First Mover Disadvantage

Forbes Online has an article this morning that discusses TiVo and the slower than expected adoption rate of the device given all of the praise:

“That’s really remarkable,” says Adi Kishore, a media and entertainment analyst for the Yankee Group in Boston. “I can’t think of any product that has had the satisfaction levels it has had but has been as sluggish in terms of the growth of the market. It’s certainly unusual for a product to have this kind of enthusiasm from the community that’s using it without being able to tip over and really become a mass-market phenomenon.”

Currently, TiVo, which hit the market more than four years ago, serves fewer than 800,000 subscribers. Only about 1% of America’s households employ TiVo or similar digital video-recording products, according to the Consumer Electronic Association. By comparison, market penetration for DVD players has hit 41% and is rising, making it one of the most rapidly embraced products in history.

The article goes on to argue that TiVo suffers from a first mover disadvantage: it’s a product that will create a market but only appeal to early adopters who will quickly churn out to the next greatest thing. There is no doubt that TiVo has had to create this market itself and suffers from the same arrows in the back that have taken many pioneers down.

But to me, TiVo suffers from another great entrepreneurial problem — it’s a feature, not a product. I have the bundled DirecTV/TiVo and it works beautifully. Rather than purchase a normal satellite receiver, I got one with TiVo inside. No integration issues, no separate device. TiVo is great functionality, but it needs to be built into TVs, DVD players, cable and satellite receivers. It’s too hard a value proposition to explain and too complicated a device to set up on its own.

[VentureBlog]

Hard to argue that it is a feature, not a product now that I have been experiencing DVR technology inside my cable box… TiVo might be easy to install if you are a regular prosumer. For the average Joe, getting behind the TV, rigging some cables including a remote mouse and a phone cable (when you might not already have a jack back there) is not that great.

Speaking of the average Joe… TiVo has done a terrible job marketing themselves. I can’t think of a product that has to continually be explained in EVERY article written about them, years after release. Some traditional Direct Marketing would have gone a long way in assisting adoption. Fortunately for TiVo, they have a Plan B, which is the licensing of their software… Unfortunately, others have copied the technology (my cable box DVR is not TivO). I doubt people will actually care what brand of DVR software is inside their set-top box. In many cases you cant choose your box anyway unless of course you are selecting between cable and satellite.

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