Summary of TiVo's new pricing announcements

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Hi Folks! Based on your recommendations, here is a separate, concise thread summarizing what's going on with our new pricing.

This is NOT a discussion thread. If you have comments or opinions or general questions, please post in one of the other threads. We want to hear from you, but not in this thread. But, if you have clarifications or suggestions on how we can improve the clarity, please post here.

This is also NOT a philosophy thread. It's not about why we're doing things or how it affects TiVo's financial well-being or our market position or anything like that. This is just about the nuts and bolts of how it works. There are other threads where we discuss the philosophy.

The post below is fairly detailed and goes into the types of questions that many customers won't ask (but are of course important for detail-oriented forum members).

Want a simpler summary of what was announced? Check either of these:

• The press release: http://www.tivo.com/cms_static/press_82.html
• The official TiVo blog: http://blog.tivo.com/tivo_blog/2006/03/if_i_had_a_doll.html and http://blog.tivo.com/tivo_blog/2006/03/post.html
• TiVo.com: http://www.tivo.com/2.0.asp and the FAQs (http://www.tivo.com/2.2.asp)

* * *

On Wednesday March 8, TiVo announced two things:

1. Product Lifetime is no longer offered for new subscriptions online (as of Thursday, March 16, 2005).
2. Some brand new pricing options are now available, including bundled pricing (service plus a box for one monthly fee). More details below.

Everything else, including existing subscriptions, is unchanged.

Section 1: What's NOT changing

For existing subscribers: If you’re perfectly happy with the TiVo pricing you have and had no plans to purchase and activate a new TiVo unit, then you’re completely unaffected.

• Your monthly stays at $12.95 (or $6.95 if you have the Multi Service Discount).
• Any existing Product Lifetime contracts are still honored.
• Existing Multi Service Discount rules are unchanged.
• Existing rules about ownership transfers and service transfers are unchanged.
• Existing gift cards are still valid.

Section 2: Product Lifetime no longer an option

Here are the details about Product Lifetime going away:

As of Thursday, 3/16, you are no longer able to choose Product Lifetime when you activate or re-activate service via www.tivo.com/activate/ or Manage My Account (http://www.tivo.com/manage/).

This means that if you don't have Product Lifetime already, you won't be able to get it online. Existing customers cannot convert their existing monthly contracts into Product Lifetime online. It is no longer available as an option.

Is there any way to get Product Lifetime right now? Yes. There are a few ways to get Product Lifetime even now:

• You have until 4/15/06 to call and activate Product Lifetime service on any DVR except DVRs purchased via one of the new bundled pricing options (see below). Activating Product Lifetime Service is not available online; you must call TiVo Customer Support (1-877-367-8486) in order to activate Product Lifetime service. After 4/15/06, this option is no longer available.
• Due to the terms of our relationship with Humax, however, new Humax DVD Recorder products (DRT400/800/2000) not previously activated for service (that is, they have no activation history) will continue to be eligible for Product Lifetime service activation. They are not affected by the 3/16/06 purchase cutoff or the 4/15/06 Product Lifetime activation cutoff. Again, you must call TiVo Customer Support in order to activate Product Lifetime service. Humax DVD Recorder products which have already been activated for service have until 4/15/06 to upgrade to Product Lifetime service. After 4/15/06, Humax DVD Recorder products with an activation history will no longer have Product Lifetime service as an activation option.
• If you already possess a Product Lifetime gift certificate or gift card, you may call Customer Support to activate Product Lifetime using your gift certificate or gift card (but note that these are no longer for sale and have not been offered for several months, so if you don't own one already, you won't be able to get one).
• Certain contests and promotions may offer prizes that include Product Lifetime.

If you have a special situation not covered in the above, please call TiVo Customer Support (1-877-367-8486), explain your situation, and they will do their best to help you.

Note that NONE of the units sold from tivo.com currently are eligible for Product Lifetime (including the Web specials). That's because all of these units are currently sold as a bundle, and bundles are not eligible for Product Lifetime. (See the next section for more about bundles.)

Section 3: New Pricing Options

Thanks to our new options, there are now two types of service pricing for the TiVo service:

1. Bundled pricing
2. Service-only pricing

Each of these are summarized next.

1. Bundled pricing: Starting Monday March 13, if you buy a new unit from TiVo.com, you can take advantage of the new bundled pricing, which combines the TiVo service with a new 80-hr standalone Series2 DVR for a single fee.
   
   NOTE: On tivo.com, the official name for bundled pricing is "TiVo Package."
   
   See http://www.tivo.com/buy to take advantage of this pricing.
   
   Basically you can get a unit with no upfront fee. You'll sign up for either a monthly fee for one, two, or three years, or you'll prepay service for one, two, or three years.
   
   These options ONLY apply if you purchase from tivo.com. It does not apply to retail units or other units you may possess -- for service on units you already own, please see section 2 below under "service-only" pricing. (We did announce that we are working with retailers to make bundled options available there as well, sometime in the future.)
   
   Here are the pricing choices:
   
   • The price for a TiVo box and a one-year service commitment is $19.95 a month, or $224 prepaid.
   • The price for a TiVo box and a two-year service commitment is $18.95 a month, or $369 prepaid.
   • The price for a TiVo box and a three-year service commitment is $16.95 a month, or $469 prepaid.
   
   The box in question is an 80-hour standalone Series2 DVR.
   
   Bundles that include other types of boxes (e.g., the upcoming Series3) have not been announced.
   
   The 30-day money back guarantee does apply to bundle purchases. Cancel service within the first 30 days and return the box, and your entire bundled cost is credited back. (You'll have 15 days after you cancel to return the box, or else you will be charged the retail value of the box.)
   
   About the commitment period:
   • If you cancel before the end of the commitment term, you will be charged the remaining balance on your service commitment, up to $200. You get to keep the box.
   • For prepaid bundles of box and service, there is no early termination fee but after the 30-day money-back guarantee period, no refund will be given.
   • Here's what happens after your commitment period is over: If you do nothing, you will continue to be billed each month at the same rate as your original contract. For example, suppose you buy the bundle with $19.95 for a one year commitment. After twelve months, by default, you'll continue to be billed $19.95 per month. Or, if you purchase the bundle with $469 prepaid (which includes 3 years of service), after 36 months you will start being billed $16.95 per month. Once the commitment period is up, you can cancel at any time.
   • Once the commitment is up, you can call us and switch to the service-only monthly or prepay pricing option of your choice (see the next section). For example, you can call and switch to a $12.95 per month service-only plan (with a 12-month commitment).
   
   
2. Service-only pricing: If you buy a new unit from retail, or have an existing unit with no service, you'll purchase service-only pricing.
   
   What does "service-only" mean? It means you're not getting a box as well, you're only buying service. That's the new name for the type of service we've been selling to date.
   
   The existing monthly fee of $12.95 with a one-year commitment is unchanged.
   
   What does that mean? It means that next month you can go out to Best Buy, pick up a unit, and then activate it for $12.95 per month (with a one year commitment), just like today.
   
   It also means that if you pay $12.95 per month today, your monthly cost doesn't change.
   
   It also means that if you don't have a service commitment today (e.g., you purchased service before there was a one year commitment, or you're past the twelve months) you don't have any new service commitments for as long as your contract remains uncanceled.
   
   The existing Multi-Service Discount (MSD) fee of $6.95 is also unchanged. There are more details about MSD below.
   
   If you cancel your service-only contract prior to the end of the commitment, you are subject to an early termination fee (currently $150) or the balance of your contract, whichever is less.
   
   If you are not within a commitment period, you can cancel service at any time.
   
   Service-only prepay options: Service-only prepay options are available starting Friday, March 17. These prepay options let you avoid a monthly fee by pre-paying a lump sum. There are options for one, two and three years of service. Here are the details:
   
   • For one-year of service, you can prepay $155.
   • For two years of service, you can prepay $299.
   • For three years of service, you can prepay $399.
   For service-only prepay packages, no early termination fee applies, but there is no refund given after the 30-day money back guarantee period.
   
   Prepay packages are subject to our 30-day money back guarantee. Anytime within the first 30 days you can call us for a refund of the amount prepaid and cancel your service.

For Multi-Service Discount (MSD):

First off, please check out the existing FAQs for MSD if you're unfamiliar with this program, since the basic rules haven't changed:

http://www.tivo.com/1.6.2.asp#MSD

• Existing MSD subscriptions are unaffected. You pay $6.95 today? That's unchanged, unless you cancel your service on that unit or you cancel service on the full-price subscription that qualifies you for the discount.
• Suppose you buy a unit at retail. You can still activate monthly service-only for only $6.95 (as long as you have a full-priced subscription on your account to qualify you for the MSD pricing).
• The new bundle options and prepaid service-only options are not eligible for MSD -- that means if you have an existing unit you CANNOT get a new bundle and pay $6.95 for that bundle instead of the fees listed above.
• However, the new bundles described above (as well as the service-only prepay options) ARE considered to be full-priced, so they DO qualify any other monthly service-only contracts for MSD.
  
  For example: Suppose you have a Product Lifetime subscription on a Series1. You want to get a new Series2 so you purchase one of the new bundle options. You pick $18.95 for a two year commitment. The new bundle is NOT eligible for MSD, so for two years it will be $18.95. After those two years, however, it is now eligible for MSD, so you can call us to switch to service-only pricing and the monthly price will be reduced to the MSD price. (If you don't call us, you'll stay at $18.95 per month indefinitely.)
  
  Another example: Suppose you have a Series2 with a monthly plan on $12.95. You want to get another Series2 for your bedroom, so you purchase one of the new bundle options. You pick $469 prepaid. Immediately and automatically, your existing $12.95 monthly fee drops to $6.95 per month.
  

Phew, that's the basics!

Section 4: Q&A

Here are some other questions and answers:


Q. Why so many pricing options?

A. Testing showed that we needed to offer consumers a wide range of options to fit their needs. If you’re worried this is too complicated when you talk to your friends — well, you don’t have to offer all options to every friend. For some friends, I’ll tell them, “Hey, you can now get a brand new 80-hour TiVo standalone Series2 unit for no upfront fee, starting at just $16.95 per month.” For other friends, perhaps someone who didn’t like monthly fees, I’d steer them towards one of the prepay options, depending on how long a commitment they want.


Q. Did you raise prices?

A. No. Your existing service charges are unchanged. The basic option of $12.95 per month for service (with a one year commitment) if you own a unit is unchanged. With the new options that are also available, consumers will pay far less out upfront to own a unit: You can now get an 80-hour Series2 DVR with no upfront fee starting at $16.95 per month (with a three-year commitment).


Q. If I purchase a bundle, do I own the TiVo box at the end of my service commitment or do I have to give it back?

A. You own the TiVo box at the time of purchase. If you decide to cancel service after 30 days, you will be charged a cancellation fee, but you keep the box. Please see full terms and conditions.


Q. What happens if my TiVo box breaks during my service commitment?

A. All TiVo boxes are subject to the TiVo DVR Limited Warranty. Please see the full TiVo DVR Limited Warranty for details (http://www.tivo.com/2.6.1.3.asp). During the term of your commitment, TiVo will extend the length of the parts warranty for the length of your term for TiVo-branded DVRs. If your box breaks, TiVo will replace it for a reasonable fee.


Q. Are the new bundle options available in Canada?

A. Stand by for the answer to that. The $12.95 per month service-only plan is available in Canada, no change there.


Q. Can I continue to transfer the ownership of my Product Lifetime contracts (e.g., give it to a neighbor, cousin, etc.)?

A. Yes, just as you can today. You can give your DVR to someone else and the Product Lifetime service goes with the box. Either you or the recipient must call TiVo Customer Support (1-877-367-8486) to transfer the ownership.

NOTE: As always, buyer must beware in cases where you purchase a unit with Product Lifetime from a stranger. Be sure that you have the ownership transferred to you as soon as possible, and make sure the seller is not planning on transferring the service via the grandfather transfer or some other transfer. If they do so, your only recourse is to mediate with the seller.


Q. Can I transfer the ownership of my bundled package to someone else and have them complete the balance of the contract?

A. No. This is not allowed today on monthly contracts, and is not allowed with the new bundles either.


Q. Can I transfer my Product Lifetime service contract to new hardware?

A. For Product Lifetime, the answer is no, just like today. This isn't really part of our announcement and the rules haven't changed, but since this is a frequently asked question I'm including it here. Product Lifetime is always tied to the specific box that you activated, as defined in the terms of the Product Lifetime Description: http://www.tivo.com/0.4.asp

There are only four exceptions:

1. 30-day money back guarantee: During the first 30 days after you activate your Product Lifetime service, you can transfer freely from one unit to another.
2. Grandfather transfer: The one-time "Grandfather transfer" (for people who purchased Product Lifetime on or before January 21, 2000 [as in, more than six years ago], and who have not already used their one-time transfer) is still allowed and will also be honored for future hardware releases from TiVo, such as the Series3. If you have any trouble when you call, please mention KDB code 09-07-04 to the agent.
3. Authorized warranty replacement:In the event that a unit with Product Lifetime malfunctions, you can opt to have it repaired under warranty by the manufacturer. If the manufacturer (whether it's TiVo, Humax, Sony, etc.) cannot repair the unit and opts to replace it, we will transfer the Product Lifetime service to the new unit. In most cases this happens automatically. If not, you can usually make the change yourself in Manage My Account or by calling customer support.
4. Extended warranty through a retailer: As a courtesy, TiVo will usually allow a Product Lifetime service transfer in the case that you purchased an extended warranty from a retailer, and the retailer was not able to repair the unit and instead replaced it with an equivalent unit under the terms of their extended warranty program. Note that customer support might ask to see evidence of the extended warranty agreement.

Q. Can I transfer an existing monthly service-only contract or bundled service contract to new hardware? Suppose I get a box from retail or my cousin or eBay and want to switch service. Or I buy a shiny new Series3?

A. Yes. We call this a "Service Number Change" in Manage My Account and you can handle this transaction yourself at any time by going to http://www.tivo.com/manage/

This option is available today on monthly service-only contracts, and will still be available for all plans (except Product Lifetime) once the new pricing options go into effect.

Note that the old unit will no longer have service, which means it probably will have limited or no function.

Note also that the balance of your service commitment is unchanged, and transfers to the new hardware as well.

Suppose, for example, you purchase a bundled service package with an 80-hour Series2 DVR and a three year commitment at $16.95 per month. After 17 months you want to switch your service to a new Series3. You can do that. You'll purchase the new Series3 at retail, use Manage My Account to change your TiVo Service Number on your contract, and now your Series3 is activated at $16.95 per month, with 19 months left on your service commitment. Your Series2 unit will no longer have service.

Note that your Series3 unit would probably NOT be eligible for any rebate (if applicable), since our rebates typically require a new service activation.


Q. What about unredeemed Product Lifetime gift subscriptions? Will those still be honored after Wednesday 3/15?

A. Yes. We will honor your unredeemed Product Lifetime gift subscription. When you go to redeem your Product Lifetime gift subscription, it can be used on future hardware platforms such as the Series3.

Note that we stopped selling Product Lifetime gift subscriptions several months ago (and removed them from the Rewards program earlier this year, there was a thread before that happened). So if you don't have one already, the above does not apply to you.


Q. What about unredeemed 3-, 6-, or 12- month gift subscriptions?

A. They can be applied towards any service-only plan until they expire. The current cash value of the card ($12.95 x the number of months) will be applied against the cost of the service-only plan you choose. You'll only be responsible for the balance.

They cannot be applied towards bundled pricing.


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EDITS: 12:20pm to 12:43pm on 3/10/06:
* Added (per ChuckyBox's pointer suggestion) a pointer from bundlied to service-only for units you already own.
* Added a new paragraph clarifying Product Lifetime's non-availability after next Wednesday for existing subscribers (per jfh3's question).
* Expanded the Q&A section on Product Lifetime service transfers.
* Added a note of caution when buying a unit with Product Lifetime.

EDIT 1:10pm: Changed grandfather date from January 20 to January 21. Added the KDB number. Added the 30-day money back guarantee rule. Added some clarification per Dan203's suggestion.

EDIT 4:45pm on 3/13/06: Updated time references about "next week" (which is now "this week") to be more specific, added details about the new service-only prepay options.

EDIT: 7:55pm on 3/13/06: Additional clarifications/exceptions for Product Lifetime going away

EDIT: 10:45am on 3/14/06: "prepare" -> "prepay" (thanks Megazone). Also more specific details on Humax models. Indicated more details about when Product Lifetime goes away -- 8pm on Thursday 3/16.

EDIT: 12:45am on 3/17/06: Updated article now that Product Lifetime is removed from tivo.com. Various small wording changes. Added some URLs and fixed the broken URL DVDKingdom pointed out.

EDIT 6:25pm on 3/21/06: Updated article with new Product Lifetime extension to 4/15.

EDIT: 9:20am on 3/23/06: Clarified that none of the units sold from tivo.com today are eligible for Product Lifetime. Some minor wording clarifications.

 

Hi Allie -- absolutely. You own the unit so you can either sell it or keep it, as you wish, to whoever you wish. To activate the unit, whoever owns it can choose the service-only price of their choice -- so, either $12.95 per month (with a one-year commitment), or $6.95 if they already have a full-price unit on their account), or one of the new prepay service-only options for 1, 2, or 3 years.

Best regards,
Stephen

 

Sorry about that -- we haven't announced them yet, so that's why it's a bit vague. Basically instead of paying $12.95 per month (with a one year commitment), you can prepay for 1, 2 or 3 years; we have not disclosed the pricing on those prepay service-only options yet. Once they're announced next week, I will edit the original article to be a bit clearer.

(Of course, it might be the MSD price instead of $12.95 if you have another full-price unit on your account.)

EDIT: Clarity and MSD point.

 

Hi Dan, the reasoning behind that is that we can't move you to $12.95 unless you give us a further one year commitment, and we don't want to do that to you without you telling us that's what you want. Instead, you have to confirm you want $12.95 per month and agree to a new one-year commitment. This is identical to what cell phone companies and other service providers do today.

 

Yup! Same as today. I've expanded the relevant section above to make this clear.

 

Are you expressing the opinion that his post was an opinion? Not allowed! (Heh, I crack myself up.)

Seriously, though, there's a fine line. My main point was that this thread shouldn't have extended debates about why or why not, since this is an informational thread that's supposed to be concise, and there are other threads where we can all debate the whys and wherefores and how comes.

 

#1 happens, although (assuming you don't mind another service commitment) it may well be in your interest to call TiVo and change to a service-only plan.