Why Comcast TiVo is Actually Bad for TiVo (Sorry)

Democracy in Media: Why Comcast TiVo is Actually Bad for TiVo (Sorry)
Wow, via Om Malik, some very insightful theories on the TiVo Comcast deal. Definitely check it out.

“”Anyway, let me explain why this deal will eventually suck for TiVo and its customers… TiVo has had an internal power struggle between two camps for some time. One camp, led by Ramsay, felt that TiVo needed to focus on generating substantial (i.e. profitable) monthly fees on TiVo services, while (most importantly) retaining control over technology direction (i.e. ability to innovate). The second camp has been all about driving consumer growth through carrier channels (as it turns out, at almost any cost.) It appears that this internal struggle has run its course and the latter group has prevailed. I believe that this is a bad thing for TiVo’s customers, and therefore a bad thing for TiVo in the final analysis.”

Democracy in Media ultimately concludes that the new TiVo will be a two headed beast trying to serve two masters. On the one hand they will be an advertising driven company focused on driving value out of the low revenue Comcast and DirecTV boxes while at the same time they will be a customer driven company looking to innovate on the standalone side. They conclude that it will be difficult to serve two masters and that this decision will in the end make about as much sense as Apple’s ill-fated announcement that it was going to begin to license its operating system to third party vendors. It made sense at the time but in the end copying Microsoft was not the soundest strategy for the company.

A very interesting take and it makes you think.

At present the advertising revenue and what not represents less than 10% for TiVo — but with the significantly larger install base that Comcast could represent the advertising and other services revenue will most likely become more significant.

Even though Ramsay repeatedly refuses to comment on analyst conference calls on the profitability of the DirecTV relationship, analysts have basically dissected the number and peg the value of each DirecTV/TiVo relationship at about $1 per month. Although no numbers have been made public regarding the Comcast deal one might conclude that the ultimate number would be less. It will be interesting to see the analysts dissect this key financial metric once TiVo starts earning and reporting revenue from this new arrangement.

Democracy in Media thinks the number is less than a dollar a month. TiVo was kind of over a barrel. With a declining stock price, the upcoming potential loss of the DirecTV relationship and public pressure coming from things like TiVo “death watches,” they may have had little if any leverage to negotiate anything but the most one-sided terms with Comcast. Yes, they buy some time, but when they actually begin to report these numbers it will be interesting to see how they fared in the negotiations.

Lots of unanswered questions still remain. How will NetFlix fit into the picture? Will the TiVo Comcast box really have any teeth? Will it have better features than the seriously crippled DirecTV TiVo boxes? Or as Comcast’s Foundation box (developed by Microsoft) is a dumbed down Media Center PC, will Comcast’s TiVo box be a dumbed down TiVo?

And how crazy was it that Ramsay was vilifying the cable companies as a “monopoly” on the analyst call just last week when asked about the CableCARD issue? I have to assume that at the same time they were negotiating with Comcast. What a strange tact to take unless it was to purposely throw people off or here’s a really wild scenario, unless Ramsay never even knew about the deal. What if there were other decision makers at TiVo that in order to stave off the declining stock price made the deal without Ramsay knowing.

If what the New York Times printed previously about a Comcast deal falling apart when Ramsay wanted more money and more control over the box were true, could Ramsay really have been totally out of the loop and this happened behind his back?

Total and complete conjecture and conspiracy analysis, absolutely unfounded in any way of course, but how crazy would that have been?

And what’s with the announced award of 250,000 options at the low stock price to Ramsay only a few days prior to the big Comcast announcement? For an outgoing CEO no less.

What’s the chance that some anonymous individual could leak the real story on some comment board (like this) somewhere?

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