There are lots of economic factors affecting TiVo. TiVo has pressures of competition from cable and satellite providers who developed the same product as TiVo’s DVR. TiVo products are expensive. So, customers shifted from TiVo’s product to competitors’ products because of the availability of substitute products in the market. Market environment affected TiVo’s performance. Advertisement was not effective due to communication error and caused to decline in revenue.
Another aspect is that of advertising revenues which may be considered the mainstay of major players. In the case of TiVo customers, they have the option to avoid watching commercials, and this could lead to lowered revenues for the company. However, it does have a pop-up option by which customers could view various product advertisements at the bottom of their screens and click for further details. Thus, it is possible for cars, music systems; foodstuff and beverages, to name a few that could be advertised and purchased online through TiVo viewing. “As of today, TiVo has included 70 “showcase” advertising campaigns in its TiVo platforms for companies such as Acura, Best Buy, BMW, Buick, Cadillac, Charles Schwab, Coca-Cola, Dell, General Motors, GMC, New Line Cinema, Nissan, Pioneer, Porsche, and Target “ (11, 48-4).
Social factors affect the purchasing decision of the customers. Internet influences the people and causes to change their attitude. People give importance to quality. TiVo developed HD television in order to provide quality products. “HD products focus more toward quality of what is being seen and heard rather than the compactness like we saw a decade ago. High Definition sets include HDTV, HD broadcasting, HD DVD, HD Radio, HD Photo and even HD Audio” (47, 48-16). In order to develop good experience among customers, TiVo developed innovative products through merger with different competitors. The main strategy behind the development of digitalized video receiver was to provide good experience according to the customers’ needs. “As people’s daily life became busier and demanded more and more to attain the pleasure of watching TV, DVRs became the tool to suffice that trend” (8, 48-3). They give preference for entertainment even in busy life. One of the salient features of TiVo is that it is chiefly used by leisure class, who has both the money and time to indulge in such kinds of wholesome entertainment. Computers could store live TV signals that could be played back at the leisure of the viewers, at their will and pleasure. It could also be connected via internet, and viewers could view their favorite films and hear their preferred music being played through internet providers, at their own pace and convenience. TiVo technology is extremely versatile and user-friendly and it could be hooked onto iPods, laptops, mobile phones and other cellular devices for maximum usage and conveniences. This renders flexibility and mobility in its operations in that it could be made compatible anytime, anywhere and anyplace, without any kind of inhibitive features or restriction of use.
Rules and regulations of the government should be favorable to the company’s activities. Rules against the company’s activities would affect the company’s performance. TiVo target market is developed countries. So, it has good environmental situation for merger or acquisition. TiVo is developing qualitative products in order to provide a good experience to the customers. Their products are not harmful to the society.
Technology is one of the great advantages of TiVo. “Pioneered by Mike Ramsay and Jim Barton, TiVo redefined entertainment in many other ways, delivering the promise of technologies that were much hyped” (3, 48-1). TiVo developed different innovative technology products comparing to competitors. They added innovations in order to overcome the problems of competitors. TiVo maintained the lead in internet technologies through ability to connect DSL internet directly to television and attached video recording directly to cellular phone.
This has also been the underlying cause for its success and growth graphs in the competitive electronic entertainment market, which was dominated by major players like Sony, Nintendo, Atari and others.
“Digital video recorder market is located at the convergence of four established industries: Broadcasting and TV, software and programming, electronic instruments, and communication equipment” (36, 48-13).
“Disruptive technology” leads to both advantage and disadvantage to the products. Advantage is the factor that differentiates a product from other product. Disadvantage is an unfamiliar usage to the customer. (37, 48-13).
AOL participated with TiVo in the industry and undertook the services of TiVo products. Discovery communication and NBC participated with TiVo for advertising and promotional services. “AT&T helped TiVo to market and sell the service in Boston, Denver and Silicon Valley areas. BSkyB was the service partner for TiVo in the United Kingdom. Creative Artists Agency marketed and gave promotional support of the personal video recorder” (39, 48-14).
TiVo products are affordable to all sections of people in the society because it belongs to entertainment field. Cable and satellite companies involved in the industry. Availability of substitutes is the major challenge in this industry. It leads to shift of the customer one company to other. Another challenge is small control in the market. Competitive advantage is relevant in the industry.
One of the great competitive advantages of TiVo is disruptive technology which enables it to differentiate its products from others. Its products are quality oriented. TiVo took patent in order to avoid copying the product by competitors. R&D team makes sure that TiVo is more desirable from the users’ perspective in long term. Market team analyzes customer characteristics and help to develop strategies for the progress of the organization. TiVo could merge with the competitors in appropriate situation. It is also one of the advantages of the TiVo.
Threats of Entry
Economies of scale: While TiVo offers discounts, it does not offer the kind of attractive offers that customers would scramble for. Besides, it is necessary for TiVo to consider the actual value of ownership based on TiVo subscribers alone, and not its partnership subscribers. If they are able to reduce and maintain costs, they would be in a better position to achieve economies of scale. Besides, having restricted product lines could also deter achieving economies of scale, since customers have lesser varieties to choose from.
The fact remains that in case of TiVo, with its publicized “disruptive technology” it has been all along aided by DirecTV in its marketing efforts. (37, 48-13). Now that DirecTV would like to go in for its own brand of DVR, it has become necessary to consider other marketing strategies for reaching out to customers. The product differentiation that TiVo needs to do is to consider its independent revenues through subscribers and their feedbacks.
Capital requirements (barrier to entry)
One of the major areas that need to be attended is with regard to funds that are needed to sustain in industry, especially the electronic industry. In the case of TiVo, with stock price fluctuations being an exception rather than a rule, the trick would be how to appease investors without affecting sales.
Cost disadvantages Independent of size
Perhaps, one of the major disadvantages is that TiVo is higher priced than its competitors. Besides, satellite and cable operators are providing free boxes with subscriptions which could hurt TiVo’s business. They are offering all the features and services that TiVo is offering, at lower or no price at all. Even if one were to purchase TiVo products, one would still be needed to get the connection and pay subscriber fees. TiVo’s critical business leads and revenue come from service providers and it is necessary that these alliances are retained and reinforced in future too.
Access to Distributions Channels
The fact remains that as device manufacturers and distributors, TiVo needs the services of providers to maintain the systems. Thus, the devices by themselves cannot produce revenues for the company until it has been purchased, installed and set into operation by the customer through the service provider. In the case of TiVo, the problem that arises now is that many service providers are in a position to produce and market their own devices, thus clearing the deck for TiVo to become, perhaps, redundant. However, their strategic alliances need to stand them in good stead to tide over competitive problems.
In the case of TiVo, it is seen that suppliers do depend upon supplies to such kind of industry and also there are quite a large number of suppliers, and therefore. they cannot exert a very strong influence upon TiVo. However, pricing would be competitive and equitable in the case of supplies to TiVo since the suppliers work in competitive markets and the supplies are not very unique.
In this case it is seen that most of TiVo’s customers are householders who could also use products supplied by cable or satellite operators. They could also haggle keeping the charges of competitors of TiVo. To a large extent, they could exercise moderate influence.
There are substitute products for those offered by TiVo, especially sold at lower rates or even free with subscriptions of cable, or satellite operators. Besides, with greater advancement of technology it is possible that newer innovations may invade DVR technology in the not so distant future. Keeping all these things in mind, it is imperative that TiVo consolidates its gains and improvises its R&D to tackle any new emergences in the field of technology.
Jockeying for position
It does exist in the case of TiVo although the number of players may be limited. However, a unique characteristic may be in terms of the fact that the competitors may also be allies and help bring business and revenue to the company through alliances and mergers.
Obviously, the upper middle class and high class people with disposable incomes are TV addicts. The customers could also be housewives and working women who enjoy television and music channels. Customers could be both gender with age no bar.
The Company enjoys goodwill and reputation and has good labor relations despite resorting to lay-offs and retrenchments once in a while to control costs and achieve operating efficiencies.
Suppliers offer discounts and depend upon the company to a certain extent, being one of the largest companies in the region in this industry.
They accept stock as security, offer credit on competitive terms as they have good line of credit margins and also have been doing business for quite some time. The company has strategic supply chain management with creditors and suppliers and considers them as a vital link in progressive partnerships and harmonious relations for mutual profits. Besides, creditors are vital link to customers and suppliers and fulfill useful roles along the supply chain management and logistics linked with business.
Hoffman, A N., Halim, R., Son, R., & Wong, S. (N.D.). Case 48: TiVo, Inc: TiVo vs. cable and satellite DVR; Can TiVo survive?: Once upon a TiVo. 48-1.
Hoffman, A N., Halim, R., Son, R., & Wong, S. (N.D.). Case 48 : TiVo, Inc: TiVo vs. Cable and Satellite DVR; Can TiVo Survive? 48-4.
Hoffman, A N., Halim, R., Son, R., & Wong, S. (N.D.). Case 48: TiVo, Inc: TiVo vs. cable and satellite DVR; Can TiVo survive?: Sleeping with the enemies: Friends or foe?. 48-14.
Hoffman, A N., Halim, R., Son, R., & Wong, S. (N.D.). Case 48: TiVo, Inc: TiVo vs. cable and satellite DVR; Can TiVo survive?: Sleeping with the enemies: Industry. 48-13.