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Pulling the Plug on Tivo

I’ve pulled the plug on Tivo (TIVO) after three years of great service. With my recent FiOS TV subscription, I needed HD capability and I cannot justify paying $800 for hardware I get for free from Verizon (VZ). I just wish I had tried to cancel my Tivo service earlier as they offered to cut the per month fee in half if I stayed. That’s a bad leading indicator for the health of this company.

Tivo has an excellent online account management interface, except of course for canceling your service. After digging around on the website I discover that I need to talk with a real human. After 10 minutes on hold, I speak with a service rep who suggests I give the old Tivo box to a friend, or hook it to a second TV in my house. They were willing to drop the per month fee to $6.95 – I’ve been willingly paying $12.95 a month. This was irritating – if you are a Tivo customer I suggest you call them up and threaten to cancel.

I would have switched to the Tivo Series 3 box. Verizon charges me $12.95 for their Series 3 HDTV DVR, the same price I was paying Tivo. The difference is I need to front Tivo $800 for their hardware, where as Verizon includes the hardware in the $12.95 fee. My initial experience with the Verizon DVR has been negative, but not enough to make me spring for a $800 piece of hardware.

I think it’s time to crack open the Scientific Atlanta (CSCO) DVR and see what costs so much in these boxes. I can’t imagine the hardware BOM of the Tivo box is any different. Either Verizon is taking a bath on leasing hardware at $12.95 or Tivo is gouging customers with a ridiculously overpriced $800 box.

It’s entirely possible that Tivo is trying to stick it to early adopters willing to burn $800 on premium equipment and will cut the price aggressively once they have milked this market segment. They will lose subscribers like myself transitioning to HD who can’t turn down free hardware from their Cableco/Bellco video provider. Perhaps someone from Tivo will read this and give me a free unit to review. Perhaps Tivo will cut the price to $299 and earn my business again. Gizmodo discussed the same issue in more depth here.

Regardless, as an investor with a minor holding in Tivo at this point (Read all of my silly visionary ideas on Tivo here), I am now convinced that however grand my visions are for this company they appear to lack a strategy to avoid the fate of another innovative company I mistakenly tied my dreams to, Metricom.

How exactly is Tivo going to grow their subscriber base when it requires an initial outlay of $800 against free hardware from their Cableco? I postulate that there are more Tivo subscribers transitioning to HDTV than people without Tivo who are willing to stick with Standard Def and sign up. Without a radical price cut on the Series 3 box, Tivo the company will get unplugged.

I plan to post a more extensive summary of the FiOS TV hardware (yes, I’ve got MOCA) and install process at a later date. I am long Tivo at the time I write this, and feel embarrassed to admit it.

Discussion

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  1. Funny you mention Metricom. I made a killing on their stock. I was a very happy customer in the Seattle market starting in 1995. Bought their stock @ $6 knowing that from past performance it went up to around $30 every time they opened a new metro. My broker thought I was nuts and tried to discourage me from buying it. I was overseas when the Paul Allen/MCI news hit and one day my powerbook stock ticker showed it at $108. I freaked. There waqs NO WAY MCOM was worth that much so I called my broker and gave the sell order. Again, my broker tried to discourage me from doing so. Needless to say, I sold and fired my broker.

    Can’t say much about TIVO because honestly I have given up on TV. It is just not worth my time to work to find good programming. Instead I watch bitorrented copies of the BBC’s “Top Gear” and whatever arrives from my NetFlix queue. I haven’t watched an actual television (except for hockey games) in years.

    –chuck

    Posted by chuck goolsbee | October 31, 2006, 1:24 PM
  2. Another death knell for Tivo is the growing use of Windows Media Center PCs. Yes, it costs more upfront than the Series 3 box, but there is no monthly fee, and it also supplies familiar Internet access, excellent gaming and general purpose apps as well.

    People that come to our house and see what it does are a little amazed, which is funny because it is really no big deal. Picture in picture when one of the screens is a web page showing YouTube? Cool.

    Tivo’s value-added is so tiny — essentially just an automated program guide with a GUI. WMCE gives that away along with everything else. Remember Gemstar? Eesh.

    Posted by ChipGeek | October 31, 2006, 1:34 PM
  3. The real threat of Windows Media PC’s is against companies like Sigma Designs, who build dedicated set-top box silicon. AMD/ATI will mutilate them.

    Posted by Andrew Schmitt | October 31, 2006, 3:22 PM
  4. Well, for better or worse, I just went and spent $680 on a Series 3 (15% off coupon to the TiVo Community Store).

    I’ve had TiVo for years and although I could probably ween myself off it and use something like Media Center or MythTV, I think my wife is totally addicted to the TiVo interface.

    It seems like all the free DVRs from the cable companies have been getting pretty bad reviews everywhere I look, so I’m thinking that it might be worth it to go with the TiVo.

    We’ll see. I’ll be posting about my Series 3 when it arrives.

    Posted by Marc | October 31, 2006, 8:48 PM
  5. I’ve been long too, waiting for the company to be bought, but recent trends suggest rock bottom prices rather than the premium I expected. In hind sight I should have sold when Janet J showed her left tit on prime time. It was Tivo’s finest hour. My bad. We haven’t seen the stock price that high since.

    I don’t fully understand the transition to HD and would be interested in opinions. I don’t watch much TV myself so I’m not much of a expert on TV programming. CNN in the mornings is about as much as I experience.

    rgrds.

    Posted by Bill | November 1, 2006, 8:51 PM
  6. I agree with you, the tivo serivce is doomed as consumers switch over to their cable companies for high def dvr. In fact, I wasn’t even aware of the tivo hd dvr until you brought it up, and switched directly to time warner’s hd. It works great, and I didn’t have to lay out $800, which borders on madness

    Posted by Andrew Jacob | November 7, 2006, 12:13 AM
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