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Tivo Business Model

Essay by   •  December 11, 2012  •  Essay  •  415 Words (2 Pages)  •  1,215 Views

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TiVo's business model is subscription based. They charge a subscription fee to users of their physical TiVo box unit. This subscription fee is either $199 for the lifetime of the unit, $99 a year or $9.95 a month. TiVo has contracted with two strategic partners, Philips and Sony. These partners make and distribute the physical product, the TiVo unit. TiVo may or may not make money on the actual unit sold but there business model does not count on this income as part of their business model. However the distribution of this TiVo unit is a very important to TiVo's revenue stream as only those who have this TiVo unit are potential customers for their TiVo Service. TiVo units are distributed by Sony and Philips to retails store such as BestBuy, Sears, and Circuit City who then sell the box to the final consumer of the product. It seems like TiVo is utilizing the push method for the TiVo unit by advertising to the end consumer through television commercials and print ads and encouraging them to purchase the product.

TiVo's value proposition is that they allow the consumer to change the way they watch TV. They coin the phrase, "create your own TV network". The value provided is in the ability to record television shows and watch them when convenient as well as the ability to record live TV, and for the unit to use metrics to determine what television shows you may also like and record them for you. This in turn has an impact on when people make time for TV. Basically it's making TV more convenient to the user of the TiVo unit.

This is a new product and there are other competitors rushing to market with similar products such as Replay Networks, Microsoft's Ultimate TV and Javio. Also the main competition is still the VCR even though it's a limited product; it still provides some of the features that the TiVo offers such as the ability to record television shows and is already in millions of households and the price is considerably less than the TiVo.

I would like to reiterate the customer base for TiVo's subscription is limited to the owners of the TiVo box unit. So TiVo's subscription business model is tied to the distribution of the TiVo box unit.

Segments

Advertisers, networks, consumers (families and workforce), cable companies

Evaluate TiVo's action plans to reach the segments identified:

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