But can the new low-cost HD recorder help TiVo turn around its fortunes? The DVR service has seen its subscription growth crawl to a near halt after losing its marketing partnership with satcaster DIRECTV more than a year ago. (It reported having 4.3 million subs in May.)
I believe that the $299 "TiVo HD" recorder will appeal to TiVo enthusiasts and other tech-savvy HD owners. TiVo still has a strong brand name, particularly in urban areas and among well-educated consumers.
But I don't believe that it will generate the kind of subscription growth that the company needs for long-term profitability and survivability.
Why? Three reasons:
1. Set-Top Fatigue
Americans are tired of buying TV-based set-tops that clutter the living room. Most already have a DVD player, a VCR (yes, many people still have them), a cable or satellite box, a video game console and perhaps a few other boxes sitting around. So why buy yet another set-top when you can lease one from your cable or satellite operator? Sure, the CableCard feature will enable you to replace your cable box with the TiVo set-top -- but you still have to buy the TiVo.
2. Doesn't Work With Satellite
TiVo's new HD DVR will work with cable, but not with satellite. DIRECTV and EchoStar combined represent more than 25 percent of the viewing audience, which is a large percentage to dismiss at launch. (The device also won't work with cable's new "Switched Digital Video" technology which is expected to be rolled out by several operators late this year; TiVo says it's working on a solution but that could seriously hamper the company's efforts to win over cable subs.)
3. It May Be Too Late For Some
There are now more than 30 million U.S. homes with high-def sets and many of them have already chosen a high-def recorder. And there's no evidence that they don't like the one they have chosen. If TiVo had launched a low-cost HD recorder a few years ago, things could have been different, but it didn't.
So congrats to TiVo for (finally) introducing a low-cost HD DVR. But it does feel like it's a little late to the game.
TiVo's hopes of long-term success continue to rest on getting more licensing agreements with the cable and satellite operators.
Next: CNET's Review of TiVo's new HD DVR.
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