TiVo Harvard Case Solution & Analysis

Introduction

TiVo was the pioneer of DVR technology that was introduced in the market in 1997. Jim Barton and Michael Ramsay, cofounders at TiVo, noticed a bullish trend in the television industry and recognized that television was the key attracting home instrument when compared to the Internet. They set out efforts to introduce a television that would encompass a home network technology. Before the foundation of TiVo, an average American household owned 2.4 television sets. Television screening was wide spread in United States of America. People used to spend approximately 7.4 hours per day in watching television on average. This habit was gratifying at a huge pace in America with an intensive purchase trend seen for larger television sets at that time. The reason being, television viewing was considered a relatively passive activity. Most of the networks prevalent at that point of time used to broadcast shows in the prime time from 8 p.m. to 11 p.m.; which accumulated 25 million viewers on average.

tivo case solution

TiVo became successful in the television industry, as it enabled its customers to pause, fast forward, record and give feedback through the thumbs up and thumbs down button. It partnered with Sony and Phillips for outsourcing their services and to get through with its black box distribution. TiVo’s primary focus was on Web and Personal relation aspects and its black box was priced distinctively ranging from best to basic black box. Price range for TiVo lied between $499 to $999 depending on the recording capacity of the television set, with service subscription of $9.95 per month, $99 per year and $199 for life time. TiVo was successful in the market place but it had abrupt or blur perceptions about its televisions sets. Now TiVo wanted to revamp its positioning in the market, hence, it decided which target market to choose. However, bring early adapters at that time was the best possible option. With a good penetration rate of 0.04% and addition of 14,000 new subscribers every quarter, TiVo had to use this as strength to revamp its awareness in the market place.

Key Issues

The key issues faced by the organization are related to its awareness. Although, TiVo was successful in sustaining its image as one that has made TV viewing more enjoyable, TiVo subscribers didn’t know what TiVo was produced for rather each had their own perception of TiVo. With a slow growth and penetration in the television industry of about only 0.04% and lackluster sales, TiVo was perceived to have a blur image in mind of its customers. It is seen that TiVo was arbitrarily referred as personal Video Recorder (PVR), Digital Video Recorder (DVR), Personalized Digital Recorder (PDR), Intelligent Video Recorder (IVR) or on-Demand TV.

TiVo had some gross malfunctions with respect to its design. The glitch is whether TiVo is designed for advertisers or it is designed for users. In addition to this, not only its program guide was confusing but the process of going through the menu of the television set was full of hassles too. Moreover, switching from one channel to another caused the television sets tube to either break or freeze. In addition to this, there was a problem with the Digital Video Recorder; its pause and replay options gave flexibility to the users to watch the program with pauses but this feature was hard to explain. Hence, this feature was easy to understand when experienced in person rather lengthy descriptions of the television set. Now, TiVo needs to promote its brand identity through the use of any of the four targeted television commercials, namely Network Executive, Sports Education, Cop, and Kids. Out of the four options, only Network Executive is under consideration.

Qualitative Analysis

1.     SWOT Analysis

Strength

1. Pioneer in digital video recorder (DVR)
2. High number of quarterly subscribers
3. High level of customer satisfaction
4. Partnership for distribution with Sony and Phillips
5. Availability at the national level through renowned e-stores such a Best Buy
6. Revenue accumulation through multiple sources

Weaknesses

1. Lack of brand awareness amongst its buyers
2. Confusing program guide and unit menu
3. Faced difficulty in conveying urgency to TiVo’s distribution partners.
4. Perceived expensive when compare to other good, and extra featuring television sets
5. Very limited promotional activities
6. Slow penetration rate of 0.04%

Opportunities

1. Replay TV by Replay Networks and Ultimate TV by Microsoft didn’t plan promotion in TiVo’s direction.
2. Renowned and credible partnerships with Sony, Phillips, Direct TV, Discovery Channel HBO etc
3. Enormous demand for television related devices in the market place
4. Growing demand for digital video recorder (DVR)

Threats

1. Many innovative television set producing competitors.
2. Low barriers to enter the industry

Inability to help consumers skip ads such .........................

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TiVo is a digital video recorder that allows viewers to watch what they want, when they want to watch it. Fourteen months in the launch of sales are very disappointing. Brodie Keast, vice president of marketing and sales, wants to combine a catchy communications campaign, the product is complete with satellite television receivers, aggressive pricing and sales support in order to stimulate demand for new categories. An important objective is to position TiVo as a strong brand is a major player before joining Microsoft. TiVo has difficulty selling new and complex electronics product that is designed to change consumer habits radically. In addition, the impact of TiVo on television and advertising industry is ambiguous, and TiVo has to demonstrate that it can play a constructive role in the future media landscape. "Hide
by Luke Wathieu, Michael Zoglio Source: HBS Premier Case Collection 16 pages. Publication Date: November 22, 2000. Prod. # 501 038-PDF-ENG

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