Ah TiVo, we hardly knew ye

Ars and others have been running a sort of TiVo deathwatch I've been trying to keep tabs on, and the latest installment involving DirectTV phasing out their service doesn't make the situation look any rosier:

The Wall Street Journal today reported that TiVo fell 7.5 percent in early trading today, as DirecTV's plans to abandon TiVo reverberate through the market. The relationship has been publicly souring for over a year, especially after DirecTV Vice Chairman Eddy Hartenstein resigned from TiVo's board of directors over a year ago. Oh, and did I mention that a week later, DirecTV sold 3.4 million shares of TiVo? Indeed, the writing has been on the wall for a while now, and some analysts saw this train wreck coming the minute News Corp got their fingers on DirecTV in 2003.

The long and short is that TiVo just hasn't been doing very well financially, but the big problem it faces is one that's similar to what Apple and the other music services are facing: There's a fundamental understanding that this is the real deal -- that time shifting is a real feature people want that won't go away -- but now that TiVo has created the market, and demand, there are few reasons for the cable and satellite TV companies not to cut them out of the chain...

With something like the iTMS Store, Apple and others have a leg up in getting companies to include a third party at their table because content is such a key component in the service. TiVo doesn't change the content, and doesn't add to it, it just chops it up and modifies it. If you're someone like DirectTV, you're basically a distributor with content creators at the top of the funnel. There are very, very few reasons why you might want to pay, or even allow, someone to come between you and the consumer and many of those reasons have a habit of being temporary.

I.E., you may license someone's tech because it'll take you awhile to develop your own solution with a 'reasonable' research and development expenditure, but once you're there you drop the bitch like a hot potato. There are cases where the tech you're licensing is built on research and development that would be too expensive for you to roll yourself, but spread out over many licensees it works out to something bearable.

We could go over all of those, but there'd be little point because there's little TiVo can do in any of them. They're trying in some areas, but with little success. I.E., there's a push to make TiVo more of a platform, where you can install widget-like things to tell you the temperature and such, with the idea being that if they can make it more valuable than just time shifting you'll be that much more likely to choose to use them instead of what comes by default. None of it is really working.

And of course the problem for TiVo is that once the service is rolled into the distribution chain they're just screwed. If another company has a box sitting on the shelf of Walmart, TiVo can use its brand recognition and xyz extra features to sell theirs, but the sales inertia they have to overcome when someone like DirectTV will just roll it into the monthly bill is probably going to be overwhelming.

There are things they can do to try to drag it out, but that's a whole other bailiwick, and when you add in the cable companies and such who will never want them as part of the distribution chain, and Cringley's theory that the Telcos will eventually throw PVR functionality in at the server side, and it's almost a given that TiVo is a goner and will be swallowed by a late comer distributor that -- once the stock price has been run down enough -- they're cheaper to acquire than duplicate.

Such a bummer, but being first rarely means being last.

yummy alcohol posted button Posted by drunkenbatman
    August 13, 2005, at 07:24 PM


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