Tivo Case Study
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Introduction
TiVo was incorporated in 1997 they intended to create an interactive television system that developed the idea of recording digital video on a hard disk. TiVo allowed consumers to watch their T.V shows when they wanted to watch them by recording, playing back, and pausing live television. TiVo has now bundled its services with many companies, but at one point Direct T.V accounted for 70% of TiVos costumers. Effective marketing and innovation have made TiVo the best known DVR in the industry. TiVo has always considered itself as a hardware provider and a service provider and now seem to be shifting to an all service future. Despite having the strongest brand name and one of the largest customer bases TiVo has suffered millions in operating losses. In 2003 a massive transaction from analog to digital DVRs took place. TiVo has been quick to respond to changes in the market by upgrading the features and refining performance. But, the new digital technology has caused TiVos market share to drop as competition grows quickly.
Opportunities
The embryonic DVR industry is a huge opportunity for TiVo. The market for television related devices is enormous. The demand for DVRs is rapidly growing as first time consumers are becoming more familiar with the products this gives TiVo the opportunity to get new customers without taking market share. TiVo also has the opportunity to mass produce a more basic upgradeable model of their DVR for less cost and eliminating the monthly fee. The more basic model could possibly cause TiVo to lose monthly revenues, until systems are upgraded, but would allow TiVo to lower cost and conserve engineering resources. TiVo also has the opportunity to enter into new partnerships with cable and satellite providers as the demand for DVRs increase and more television providers gain interest. Last, TiVo has the opportunity to conduct its operations on a global scale; America isnt the only country that enjoys watching television.
Strengths
TiVo has diversified itself in the industry by promoting their system as user friendly and innovated features such as viewing digital photos wirelessly from a P.C and even a suggestion engine that selects consumer preferences. Marketing seems to be the best competence TiVo has thus far. These unique marketing techniques have made TiVo the most well known DVR and set the standard in the market. Many consumers acknowledge DVRs as TiVos.
Threats
A major threat to TiVos market share is the low barriers of entry into the DVR market. Demand is growing and new customers are almost always first time buyers this brings a lot of competing interest into the market. Consumers are seeing more advertising for generic DVRs with a price so much less its hard for consumers to ignore. While some still chase the name and user friendly system others will gladly take more complicated less popular DVRs for the price cut. Competition is growing rapidly in the DVR market which leads to another threat, many cable and satellite companies such as Comcast and EchoStar are interested in manufacturing their own DVRs and offering them at discounts to subscribers with little or no monthly charges. Price wars are beginning to heat up between television providers and TiVo will have to be able compete with their economies of scale. Another threat is the buying power of television providers such as Comcast, Direct T.V, and Dish Network these communication giants have a high degree of influence on end users and purchase a substantial portion of DVRs. Last, a threat TiVo must face is the possibility that consumers will demand DVRs built into the receiver or television making the stand alone DVR obsolete.
Weaknesses
Consumers do not want to pay a monthly charge for TiVo along with their high cable and satellite bills. When television providers provide lower or no monthly charges for their DVR services consumers tend