Fall 2006 Pricing Changes - FAQ

[TiVoPony]

Here's an FAQ regarding the changes to our pricing plans announced earlier this week:

TiVo Pricing Q&A
November 10, 2006


Q. What happened last Sunday and why?
A. TiVo modified its pricing plans to lower the upfront cost for its Series2TM boxes to customers. It also made TiVo pricing consistent for both tivo.com customers and retail customers.

Q. How can you justify increases in some of the service fees?
A. The overall price that a customer pays for the TiVo box and service came down in most, but not all scenarios. You can still get TiVo service for $12.95/month, but with a 3-yr commitment. The upfront price of the Series2 box was either lowered or went away completely depending on the model. You can also get a TiVo box and service for significantly less than $12.95/month when you prepay for 3 years of service. As another example, you can get a single tuner TiVo DVR with one year of service for $199 total under the new plan. Under our previous pricing, the offer would have cost a total of $224 -- $69 for the box and then $155 for one year of pre-paid service. Overall, we want to reward customers who expect to utilize the TiVo service for a longer period of time by offering discounts for multiple year commitments and prepaid plans.

Q. How does this change what I am paying today?
A. The new pricing doesn’t affect any of our current customers’ rates for boxes that they own. If you are a monthly customer today, the monthly fees on your current boxes will not change with this change in pricing. This also applies to boxes currently covered under our multi-service discount program. New pricing applies only to new boxes purchased.

Q. What happens at the end of my service commitment period?
A. At the end of the service commitment period, subscribers may be charged, on a month- to-month basis, the most current rate applicable for the term of service the subscriber has just completed. For instance, if you chose a 2-year package at $14.95/month, at the end of two years, you will be charged the monthly fee associated with a two year commitment at that new point in time. You become a month-to-month customer, unless you want to lower your price by committing to an even longer period or by taking advantage of a new promotion.

Q. What if I bought a TiVo under the previous 1 year commitment program (monthly or pre-paid options) before November 4, 2006?
A. Our current practice is to allow these subscribers to continue their service on a month- to-month basis at $12.95 / month. TiVo does, however, reserve the right, at any time, to charge the current applicable monthly fee for a one-year commitment of service, which may be higher.

Q. What happens to any boxes that I currently have under the $6.95 / month Multi-Service Discount (MSD) program?
A. Boxes currently covered under the MSD program will continue to be billed as they are today as long as the status of the account does not change and they continue to be eligible for the discount under the original program.

Q. What happens if I currently have a TiVo box eligible for the Multi-Service Discount and I add another TiVo box to my account?
A. While your existing second box is “grandfathered” at the $6.95 monthly pricing, the new third box will be subject to the new MSD pricing. In most cases, the new pricing is comparable or favorable to the old pricing when you factor in the discounted cost of the box.

Q. What if I currently have only one box, but want to add a new TiVo box to my account?
A. This new second box will be billed under the new terms, which is at a $6.00 discount to your monthly bill. The base price changes depending on your commitment period. Again, in most cases, the new MSD pricing is either comparable or even favorable to the old pricing when you factor in the discounted cost of the box.

Q. Why would I consider any of the prepaid options?
A. We’ve heard from customers that some prefer to pay fees upfront rather than on a monthly basis. In order to reward customers for paying upfront, we offer a a discount off the corresponding monthly fee. For example, a three year pre-pay option $299 equates to about $8.30 / month.

[Gai-jin]

Originally Posted by TiVoPony

Q. What if I bought a TiVo under the previous 1 year commitment program (monthly or pre-paid options) before November 4, 2006?
A. Our current practice is to allow these subscribers to continue their service on a month- to-month basis at $12.95 / month. TiVo does, however, reserve the right, at any time, to charge the current applicable monthly fee for a one-year commitment of service, which may be higher.

So, it's pretty much just as bad as we had all been speculating.

The only good news I see is the quoted above, but the caveat listed concerns me still.

[Einselen]

Originally Posted by TiVoPony

Here's an FAQ regarding the changes to our pricing plans announced earlier this week:

TiVo Pricing Q&A
November 10, 2006

Q. What happens at the end of my service commitment period?
A. At the end of the service commitment period, subscribers may be charged, on a month- to-month basis, the most current rate applicable for the term of service the subscriber has just completed. For instance, if you chose a 2-year package at $14.95/month, at the end of two years, you will be charged the monthly fee associated with a two year commitment at that new point in time. You become a month-to-month customer, unless you want to lower your price by committing to an even longer period or by taking advantage of a new promotion.

Thanks Pony, but I am really confused still.

I bought a box from retail maybe three weeks ago and did prepay for 3 years. When the three years are up will I be paying monthly at the fee associated with the three year commitment or will I be bumped up to the fee associated with the one year commitment. My terms said I would go up to then then one year rate but this FAQ says differently. Same with the terms on buying from Tivo or buying from retail. It seems to favor if you buy form Tivo then you get the then rate associated with term length you signed up where retail you get bumped up to the more expensive 1 year rate.

Esentially this is what was going through my mind when I bought my Tivo. Prepay 3 years, at end remember to call in and get $12.95/month for 1 yr then montly at $12.95. Now I am just confused as you can from the paragraph above.

[Einselen]

Originally Posted by Gai-jin

So, it's pretty much just as bad as we had all been speculating.

The only good news I see is the quoted above, but the caveat listed concerns me still.

Yeah I wonder how that will all work out. Seems as though you need to call in at or near the end of your 1 yr and talk to the CSR or even Sup and say here is what Pony said could happen, will it happen. Then if they give it to you, yay you! If not then you gotta decide what you wanna do in extending contract or what. At that point might as well get a new box too.

[Lazlo123]

Originally Posted by Einselen

Thanks Pony, but I am really confused still.

I bought a box from retail maybe three weeks ago and did prepay for 3 years. When the three years are up will I be paying monthly at the fee associated with the three year commitment or will I be bumped up to the fee associated with the one year commitment. My terms said I would go up to then then one year rate but this FAQ says differently. Same with the terms on buying from Tivo or buying from retail. It seems to favor if you buy form Tivo then you get the then rate associated with term length you signed up where retail you get bumped up to the more expensive 1 year rate.

Esentially this is what was going through my mind when I bought my Tivo. Prepay 3 years, at end remember to call in and get $12.95/month for 1 yr then montly at $12.95. Now I am just confused as you can from the paragraph above.

Yes, if i may add, if Tivo wanted to create alignment in the pricing with Retail, why are the terms different at the end of your commitment for a service only plan or a bundled plan?

[Einselen]

Pony

Also it was not mentioned what happend with the MSD rate after the MSD committment. Assuming form the FAQ you would be paying monlthy the rate you just ended at however again with the terms from the website it seems that only applies to Tivo's bundled packages.

I hope this makes sense, it is hard to explain.

P.S. - Mods, can we make this a sticky please

[timckelley]

Bundled vs nonbundled, MSD vs nonMSD, prepay vs monthly, lifetime, lifetime transfers, retail vs from TiVO inc, 1 yr vs 2 yrs vs 3 yrs, ... this is all so confusing.

My mother-in-law would definitely be scared off by all this complexity, no matter how good a deal it is.

However, I guess I can see you can't make it totally simple either. You said there's been an interest in prepaying, so that's why you offered that option, and it does sound like there's a discount for prepaying.

[nirisahn]

Not that any of us want to pay higher prices for anything, but all companies reserve the right to change their pricing at the end of whatever contract you have. Can you imagine signing up for cable, satellite, a cell phone, or any other monthly service and not ever seeing a price increase? Doesn't happen.

[Gai-jin]

Originally Posted by nirisahn

Not that any of us want to pay higher prices for anything, but all companies reserve the right to change their pricing at the end of whatever contract you have. Can you imagine signing up for cable, satellite, a cell phone, or any other monthly service and not ever seeing a price increase? Doesn't happen.

Local phone service -- once you're in a plan, you're grandfathered into it until you change it. Shouldn't everything work that way?

[Einselen]

Originally Posted by timckelley

You said there's been an interest in prepaying, so that's why you offered that option, and it does sound like there's a discount for prepaying.

There is a discount for new customers. Existing customers get better rate with MSD. Could you imagine a prepay MSD rate?

[aindik]

Originally Posted by Gai-jin

Local phone service -- once you're in a plan, you're grandfathered into it until you change it. Shouldn't everything work that way?

Cell phone service is the same. Once your contract expires, you're in month-to-month at the same price you've been paying for the same number of minutes. They have the right to change it on you (that's what month to month means, it's not just freedom for you but freedom for them too), but generally they don't.

[rainwater]

It's pretty much what I figured. I have several DT boxes on bundled deals and I am now screwed when the year is up. My MSD rate at the end of the term is now going to be higher ($7 more) than what I was promised when I bought the box. How TiVo thinks this is fair I have no clue. Looks like I will have to get rid of at least 1 of the boxes if not 2 of them.

[Billy66]

Sweet, another increase in price and some serious complication to the process as TiVo struggles to shift the burden of acquisition cost from their marketing department to the consumer. Every other effort to recoup acquisition has failed. I hope this brings the revenue and profits needed. That's the only upside I can see in it.

Billy

[Einselen]

Originally Posted by rainwater

It's pretty much what I figured. I have several DT boxes on bundled deals and I am now screwed when the year is up. My MSD rate at the end of the term is now going to be higher ($7 more) than what I was promised when I bought the box. How TiVo thinks this is fair I have no clue. Looks like I will have to get rid of at least 1 of the boxes if not 2 of them.

Why did you buy them bundled? Couldn't you have gotten them cheaper by putting them in your account with MSD from the start? (Sorry off topic, if you want you can reply to me in PM)

[bpurcell]

Originally Posted by TiVoPony

Q. What happens at the end of my service commitment period?
A. At the end of the service commitment period, subscribers may be charged, on a month- to-month basis, the most current rate applicable for the term of service the subscriber has just completed. For instance, if you chose a 2-year package at $14.95/month, at the end of two years, you will be charged the monthly fee associated with a two year commitment at that new point in time. You become a month-to-month customer, unless you want to lower your price by committing to an even longer period or by taking advantage of a new promotion.

So is this for both retail and direct purchased Tivos? I thought other posts had mentioned that retail Tivos would pay the 1-yr price after the contract, regardless of which year commitment they made. Is that now incorrect?

[timckelley]

Originally Posted by rainwater

It's pretty much what I figured. I have several DT boxes on bundled deals and I am now screwed when the year is up. My MSD rate at the end of the term is now going to be higher ($7 more) than what I was promised when I bought the box. How TiVo thinks this is fair I have no clue. Looks like I will have to get rid of at least 1 of the boxes if not 2 of them.

When the year is up, couldn't you sign on for a 3 year MSD contract, and then only pay $6.95 per month per TiVo?

[aridon]

So I have my boxes now and am grandfathered. That means when I upgrade I'll need to take a finger in the ass to keep Tivo? Better yet, I take a 3 year committment on a Tivo and 2 years into it Tivo releases a new box that I want and I have to break my contract and resub for 3 more years to get it? Will you allow whats left on the old contract to xfer to the new box? Make me pay the contract breaking fee?

Sorry but your marketing department is nuts. Have them refer to the first rule of marketing a product. KISS.

[rainwater]

Originally Posted by timckelley

When the year is up, couldn't you sign on for a 3 year MSD contract, and then only pay $6.95 per month per TiVo?

Because I wouldn't commit to that much for a S2 DT. I will be upgrading to an S3, and having to have 2 or 3 commitments for 3 years is ridiculous. When I was told after one year, 2 of my boxes would be $6.95 with a one-year commitment, and now I am being forced to pay more than double that, then I get a little upset.

[rainwater]

Originally Posted by Einselen

Why did you buy them bundled? Couldn't you have gotten them cheaper by putting them in your account with MSD from the start? (Sorry off topic, if you want you can reply to me in PM)

Because they offered good bundled deals that didn't require much upfront costs (no rebate hassles). But now I see it was just a way to screw their customers. If I would of known, I would of paid more upfront and been grandfathered in on the MSD. But now I am just being forced to get rid of the extra boxes.

[jfh3]

Originally Posted by rainwater

It's pretty much what I figured. I have several DT boxes on bundled deals and I am now screwed when the year is up. My MSD rate at the end of the term is now going to be higher ($7 more) than what I was promised when I bought the box. How TiVo thinks this is fair I have no clue. Looks like I will have to get rid of at least 1 of the boxes if not 2 of them.

Not according to the FAQ:

"The new pricing doesn’t affect any of our current customers’ rates for boxes that they own. .... New pricing applies only to new boxes purchased."

If I understand Pony correctly, you would still be eligible for the $6.95 MSD rate on the existing DT boxes that you own.

After reading the plans and the FAQ, this doesn't seem as bad or complicated as many seem to think.

However, I wish there was another way that might be easier to "hook" a new customer that may not know when they first sign up if they will want the service for longer than a year. Maybe if there was some way you could switch to a longer term contract at the reduced rates before the initial 1-year commitment was up.
Then everybody wins.

[Einselen]

Originally Posted by aridon

Better yet, I take a 3 year committment on a Tivo and 2 years into it Tivo releases a new box that I want and I have to break my contract and resub for 3 more years to get it? Will you allow whats left on the old contract to xfer to the new box?

Previosuly the service agreement was tied to the account and not box so if you did 3 yrs perpaid you can trasfer two years and get a S3 if wanted, I doubt that has changed.

[aindik]

Originally Posted by aridon

Better yet, I take a 3 year committment on a Tivo and 2 years into it Tivo releases a new box that I want and I have to break my contract and resub for 3 more years to get it? Will you allow whats left on the old contract to xfer to the new box? Make me pay the contract breaking fee?

Perhaps this should be added to the FAQ, but the general consensus appears to be that, with a 3 year agreement, all you're agreeing to is to pay monthly service for three years. On any TiVo box, not necessarily on that box. You can replace your box with a new box at any time (but you have to pay full retail for the box).

After the three years is up, you can go month to month at the same monthly rate that another person can get signing a three year deal at that time, and you will apparently pay the current "three year deal" price for as long as you maintain service, but you can cancel at any time. I wonder if THAT month to month plan is transferrable to another box bought at retail.

[Einselen]

Originally Posted by jfh3

However, I wish there was another way that might be easier to "hook" a new customer that may not know when they first sign up if they will want the service for longer than a year.

Tivo does have the 30 day trial. Within that time they can change plans, maybe the trial should be a bit longer? Is 30 days enough to get one hooked and wanting to do more?

Also selling Tivo should be easy. Most users don't see why Tivo is more then their cable DVR and/or don't want the longer contract. Again with Tivo's 30 days you can get them hooked then. If you are selling it to a friend or family member tell them that if they don't like it then you will help them send it back.

[zalusky]

In the next 3 years I see possible dramatic changes in the landscape as the digital transition accelerates. OTA will disappear unless you get some sort converter and then will have more boxes in the loop.

Cable may/may not but most likely will go all digital where they can and that will require the cable box in the way.

I see the S3 or the Cable/Tivo box becoming much more the preferred choice over S2 boxes as time advances. This was not tru in the last 5 years when you could hook to an antenna or plug straight into the cable outlet.

All this takes me to the conclusion that prepaying 3 years ons a S2 is a mistake. Maybe two but not three.

Now if they treated it more like satellite where they simply said you have to subscribe to Tivo for three years and if you switch the hardware big deal, I would feel a lot better.

[Billy66]

Originally Posted by jfh3

After reading the plans and the FAQ, this doesn't seem as bad or complicated as many seem to think.

Imagine the dweebs at Best Buy explaining this to your mother. They will screw it up constantly and consumers will be confused as hell. At that point they aren't even sure what tiVo is let alone being able to understand the service plans. the BB folks don't know crap about either, so that should be quite entertaining.

[rainwater]

Originally Posted by jfh3

Not according to the FAQ:

"The new pricing doesn’t affect any of our current customers’ rates for boxes that they own. .... New pricing applies only to new boxes purchased."

Well, I think that is just a completely false statement because if you read below:

Q. What happens at the end of my service commitment period?
A. At the end of the service commitment period, subscribers may be charged, on a month- to-month basis, the most current rate applicable for the term of service the subscriber has just completed. For instance, if you chose a 2-year package at $14.95/month, at the end of two years, you will be charged the monthly fee associated with a two year commitment at that new point in time. You become a month-to-month customer, unless you want to lower your price by committing to an even longer period or by taking advantage of a new promotion.

Those 2 statements do not match up.

[Einselen]

Originally Posted by aindik

You can replace your box with a new box at any time (but you have to pay full retail for the box).

Asusming the rebate terms will stay the same, which most likely they will. For the S3 currently that is not an issue, but projecting forward a year or two, who knows, not even Tivo at this point of time.

[aindik]

Originally Posted by zalusky

Now if they treated it more like satellite where they simply said you have to subscribe to Tivo for three years and if you switch the hardware big deal, I would feel a lot better.

That's not in this FAQ, but that's the way I've read posts around here.

Of course, you have to buy the new hardware at full retail price.

[ajwees41]

Q. How can you justify increases in some of the service fees?
A. The overall price that a customer pays for the TiVo box and service came down in most, but not all scenarios. You can still get TiVo service for $12.95/month, but with a 3-yr commitment. The upfront price of the Series2 box was either lowered or went away completely depending on the model. You can also get a TiVo box and service for significantly less than $12.95/month when you prepay for 3 years of service. As another example, you can get a single tuner TiVo DVR with one year of service for $199 total under the new plan. Under our previous pricing, the offer would have cost a total of $224 -- $69 for the box and then $155 for one year of pre-paid service. Overall, we want to reward customers who expect to utilize the TiVo service for a longer period of time by offering discounts for multiple year commitments and prepaid plans.

Wrong

The price of the S2DT went up $29.

ajwees41

[jgickler]

Pony, please clearify this situation.

I own 4 tivos, one month 2 month @ 6.95, 2 lifetime, and one DT which I bought a bundled package for 1 year prepaid.

When the 1 year prepaid expires, what will be my rate?

From what I have read elsewhere, it would default to the current rate for the term I agreed to, in this case a 1 year. In the past it was also said that to get the MSD, I would need to commit to at least an additional contract.

So for this unit, are my choices:

1. Pay $19.95 of month to month no commitment

2. Pay $6.95 with a 3 year commitment

3. Pay 13.95 with a 1 year commitment

4. Get a cable company DVR.

The option I was expecting was a Pay $6.95 for a additional 1 year commitment, and the FAQ indicates a $12.95 price which would indicate I would loose the MSD discount if I go month to month with no commitment.