TiVo: $99 Premiere DVR Revving Retail

TiVo Inc. (Nasdaq: TIVO)'s gamble of slashing the price of its Premiere DVR by US$200 is paying off in brisk sales of the high-end set-top in retail outlets, CEO Tom Rogers said Tuesday.

"Certainly based on the feedback that we’ve gotten it appears promising," Rogers told analysts on TiVo's third-quarter earnings call, predicting that the company would gain more subscribers from sales of standalone TiVo receivers during the fourth quarter.

TiVo had been charging $299 for Premiere, a DVR that integrates broadband video content. Under the holiday pricing scheme, monthly subscription prices for the DVR will increase from $12.99 to $20. (See New TiVo DVRs Built for Web & Cable Content and TiVo Building tru2way Version of New Interface.)

Rogers wouldn't rule out extending the pricing strategy beyond the holiday season. While TiVo said that the steep hardware discounts could take a $10 million toll on earnings during the fourth quarter, Rogers was confident that the strategy would drive an increase in average revenue per subscriber.

TiVo could use a jolt in subscribers. It lost 112,000 of them during the third quarter, a total comprising a decrease of 45,000 TiVo-owned subscribers and a drop of 67,000 subscribers through partnerships with pay-TV providers. TiVo now counts 2.27 million subscribers. (See TiVo Posts Q3.)

Rogers said TiVo is driving subscriber growth through a distribution deal with RCN Corp. , and that it expects to see more growth in 2011 through its deals with DirecTV Group Inc. (NYSE: DTV), Cox Communications Inc. , and Suddenlink Communications , as well as European pay-TV firms such as Virgin Media Inc. (Nasdaq: VMED) in the UK, ONO in Spain, and Canal Digital in Scandinavia.

TiVo has also seen “significant interest” from small and mid-sized US MSOs, Rogers added. (See TiVo Covers Its Cable Bases , Cox, TiVo Strike a DVR Deal and Suddenlink Boxes Up TiVo Deal and RCN to Expand TiVo 'Premiere' Rollout.)

Also worth noting from TiVo’s earnings call:

  • In touting the upcoming launch of TiVo’s iPad app, Rogers took what sounded like a shot at rival iPad applications such as Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s Xfinity TV app. "We believe these are nothing more than glorified remote controls. The TiVo app will be an experience that is context aware, and works uniquely in tandem with what you’re doing on the television screen," Rogers said, without naming any specific competitors. (See Comcast Invades the iPad and Everyone's Mad About the iPad .)

  • Rogers praised the Federal Communications Commission (FCC) 's new rules for CableCARD, which would allow cable subscribers to self-install the security modules in TiVo DVRs and other retail set-tops and receive discounts if they buy set-top boxes through retail outlets. (See The New CableCARD Rules .)

  • TiVo said it expects to collect $300 million in previously awarded damages through its patent litigation with Dish Network LLC (Nasdaq: DISH) and EchoStar Corp. LLC (Nasdaq: SATS), noting that it expects a final decision soon from the US Federal Court of appeals following an en banc hearing held earlier this month. "The Court of Appeals is going to give us a victory here, and we’re going to be able to implement that victory with speed," Rogers said. (See PTO Affirms TiVo's 'Time Warp'.)

    — Steve Donohue, Special to Light Reading Cable

  • [email protected] 12/5/2012 | 4:17:26 PM
    re: TiVo: $99 Premiere DVR Revving Retail

    Tivo dumping their newest Premier model at $99 is a desperation move by bad management. The monthly subscription hike to $20 ($240/year) will drive away more prospective customers than their price cut could possible attract.

    Tivo management are not listening to customers who have wanted to stream video between DVRs and from their DVRs to computers and various mobile devices, functionality that other DVRs and Slingbox now provide. The new Premier DVR is also still very buggy after several months in customer hands, with a new user interface that's more difficult and still incomplete.

    I tried out a PremierXL DVR as a possible upgrade to the previous model TivoHD, but sent it back in disgust. I also canceled the monthly subscription for one of two existing TivoHD units to start the migration away from their brand to a more innovative alternative.

    [email protected] 12/5/2012 | 4:17:24 PM
    re: TiVo: $99 Premiere DVR Revving Retail

    Tivo would only be 'bold' if their Premier product had been delivered on time and COMPLETE with the $99 price tag from the beginning. However, a latent price drop now is hardly a sign of brilliance. It has taken Tivo's dense management team nearly a year to admit that they have been infuriating existing customers with ridiculous upgrade costs, and continuing to scare new customers away with unreasonable up-front equipment costs.

    This even more unreasonable $240/year subscription cost is not going to be perceived the same way as a $99 Blu-Ray player that doesn't cost another $1000 to operate over the next four years. For that money, the Tivo service has to deliver at par or better than MSO's DVR's, AND overcome all of the advantages of Internet-based media services. Unfortunately, they have proved that they are not up to the task.

    Tivo management has been miserably slow to execute, as demonstrated by their failure to complete their DirecTivo project, and they have failed to respond to customer's demands for functionality. That coupled with their failure to deliver the new Premier platform on time and releasing it while still so woefully buggy and incomplete is proof of a desperate and incompetent management team.

    Now other brands and direct Internet-based content subscriptions have passed Tivo by with more innovation, better customer cost-of-ownership, and better media access options for customers, making the Tivo brand less relevant with each passing month.

    The substantial loss of subscribers for a company that is still losing money is the beginning of the end for Tivo as an independent company unless they have a break-through product update that they have been hiding from everyone.

    SteveDonohue 12/5/2012 | 4:17:24 PM
    re: TiVo: $99 Premiere DVR Revving Retail

    I think it's a bold move to slash the price of the Premiere DVR to $99, and it's too early to predict how the $20 monthly subscription fee will impact TiVo's ability to retain subscribers. It's also too early to be calling it a desperation move, or to be criticizing TiVo management. We'll know in a few months how the gamble turns out when TiVo reports its fourth quarter earnings. 

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