TiVo CEO Tom Rogers, along with CFO David Courtney (who is leaving the company in April) and VP of Finance Stuart West, briefed financial analysts on TiVo’s latest quarter this afternoon. Key highlights from the conference call include the fact that TiVo will be offering a no upfront fee subscription only plan, the elimination of their lifetime service option, more details on their upcoming KidZone service and other features, an update on their new Comcast initiative due out later this year and a new retail initiative with Radio Shack.
The subscription only plan announced today will offer three pricing plans which will include both the box as well as service. $19.95 per month for a one year commitment, $18.95 per month for a two year commitment and $16.95 per month for a three year commitment.
Additionally, subscribers will be able to purchase the same three plans with no monthly fee at $224 for a box and one years worth of service, $369 for a box and two years of service and $469 for a box with three years worth of service.
As mentioned earlier, the lifetime subscription option, a popular option with many diehard TiVo fans, and for someone who planned on owning their TiVo for a long time the most cost effective way to own a TiVo, has been eliminated.
This pricing plan only applies to the current Series 2 models. Rogers said that they were not ready to commit to this pricing model for the upcoming Series 3 HDTV TiVo due out later this year. Pricing on the Series 3 will be announced closer to its launch.
These new service plans will begin next week through TiVo.com and are expected to be rolled out to retail channels later this year. Additionally TiVo announced the addition of Radio Shack to their stable of retailers hawking their box.
TiVo also said that they have felt very little kick back from customers over the recent requirement for new customers to commit to a one year commitment to TiVo service. According to Rogers, with TiVo’s higher monthly fees and one year lock in they have increased the lifetime value of a TiVo customer by over $100.
Richard Baldry from First Albany Corp. asked Rogers about the timing on the rollout for TiVo’s new dual tuner HDTV Series 3 box and Rogers said that the box will not be out until after mid year but said that the box would be available for the “heaviest part of the selling season later this year.” Looks like Dave Zatz wins a lunch bet with Davis Freeberg.
Rogers revisited TiVo’s newly announced KidZone technology on the call as a key differentiator from generic DVRs and as a tool to “counter commoditization.”
Rogers also talked about their upcoming partnership with Comcast and said that it was still on track for roll out later this year. “We are excited by the idea of the generic DVRs the cable companies are rolling out,” said Rogers. Rogers cited their relationship with Comcast as an example of where TiVo service could still thrive even on non TiVo DVRs. Rogers added that TiVo was also in “solid discussion with other cable operators.”
Rogers also discussed his vision for TiVo to continue to serve as a media center for the connected home of the future citing mobile usage and other key strategic partnerships. “The TiVo service is increasingly about being the central point of video distribution in the home to other devices,” said Rogers.
On the subject of advertising on TiVo, Rogers said that TiVo’s previously announced advertising initiatives will be “rolled out in the not too distant future,” and added that Comcast is “quite interested in these features.”
Rogers also addressed the DirecTV subscriber issue and the anticipated slowing of future growth there. Although people keep bringing up the loss of DirecTV over and over and over and over again, personally I do not think that this is as great of an issue as people make it out to be. While admiting that new DirecTV subscribers would most likely be lower this year than last year due to DirecTV more aggressively marketing their own proprietary DVR, Rogers pointed out that they are succeeding as a company in a lot of other areas.
Two things people need to keep in mind with regards to DirecTV are that 1. Comcast revenue will very likely replace lost DirecTV revenue and 2. TiVo makes far more money on their standalone boxes than the pittance that they receive on their DirecTV boxes. The reduction in DirecTV business is perhaps one of the most overhyped stories out there on TiVo today. It was interesting the first time but not the 2nd and 3rd and 4th and 5th and so on and so on and so on.
Personally I think DirecTV (besides hating kids, note how they choose not to adopt TiVo’s new KidZone technology) is very short sighted in thinking that they can produce a better DVR experience than what they pay TiVo for. In fact, worth checking out is the fact that Weaknees (who customizes TiVos with bigger hardrives, etc.) has decided to no longer even sell the DirecTV R15 model PVR because “we have had many, many complaints about these boxes, and many returns. Our customer base is made up of people generally interested in and accustomed to TiVo DVRs, and this machine just falls short.”
In fact, if some of DirecTV’s customers have such bad experiences with DirecTV’s generic PVRs it would not surprise me to see these same people buy Series 3 standalone TiVo’s due out later this year which will be far more profitable to TiVo than DirecTV boxes.
Hopefully this will put the hype on TiVo losing DirecTV subscription growth to rest for once and for all.
Although TiVo has been criticized over the past few years for having negative earnings as a company, Rogers repeatedly emphasized on the call that this past year has been the first year of cash flow positive results for the company. Rogers said that sometimes people focus too much on their negative earnings without bearing their positive cash flow in mind.
Davis Freeberg Update – For the first time ever, TiVo has convienently made a podcast of today’s event available on their investor relations website. Way to go TiVo! This is a much better solution for your investors. Hopefully, we’ll see more companies adopt this format in the future.
Update #2: For more comments on this news you can check out the comments at Slashdot.
Update #3: For a complete transcript of the call you can visit the Consumer Electronics Stock Blog.
DirecTV doesn’t think they can produce a better DVR. They think they can produce a cheaper DVR under their control without marketing someone else’s brand.
Wow, lots of news to digest hear. I was never a big fan of the lifetime subscription since it was locked in to the box that you purchased (no upgrade path). The new pricing seems a little steep but I will need to let that marinate for a few days. I agree that the loss of DIRECTV thing has been overhyped. I have heard nothing but bad things about their PVR and I wouldn’t be surprised to hear about people ditching DIRECTV and going back to TiVo.
Here’s a transcription of the full Tivo conference call:
http://cestockblog.com/article/7545
Hmm…
Not sure why they are doing this… but personally I do not take lifetime subscription 🙂
I have a series 1 with a lifetime subscription. If they drop this option going forward my opinion of TiVo will change and I will likely not purchase another unit.
I own one Series 1 that I bought back in 2000 and two Series 2 that I bought back in 2002. I knew that I would be using these products for a long time in the future, so I naturally purchased a lifetime subscription plan. In light of this news, I will not purchase another unit, even the admittedly attractive Series 3. If I purchase hardware, it will have a fixed cost, and it will be fully functional until it dies of old age. If I cannot do that, I will “rent”.
This decision represents TiVo walking off the cliff. Time Warner is happy to rent its customers a HD DVR for no upfront cost and $8/mo. TiVo would have me purchase the hardware and provide them with an infinite income stream at $13/mo, or in its new plan, effectively rent the hardware for at least $17/mo with a three year commitment.
I’m sorry, but no user interface is worth a three year contract at twice the price. TiVo just lost a repeat customer.
As an owner of two Series 2 units, I was looking forward to the Series 3. I could go with a DVR supplied by Dish, or change to cable and use thier DVR. But why pay a monthly service fee forever when I can buy a new Series 3 and get the lifetime service. Oops – can’t do that now! Looks like TiVo just shot themselves in the head.
I am also done with TiVo. I was going to replace my series 1 Tivo with the HDTV version but that won’t be happening.
I have been using the cable company’s HD DVR and Sage TV delivered via a Media MVP from Hauppauge while my series one Tivo is virtually unused due to it’s horrible picture quality on my HDTV.
My 7 year old series one has a lifetime subscription and every month my TCO is going down, now at $6.50. The cheapest plan from Tivo now is going to be $13.00 a month by purchasing the unit with 3 years of service, and then what? Do I have to buy a new unit or do I get a cheaper monthly rate?
Personally, I’m a big fan of the lifetime subscription. We bought our first Tivo (a series 1 unit) about 5 years ago. Then, when Tivo first brought out the Series 2, we took advantage of their promotional deal that allowed series 1 owners to transfer their lifetime subscription to a newly purchased Series 2 unit.
Since a lifetime subscription cost was usually 2x the yearly cost, it’s been a big win for us. Essentially giving us 3+ years of free service. 😀
I’m hoping they do something similar for upgrading from series 2 to series 3.
… But I’m not holding my breath.
I believe there were/are better ways to do this…
The pricing is too high IMO and I would have liked to see Tivo provide a rental service at a lower price. A price in the $10/mon range since that competes with the cable company rentals.
They could have used a $100 security deposit to offset hardware costs and offered the 3rd year at $100 by applying the deposit. But then again, they don’t seem to be willing/able to handle a 3 year float on each customer like the cable companies can handle. But then again, the cable companies already have settop box refurbishing facilities setup and handling the DVRs didn’t add much overhead there….
Sticking with our Series 1 w/lifetime and it’s likely we won’t upgrade. 🙁 MythTV for HDTV is working pretty good anyways…
I can’t believe Tivo could be this stupid. My family was one of the first 100,000 to ever buy Tivo. We’ve purchased 3 lifetime subscriptions, 3 different boxes, and we’ve gotten 3 other people onto Tivo. In the future, though, I won’t be recommending Tivo. In fact, I’ll probably try to setup my own MythTV box in the near future so I’m future-proofed against any more Tivo hi-jinks.
I wonder what this does to those of us who have a lifetime subscription that ISN’T attached to a box. Do we get to keep that or do we lose it?
This will be the last time I endorse Tivo. We’ve had 2 lifetimes over the years. We’ve bought a Tivo for relatives and had numerous people hooked on Tivo by our recommendation. This is ridiculous. What happens to those of us who have a lifetime subscription that ISN’T attached to the box?
By that I mean when my wife and I bought our Series 2 I believe we were given the option to have Tivo service not be attached to the box, but be attached to us and thus to any Tivo we owned in the future. Therefore if our current Tivo broke, for example, or if we decided we wanted 80 hours instead of 40 we could get the new Tivo and still have our subscription. The old Tivo then would no longer be activated. That was my understanding then and still is now. So what happens to us? Are basically just bent over?
I, just like several others here, am disappointed with the dropped lifetime service option. This is indeed a big mistake. I have referred a dozen people to Tivo, and gifted 3 lifetime subscriptions to family members. A hardcore user like myself is worth a lot of $$$ to Tivo, and I’m sure there are thousands of others like me who can, and will, effect the Tivo bottom line. I’ll bet that Tivo offers a new lifetime plan for the Series 3 HD/multi-tuner Tivo product line. It will likely be twice the price, but they’ll have to a tsome point…Tivo doesn’t realize the customer base that their lifetime subscribers have created…
I am an owner of 2 series 2 Tivos, both with lifetime subscriptions, and have gifted an additional 2 tivos, both with lifetime subscriptions to my parents and brother. Not to mention all of the friends that I have caused to buy Tivos (8 referrals so far).
I had been looking forward to purchasing 1 or 2 of the new series 3 boxes, but if they do not offer lifetime subscription then I will not buy them. Instead I will rent a DVR from the cable company (for only $9/month) or else roll my own with MythTV.
Hey Tivo, way to alienate your best customers!
The lifetime sub is the only reason I own a tivo. I will not pay a monthly fee. I also will roll my own when my tivo dies.
Will the Series 3 Tivo be able to receive DirecTV signals to do dual Tuner Action?
With all the new pricing changes, it make building your own DVR look that much more attractive.
Considering the Series 3, though, consumers are screwed, as you can’t build your own HD recorder with CableCard support!!
Lifetime subscription was a primary reason to own a TiVo for me. Otherwise, it’s easier/cheaper to build a MythTV box. I won’t be upgrading to the Series 3 when it comes out.
I one a series one philips (bought in 2000 with lifetime.) I gave my brother a series one sony with lifetime.
I was about to buy a series two with lifetime.
Now I’m just not sure I want to be a TiVO customer anymore.
I have to wonder what this model will do to customers in Canada who are about to get legit service and support, but up until now have hacked their guide info.
TiVo made a choice to announce a pricing plan that does in fact alienate several existing subscriers and perhaps turns away potential new customers. They will however still be able to get new and repeat customers regardless of this, it’s just the reality of business. If you want proof just take a look at your cable bill and see how many dinners your cable company owes you for the after-dinner antics they have engaged in for decades.
I think the bottom line is that with MS Vista supporting CableCard and the inevitable entry of Apple into the sauce it makes sense that TiVo is trying to posture to reap some of the potential money that those people out there that have no interest in building their own boxes will be willing to spend.
Personally I will just have to wait and see. Im tempted by the HDTiVo but with CableCard tech coming to my PC soon it may be a toss-up. But again that is because I CAN build a HTPC where most people I talk to CAN’T or won’t.
maxx, you CANNOT build an HTPC with cablecard support. The entire system has to be certitfied for support, meaning that even if the individual parts are certified, it won’t work. If you want CC support in an HTPC, you will have to get a new PC that is certified from a major brand.
That said, I think that TiVo is utterly rediculous. I had every intention of ditching my Sony HD DVR in favor of an HDTiVo, but now that isn’t likely to happen.
Wow, this is like a geeks gone mad convention. Everyone in this blog dumping Tivo is doing it because they may have to pay a monthly fee now. The lifetime subscription was nice if you never planned to upgrade the equipment(notice the biggest complainers are still rockin’ series one units.) But really, do you get angry when you go into a restaurant and they don’t feed you for free just because you ate there last month. Tivo is not a box and it is not a piece of hardware; it is a service, just like your cable, internet access, or rent. Whether it comes in a box from Tivo, Comcast, or maybe even space, it will be a part of my home theater, and if you don’t get that, you don’t get Tivo. If anyone here does decide to drop Tivo because of this change, I am sure their DIY media center PC with TitanTV and a sync to their PDA phone Bluetooth headset will look very nice hanging off the back of that TV in their Mom’s basement.
TiVo now wants to play the term lock-in game just like most cell phone companies. Perhaps they can find enough people who don’t do the math. As for me, I refuse to comit to a cell phone contract — I use pre-paid celluar. When my TiVo breaks, I will also reuse to agree to this nonsense. There are alternatives to TiVo servoce already.
I was about a month away from ordering a new series2 with a lifetime subscription (monthly fees are a waste of money). But when I heard this news, I decided to ditch TiVo altogether in favor of a system that I wouldn’t have to pay monthly fees. TiVo just lost another customer to MythTV. I figure I would have had to pay ~$400 to get started with TiVo and get my lifetime subscription. So I have a $400 budget to get a larger hard drive, a Hauppauge WinTV PVR 500, and a Hauppauge MediaMVP. Sounds like this latest business move is good for TiVo’s wallet and bad for ours. So it is time for TiVo customers to do what we do to all overbearing companies: stick it to The Man.
I have TWO Tivo boxes with lifetime and prior to this BS, I could transfer this service to any other new box if something happened to the old one. How can they change this on me now? It’s FRAUD!!! I now HATE Tivo and their business practices and will NOT recommend them to anyone else as I have done for so long now…