Business Week has more:
The five-year-old company faces an onslaught of competition, and its strategic position seems hopeless. Most of its customers buy stand-alone boxes, then pay $12.95 a month for TiVo’s “time-shifting” service. Now, cable companies are beginning to offer similar services for lower subscription rates with no up-front cost. Worse, Rupert Murdoch’s DirecTV, TiVo’s biggest customer, is considering using technology from another Murdoch company to replace TiVo in at least some of its satellite boxes. Investors certainly are spooked. TiVo’s stock is down 50% since last July, to less than $7. “People are assuming the worst,” says analyst David Farina of investment bank William Blair & Co.
But tap that pause button for a moment. A close look at CEO Michael Ramsay’s new plans for the company suggests that any requiem for TiVo may be premature. He’s pushing to make TiVo less dependent on stand-alone boxes by striking alliances to have TiVo’s software incorporated into hot-selling consumer electronics such as DVD recorders. He’s aiming to get more revenue from subscribers by offering them cool new features, including satellite radio, digital photo editing, and the ability to surf the Web from TiVo boxes. And although many of his customers get TiVo to avoid advertising, he expects to build a significant business from selling opt-in ads specially crafted for his much-coveted audience. “TiVo has a lot of irons in the fire. I wouldn’t write them off just yet,” says analyst Michael Paxton of researcher In-Stat/MDR.
The strategy could remake TiVo. While the company now gets 90% of its revenues from basic digital recording — customers who spend $12.95 a month or $299 for lifetime service — Ramsay expects that to drop to 33% in a few years. The rest, he figures, will be split between premium services and advertising. “TiVo can not only survive, we can grow and thrive,” he says.