2011

BUSINESS STRATEGY
GROUP 1 FINANCE C o Samridhi Rathi o Archit Khandelwal o Sharul Singh Goel o Shivangi Srivastava o Karandeep Singh Sethi

[STRATEGIC INFLECTION : TIVO IN 2003 (A)]
Submitted to : Prof. Ray Titus

But despite having the strongest brand. Tivo reached the Inflection point in 2003. the most differentiated product in terms of features and one of the largest installed bases at that time. . the leading provider of digital video recorder (DVR) technologies and services in US was founded in 1997 by Ramsay and Barton. With the entrance on tivo in the industry the competition had increased to more than dozen competitors by 1998. In the case will discuss the reasons which led to this situation for Tivo and what strategies can be adopted by the company to overcome this stage.INTRODUCTION Tivo.

. AOL Time Warner. such as Cable.e. the industry in which Tivo operates can be explained using Porter¶s 5 forces model. Time Warner and Cox which are into providing Digital Set top boxes with built-in DVRs and their own services. that time it was the sole provider of DVR service but eventually it has increased to more than dozens including Comcast. Computer and consumer Electronic Companies were in position to enter the market by producing the product similar to Tivo at affordable Price. Bargaining power of Suppliers The suppliers of components for Tivo.EXTERNAL ANALYSIS The analysis of the external environment i. Rivalry among the Industry The tivo faces tough completion from the company named Echostar. which is quick eating away tivo¶s share in DVR segment. As such the company was forced to produce more cheaply. Satellite. which can be observed by the fact that at the time when the company was founded in 1997.equipped boxes with two tuners. by reducing the number of parts. Porter¶s 5 Force Risk of entry The risk of entry into this industry was low. Also Motorola which was the leading provider of cable set-top decoders. Bargaining Power of Buyers Tivo had a limited buyer base. There existed improper brand awareness. The buyers precieved the tivo¶s product to be expensive. enabling users to watch live one show while recording the another. etc. as a result many consumers were confused as to what Tivo DVR was and what it can do. started shipping DVR. Also there are the companies like Comcast.

. Strengths 1. INTERNAL ANALYSIS To discuss about the internal analysis we will discuss about the Strengths and weakness of the company. This made Tivo very difficult to hack. along with digital music and photos. Tivo users were rabid fans. 4.Threat of Substitutes Tivo DVR faced major threat from cable operators which controlled the programming to nearly 67% homes. 5. The Cables were still preferred by many viewers because of its lower price and convenience of having everything in one box. Tivo had the first mover advantage when it entered into this business. was soldered into the box. 2. Tivo designed its product in such a way that cost was low and manufacturing relatively easy since the unit was outsourced. Security and privacy was of much importance for Tivo. hence Tivo DVR¶s microprocessor containing Cryptography software. Tivo had audience measurement services which allowed buyers to analyze viewer behaviour 3. The another threat faced by Tivo was from ever upgrading Personal Computers which were capable of storing and retrieving TV shows. Almost all (97%) Tivo users were satisfied ± saying that they would recommend Tivo to a friend.

Tivo ± 10% p.a. 8. . which ultimately limited the number of subscribers. Cable TV service ± 30% p. Tivo was not good at decision making as a result it reached Inflection point in 2003. in particular what Tivo product could and could not do. It was required to be connected to TV and also phone jack or internet. . Tivo targeted ³Discriminating Enthusiasts´ as it consumer segment.e. Weaknesses 1. There were up to 6 cables that needed to be connected and most users needed help from customer service desk during installation. after which it was confused as to go for mass market or for product differentiation. 7. 4.a.6. The brand awareness was improper as the consumers were confused about what a DVR did and did not do. These consumers age between 25 and 45 years and had household income ranging from $70000 to $100000.a. Tivo had the ability to scale up to 100 million users without changing the underlying infrastructure. Tivo¶s churn rate was very low as compared to other subscription service. 2. Tivo installation was difficult. . Families with young children were very fond of Tivo becau se its Parental Control feature. Cell phone ± 33% p. i.. 9. 3. Tivo on the technological front could only handle English language.

2. since Cable still has the Lion¶s share of the market with 67% of the market. 4. Develop Set top boxes with two tuners. therey reducing the size and cost of set top box.SUGGESTIONS FOR TIVO 1. enabling users to watch one live show while recording another. It will provide the users with more flexibility. 3. Tivo should go in to have a deal to licen se its software to a major cable company. It should come up new units that combine DVD recorders with DVR hard drives. Tivo besides providing physical storage should provide its customers with online storage. This would be beneficial for both ± the company as well as the consumer. . Having online storage would enable Tivo to remove HDD from the set top box.

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