TiVo in 2002 Consumer Behavior

MARK 5311

Zino Egweh Johnny Ferraro Brittany Culberson Throy Campbell Amanda Rodriguez Heungsun Lim

TABLE OF CONTENTS

Introduction

What is TiVo

TiVo v. Competitors  Dilemma  Consumer Behavior Model  Options  Recommendations  TiVo Today
 

Financials

Q&A

conflicting times. busy lives How can we maximize the enjoyment of discretionary time? Gary Becker and discretionary time VCR   Record your shows Hard to program. does not allow you to record and play a tape at the same time Problems .HOME ENTERTAINMENT BEFORE TIVO       Satellite and cable channels present a dilemma for consumers Too many favorite shows. not picture perfect clear.

1999: TiVo made its initial public offering for $16 per share  .INTRODUCTION  Then came TiVo  TiVo was founded in 1997 by Mike Ramsey and Jim Barton TiVo revolutionized the home entertainment industry when it pioneered the DVR technology  PVR=DVR personal/digital video recorder  September 30.

fast forward through commercials. Business Week) DVR allows consumers to record TV programs on a hard disk instead of video cassette (VCR)  TiVo consumers can watch their favorite shows during leisure time  TiVo consumers can pause live TV.HOW DOES TIVO WORK  TiVo captures TV from satellite. cable and air. go back for instant replay and watch programs at a convenient time  . turns it into a digital form and stores it in a hard drive (Stephen Wildstrom.

directors.com (current market product) .COMPETITION COMPARISON o TiVo          Has become a verb in households. or even sports teams and automatically records them for you Offers parental controls in the form of “TiVo Kidzone” by pre-screening programs for age appropriate rating “TiVo to-go” allows a viewer to transfer recorded material to personal laptops. (This feature is only available on the series 2 and higher. other TiVo customers (mainly used for home video) and other mobile devices TiVo online services allow the viewer to set up and maintain their TiVo digital recording device via internet access.e.com “WishList” feature allows viewer to search for specific actors. I TiVoed that show last night Easier to use according to consumersearch. i. Can download rented or purchased movies from Amazon.) Requires separate “TiVo box” to be purchased along with monthly service fees “TiVo season pass” allows viewers to record every episode of their favorite shows whenever they play. not available at time of case study.

generally less than that of TiVo Service can be rented if desired instead of purchased Many programs do not come with contracts allowing unrestricted entry and exit from the product Most cable and satellite TV providers offer this service Internet providers are offering similar products via the PC whereby viewers can download straight to the PC hard drive and watch video wherever they choose Both TiVo and other DVR products   Multiple tuners allow for multiple channel watching and recording simultaneously Both offer HD recording products (current market conditions) . internet providers can provide DVR service without additional monthly service fees.DVR COMPETITION      Many cable.

MARKETING STRATEGY  Originally very little spent on advertisement Once the product gained recognition. it would sell itself  Consumers would find a need for TiVo   Relied on customer evangelism  Believed satisfied consumers would persuade others PERCEPTIONS OF TiVo  Expensive  Consumers unwilling to pay $200 for box in addition to monthly subscription   High-tech VCR Too much hassle Families do not want another „gadget‟  Hard to maintain  “Spying”  .

But be warned. Julian Hearn.“TOO SMART FOR THEIR OWN GOOD”  Pioneers often overthrown by competitors It‟s not necessarily being first to market that counts. 2001  Generic  DVRs in abundance DirecTV  Other cable companies offering DVR bundled with cable box  Loss of market share  Unable  to turn a profit Not enough customers to offset costs . Kruder November 6. Brand Strategy Director. awareness is not the same as establishing a brand. It's being first to establish your brand in the minds of your target market that will ensure success.

The consumers way of life result in needs and wants. Consumer Biannual Survey:  Satisfaction. Technological Gadgets. TiVo conducted surveys which provided primary information. Information was gathered using a biannual consumer survey. Fun Facts TiVo Logs:  Diagnostic data  Discussed by using Dr. which begins the decision making process.BEHAVIORAL MODEL    In an attempt to better understand and satisfy consumer‟s needs and wants. Acquisition of and experience with the personal video recorder (PVR) impacts person‟s lifestyle and ultimately further purchases and product loyalty. Usability and Demographics Attitude Survey:  Viewing Habits. TiVo vs. which impact customers self concept and lifestyle. Life with TiVo. Responses enable TiVo to analyze internal and external influences. attitude survey and logs provided through consumer usage of the PVR. Rogers‟ Consumer Behavioral model .

BEHAVIORAL MODEL External (sociological) Internal (psychological) culture social class needs motives learning reference groups family marketing mix wants awareness Diagnostic Data Tech Gadgets Demographics personality perception attitude preference b e h a v i o r Demographics Tech Gadgets Diagnostic Data Viewing Habits Fun Facts S a t i s f a c t i o n U s a b i l i t y .

BEHAVIORAL MODEL  External (Sociology)  Demographics    78% of subscribers were 25 – 54 age group which comprise 60% of population Families with young children are well represented 71% of subscribers are home owners.4% would recommend .1% found the “Trick Play” (pause. Technological Gadgets  Compared to microwave (unavoidable component of everyone’s home)  Personality & Perception    Viewing Habits  69% of subscribers watched more television with TiVo TiVo impacted viewers’ day to day personal life and interactions with others 96% of users find it frustrating to watch television without TiVo Life with TiVo  Fun Facts   Behavior  Usability     89% perceived TiVo’s easy to use 95. rewind. fast forward) Satisfaction 90% of customers were satisfied with TiVo and 96. professionals with upper management occupations  Internal (Psychology)  TiVo vs.

OPTIONS  Product Strategies       Sell technology Develop unit that contains TiVo software and cable/satellite box in one Develop more features that appeal to public Develop a “lower-end”/more generic unit that is more affordable to company and public Develop software that more accurately tracks and analyzes subscriber data (demographics. programs watched.) and sell to marketing companies Protect valuable patents  Distribution Strategies   Sell standalone units at more electronic and super stores License software with all cable/satellite television services 13 . commercials watched/skipped. etc.

MORE OPTIONS  Promotion Strategies       Reevaluate advertising dollars and reallocate dollars to television ads during most watched shows. major sporting events and sweeps months Cut advertising budget Offer coupons/rebates on standalone unit purchase Offer free product trial on lower-end units Offer incentives to subscribers who influence enrollment of friends/family Offer free set up and training to subscribers  Pricing Strategies Immediately cut price on standalone units  Eliminate initial purchase of standalone unit and increase monthly subscription price for unit rental  14 .

video camcorder. coupons and/or rebates   “Life is better with TiVo.RECOMMENDATIONS Develop a “lower-end”/more generic unit  Immediately cut price on standalone units  Offer rental contract on standalone units  License software to cable/satellite television providers  Begin aggressive promotion programs   Refer-A-Friend and save! 70% of TiVo purchasers knew someone with TiVo prior to purchase  68% of TiVo purchasers were influenced in part by friends   Free trials. digital camera. MP3 player. PDA . DVD player.” TiVo more important than everything but my children  Ranks more important than VCR.

ensuring easier installation of Cable CARD products and underscoring the cable industry's recognition of TiVo's importance to their subscribers Comcast. Wind stream Communications.TRYING TO EXPAND MARKET   Bolsters international presence with launch of TiVo service at retail in Canada Develop a software solution that will bring the TiVo experience to users receiving their television signals through a computer Broaden relationship with NCTA  ANNOUNCED RELATIONSHIP WITH NCTA  Solidifying relationships with the cable industry.com. Music Choice Network  INTERACTIVE ADVERTISING & AUDIENCE RESEARCH PARTNERSHIP   Stop//Watch(TM) Rating Service to NBC & CBS Power//Watch(TM) Consumer Panel to Starcom & Carat . Jaman.

500 2.500 3.2007 Oct 31.2006 .000 3.2006 April 30.000 MSOs/Broadcasters TiVo owned 1.000 2.500 1.000 500 0 Oct 31.2006 July 31.SUBSCRIBER NUMBERS 4.2006 Jan 31.500 4.2007 July 31.2007 Jan 31.2007 April 30.

357 60.740 72.087 35.398 37.093 111.018 20.955 -47.882 45.629 -80.000 200.859 115.167 18.842 22.000 100.476 77.367 -79.728 42.634 37.714 17.275 72.596 300.985 170.000 0 Service & technology revenues Hardware revenues .947 -32.620 Hardware revenues Research & development expense Sales & marketing expense Net income (loss) 50.CONTINUED POOR EARNINGS As Reported Annual Income Statement 1/31/2007 1/31/2006 1/31/2005 1/31/2004 1/31/2003 217.170 Service & technology revenues 88.754 41.047 -34.

STAGNATED STOCK PRICE .

Q&A .

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