TiVo’s Ignorance

The New York Times is running a story with some key insight into why Tivo is only where it is today… Ignorance. Tivo’s CEO and Chairman, Michael Ramsey just simply could not let go and this is clearly pushed them down the road to failure.

Tivo is still a niche player even though their brand outweighs the number of units sold, an estimated 2.3 Million. By ignoring the inevitable future, that DVR functionality was more commodity than secret sauce, they allowed anyone interested in entering the market to cruise past them with ease. It can certainly be argued that the Tivo system is more sophisticated with greater flexibility and features, but the failure to market that early on, made it difficult to choose Tivo when you could get a box for free from your cable company.

2 Tuners and HDTV are two significant advances that cable carriers were able to deliver at virtually no cost (set-tops are usually free) to subscribers. The boxes from carriers also come with an installer in many cases and are easy to swap out should you run into an issue – something you’d have to send out for with Tivo and if you a re out of warranty, you might find yourself having to pay for repairs if there was a hardware failure.

The amazing thing is that apparently Tivo was pretty close to doing a deal with Comcast last year, but Ramsey backed out in the final hours thinking they should be getting more money.

After months of hard bargaining, TiVo reached an agreement last summer to offer its pioneering video recording system to customers of the Comcast cable system, according to several people involved in the discussions.

It was potentially a critical deal for TiVo, because Comcast is by far the biggest cable system and also because control of DirecTV, the satellite system that has been the biggest distributor of TiVo, had been bought by the News Corporation, which also owns a TiVo rival.

Yet, at the last minute, Michael Ramsay, TiVo’s chief executive, decided to pull out of the deal. Comcast was not going to pay TiVo enough money or give it enough control over its service, Mr. Ramsay told the company’s board, according to people involved in those discussions.

TiVo’s board backed Mr. Ramsay, a brilliant and headstrong Scottish engineer, who wanted to focus on new technologies to attract customers directly – without distribution of the service by cable or satellite TV companies. But a debate about whether the company made the right choice raged in its executive suite and boardroom.

Here’s a tip… less profit per box but installations in the homes of the largest cable company in the country is better than remaining a niche also ran. As long as the deal was not exclusive, it would most likely lead to deals with other carriers looking to keep up. Comcast is testing all kinds of new DVR and HD systems and probably wants to go with leading edge stuff… the kind of tech Tivo has, well had. Now it simply does not matter. When their HD Cable Card box comes out next year, it will have to fight an even steeper uphill battle for the attention of many already installed HD and SD DVRs courtesy of cable companies across the country.

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