TiVo “Close” to Subscription Only Box

Technology News Article | Reuters.com Reuters is reporting this morning that TiVo is “close” to offering a subscription only TiVo offering.

“Chief Executive Tom Rogers said the company, whose name has become synonymous with the ability to pause live television and skip commercials, was close to offering a range of pricing options, including one plan that would include a free set-top box.”

“The company is likely to begin the test to offer free boxes, possibly in exchange for higher priced and longer term plans, fairly soon, said Rogers, who was named chief executive last July.”

We reported here back on February 17th based on an interview Rogers had given to Bloomberg news that this was in the works. In that interview Rogers had said that they would look at a subscription only plan “early this year.”

I would suspect that initially they would limit this to Series 2 TiVo boxes which will be less desirable when the multi tuner HDTV standalone Series 3 TiVos come out later this year. Although no timing is set on when the Series 3 box will be released I would think that with the early adopter high-end crowd that beating Microsoft and their CableCARD equipped Media Center PCs to market would be a goal of the company at the moment. The Series 3 is currently believed to be in outside beta testing at the moment.

One strategy might be that TiVo would launch the subscription only Series 2 boxes at the same time that they released the higher end Series 3 box for purchase.

Although a higher monthly fee free TiVo box might not in fact be the best deal for a consumer when analyzing true total cost of ownership over time, it would nevertheless open the product to a much broader mass market audience and would compete with similar free unit subscription based offerings from TiVo’s satellite and cable competitors.

No word on what they would price a subscription only box at. According to Reuters most consumers pay about $13 a month for their TiVos today.

Offering a subscription only box seems like the right move for the company to make and has been suggested by many in the past as a good direction for the company.

With a subscription only version launch, it would seem important for TiVo to effectively distinguish their product from the cheapo freebie cable and satellite offerings to justify what would surely be a more expensive monthly cost.

I would assume that a subscription only pricing option on a TiVo would be similar to your contract with the cell phone company with a service agreement time period (one year? two years?). One thought for TiVo would be that if they launch this pricing plan with their Series 2 units that they have a provision in their contract to let anyone out of a service agreement if they ugrade to a Series 3 TiVo when they are available later this year.

*Davis Freeberg Update – Dave Zatz found an interesting videotaped interview of Tom Rogers at the Reuters event earlier today. The interview lasts about 5 minutes and is definetely worth checking out.

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7 Comments

  1. Dave Zatz says:

    Last year, TiVo tried giving away boxes and charged $16.95/mo versus the typical $12.95/mo. Supposedly the response to the promotion (advertised on TV) was good.

  2. Dave Zatz says:

    Oh yeah, there already is a service term of 1 year or a $150 cancellation fee. Would a totally subsidized box have a two year period? And would smart consumers avoid it since these standard def single tuner analog units have limited use going forward…

  3. I think it’s a great idea, one that they have experimented with not too long ago. IIRC in their experiment the pricing worked out to juct about the same price as buying a TiVo and paying for one year (or was it 18 months?) of service.

    Though many people HATE rebates, and I’ve heard reports that unfulfilled rebates amount to a significan amount for TiVo which probably drives up revenue more for a purchased TiVo (compared to a subscription supported) knowing that not all the rebates will be fulfilled.

    If TiVo charges too much for a monthly fee for the subscription service (probably much over $15/mo) they won’t get as much adoption, charge too little and they could cannibalize sales of the purchased TiVos.

    One thing they need to do is make sure it’s eay to turn the subscriber customers into regular customers. You can get someone to pay $15 per month for the first year or two but not for a long time. Maybve give the subscription customers the opportunity to buy a (slightly) discounted lifetime service, or switch to standard monthly service at the end of the subscription contract.

    They will also need to offer the monthly service discount for second and subsequent TiVos for people who initially opted for the subscription service for their first TiVo, this is something that the previous experiment did not do.

  4. I think it’s something like 45% of their rebates end up unclaimed, but I’m not sure where I saw that number. Renting is definetely the best direction for the company to go. There is no need to make people buy the boxes. TiVo is crazy addictive. I barely watched TV before I made that little impluse buy five years ago. It would be great to see them partner with Netflix for a $25 per month package. It could include one or two dvds with a basic box.

    It would be a win win for both companies. TiVo would get a new distribution partner and Netflix would see disc usuage decline. It might cost more to ship a heavy TiVo, but I bet that renters would slow down their monthly dvd watching, if they had TiVo to keep them entertained too.

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