New TiVo Service Holiday Pricing

Discussion in 'TiVo Coffee House - TiVo Discussion' started by TiVoPony, Nov 8, 2007.

  1. HDTiVo

    HDTiVo Not so Senior Member

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    What is necessary is a very comprehensive revamping of the strategy and company on many levels. Pricing and contract terms are just one piece of it. TiVo was actually getting close to sustained profitability, including the ability to grow at a decent rate and still report profits, before they went off course with Rogers' fiasco. That former model needed much work too, but it showed success was likely achievable.
     
  2. CrispyCritter

    CrispyCritter Purple Ribbon Wearer

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    North...
    Yes, I agree (and I do think this is a substantive comment despite HDTiVo). But I think the comment applies to the standalone market, not the entire TiVo market.

    The way I see things, last year (giving away free TiVos) was the last attempt of TiVo to base the company on standalone DVRs. The competition from cable company DVRs with their $0 up-front costs has been growing extremely rapidly over the last 3 years. TiVo tried to match that (and it has always been the case that up-front costs dominate purchase decisions), and failed.

    I believe TiVo has now decided that the independent standalone DVRs will never be dominant in the DVR market - they can't compete for the mass market DVR. They've settled for the high end of the mass market and try to break even there. Their long-term big profits will come from the cable (and satellite) companies with the small monthly fee and a share of the advertising revenue.
     
  3. CrispyCritter

    CrispyCritter Purple Ribbon Wearer

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    They were nowhere close to sustained profitability because of the specter of cable company DVRs entering the market place. It's a changing world and they had to capture a much larger share of the market before the cable company DVRs got entrenched. TiVo tried and failed, but it was their last chance at that approach.

    My view is that the failure wasn't all that bad for TiVo. Can you imagine what the last year sub numbers would have been like if they hadn't been giving away TiVos? It served to keep the sub numbers somewhat up while bridging to the subs from Comcast.
     
  4. HDTiVo

    HDTiVo Not so Senior Member

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    I don't mean it disingenuously. I know there is some modest loss on TiVo HD sales, which I have written many times before. It is pretty small compared to losses over the past couple of years, so the $6.95 MSD rate certainly wasn't a bad deal for TiVo, which had offered it for a long time on hardware with much bigger losses.

    What I am also saying is that there are many other costs which are not variable (HW loss is largely per unit) to be spread over whatever units manage to get sold (Gross Adds). Those costs dwarf the hardware cost issue - even the larger cost of the past - and volume drives them down (ie. SAC) to levels where lower sub fees make business sense over the entire enterprise because there are many more subs producing more total gross profit on service.

    So I don't talk about charging $X/mo for the sake of saying it. I look at all TiVo's costs and the trends of sales and other factors to figure out if it is in fact likely to be practical. On top of that is future business development in non-sub fee revenue (like video sales, advertising, etc.) and the positive effect a larger sub base and higher growth rate would have on those.

    I think TiVo should have given the THD a chance to shine in sales before messing with MSD. They are not known for making good decisions as their past performance has demonstrated. The other part - $12.95/mo and lower pre-pays - are an improvement; they are volume drivers. But as I said earlier, I don't think the entire price plan is going to move things very much one way or another.
     
  5. ufo4sale

    ufo4sale Well-Known Member

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    I just signed up for the 3 year plan at 6.95 a month. At the end of the 3 years can I still get it at the old MSD rate of 6.95?
     
  6. greg_burns

    greg_burns Now in HD

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    No, you would go back to the current monthly MSD rate (whatever that may be in 3 years; currently 9.95). Or you can sign up again for whatever plan they may have at the time.

    At least that is my understanding. Sound right?
     
  7. ufo4sale

    ufo4sale Well-Known Member

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    Didn't Pony say that If you had a box prior to this pricing change that it wouldn't effect current boxes on your account? I had a box that just came off of the 1 year lifetime promotion and it automatically went to the 6.95 rate. I would expect that this TiVo would do the same thing since I signed up before they "raised" the rates for the MSD pricing. Plus I just moved to NY and found out that all my TiVo's are going to be taxed. So instead of paying 6.95 a month I now have to pay 7.55 a month.
     
  8. RonDawg

    RonDawg Well-Known Member

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    Neither...
    According to the TiVo website, upon expiration of the contract your box would be charged at the "then-applicable monthly rate", whatever that may be.
     
  9. bicker

    bicker bUU

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    Absolutely. That "holy grail" that people have been pursuing for years, of an affordable HD DVR without subscription, isn't going to be the most profitable use of the required capital for ANY company. Though, I'm not sure that even with the deals with companies like Comcast whether "big" profits will be forthcoming -- but at least there is a CHANCE of that happening that way.
     
  10. soopergeek

    soopergeek New Member

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    Guys,

    I just changed my 3yr prepay MSD to the $99 1yr prepay. I was still within the 30 days.

    Why did I do this? **Because it is very likely that within the next year SDV WILL RENDER MY TIVO USELESS**

    I'm thrilled to have an escape plan.
     
  11. HDTiVo

    HDTiVo Not so Senior Member

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    I have other views beyond this specific topic which address the changing world problem.

    TiVo failed because they made many mistakes. Deducing that the market isn't there based on TiVo's poor performance isn't right. There is an excellent chance that the market was and is there. Despite "generic" cable offerings, the DVR business (and extensions beyond DVR) is still not in a cannibalization stage, but expanding to offer opportunity to many players .

    Note also that successful cable DVR uptake is leading to price increases. That gives TiVo an even better chance to make hay, but you don't raise a price until you've established your product and can see that a price increase can increase profits.

    You are saying that CableSoft is the future, but how do you get to the numbers needed when you look at the whole enterprise, even if it is downsized significantly? Even looking at the rather successful DTV relationship and extending that to cablesoft, those revenues didn't amount to enough to make up for other costs. I'd like to see how you are calculating this.

    You are betting on the success of something before it has even one paying customer. TiVo does this all the time, saying this or that is going to be great and then it doesn't pan out. I think there will be alot of cablesoft customers, but its a big stretch to get to levels that result in profits overall.
     
  12. greg_burns

    greg_burns Now in HD

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    Did it automatically go to 6.95/monthly? Why did you then call and sign up for a 3 yr plan to get the 6.95/month rate? We talking about the same box here?

    Not that it matters, just wondering why when mine came off that promotion they wanted to charge me 12.95/month.
     
  13. CrispyCritter

    CrispyCritter Purple Ribbon Wearer

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    I agree with that.

    The new price plans are much simpler and to be preferred. TiVo doesn't need the messy contracts any more. The contracts were directly tied to the giving away of the free TiVos (and massive subsidies of the DT). They needed to both tie the user to the TiVo service and recoup the expense of the free TiVo. Now that the focus is on the TiVoHD at a nondiscounted price, contracts are unnecessary.

    Yes, the MSD increase will certainly reduce sales of the TiVoHD. But not by much: $36 a year is not a lot, and it only affects a small portion of the market. The decrease from $16.95 to $12.95 will drive TiVoHD sales higher by much more.
     
  14. holligl

    holligl Member

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    As long as they grandfather the previous MSD, the new lifetime cost would equivalent to 4.8 years, not even considering the time value of money. Glad I pulled the trigger earlier. We will probably keep our S2 Lifetime rolling as long as there is an analog feed (may not be that long), just for overflow programing we don't need on the THD.

    TiVo needs to recognize that until SDV is addressed, they will have one major disadvantage/flaw in comparison to the cable company equipment.
     
  15. ufo4sale

    ufo4sale Well-Known Member

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    I have several TiVo's. I transferred a seres II lifetime to the Series III when they ran the first promotion. I then tried to transferred a series II lifetime to the TiVoHD not realizing that I already transferred that same lifetime to the Series III last year. I did the only thing that made sense. I signed up for the 3 year plan at 6.95 a month.

    The series II TiVo that the lifetime service was up on automatically switch to 6.95 a month without a commitment plan. That was my understanding when I took TiVo up on their first promotion lifetime offer.
     
  16. greg_burns

    greg_burns Now in HD

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    Mine too. :mad: :rolleyes:
     
  17. ufo4sale

    ufo4sale Well-Known Member

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    I think I spoke to soon. TiVo royally screwed up several of my TiVo's on manage my account. Now I get the privilege to speak to one of the nice folks over a customer service to try and get this all straighten out. What's with the sarcastic face?
     
  18. greg_burns

    greg_burns Now in HD

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    Rolling my eyes at Tivo. :p

    Good luck.
     
  19. alyssa

    alyssa Active Member

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    Pony has said he'd look into the Box's we transfered the Lifetimes from. Lets *HOPE* we get some acknowledgment of our situations.

    I mean, after all we are Tivo's most loyal customers. A tip of the hat would go a long way. It could only be for owners who are in the know.
     
  20. HDTiVo

    HDTiVo Not so Senior Member

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    Yes, exactly. The higher prices and terms drive overall profits down, while lower prices and less terms drive profits up. That is within the range of the reasonable numbers we are dealing with; for as counter example, $3.95/mo for service probably drives profits down not up.

    In reality they didn't even need the contracts. That just drove sales away and costs excessively high. In reality, on average people who get TiVoes keep them around for a long time without any contractual bind. A related irony here has been that old TiVoes have been discouraged from being resubscribed. Old TiVoes incur virtually no SAC and certainly zero HW subsidy. It was all quite screwy.

    Now the $12.95 is much better, but even the 1yr contract is not a good idea, just as you mention too.

    $6.95 to $9.95 is a big jump. I don't believe looking at it as $36 per year and saying that's not much is the right way to predict the effects. Its not that those aren't literally true numbers, but the way people behave/react in the marketplace doesn't comport with looking at it from that angle.

    In the end predicting that 16.95 to 12.95 will boost more than 6.95 to 9.95 takes off is pretty hard. We don't know what the mix has been. We don't know how much TTG/MRV would affect the mix now that there is much greater reason to have multiple hi def units. There are the myriad circumstances like the example I gave earlier which is common to many multi-TiVo owners where getting a THD and keeping an old S2 subbed really means the old S2 is costing me $9.95 a month, which means I drop the S2 and still pay $6.95 for the THD. So TiVo doesn't gain $3, it loses $6.95.

    So it is a very muddy thing to predict. If it were me, and especially if it were TiVo with its poor predictive track record, I'd say I'll take the small loss on the THD units because the $6.95 contributes enough margin to help pay for the entire corporate expenses, and I'd let myself have a real nice Q4 relative to anything I've seen in a very long time, and let those results generate buzz everywhere from consumers and retailers to wall street; and then I'll decide whether to raise that price a bit because the sales are justifying it.
     

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