I fear the end is near, dear Tivo

A sad Tivo
I love my Tivo and would not watch TV without it. Explaining it to people unfamiliar with Tivo is hard enough, but will be next to impossible with today’s price increases.

My Tivo is honestly one of the best things I’ve ever bought. I’ve often said that if it ever broke, I’d be at the store at 8:00am the next day to buy a new one. It has liberated me from having to watch shows at certain times and always has something I actually want to watch. I will never watch “live” TV again if at all possible.

Naturally, having such a profoundly positive experience with the Tivo made me want to share its wonders with friends and family. Like a good Tivo fanatic, I extolled the many virtues of the simple-looking little box to anyone who’d listen. I’d explain how it is so much more than simply pausing live TV, despite what the commercials explain.

Of course, the next logical question the person would ask is, “How much is it?”

Well, when I bought my Tivo, you had the option of paying $9.95 per month for service or a single $200 lifetime (of the box) lump sum. After a while, Tivo decided that the service was worth $12.95 per month, or $250 for the lifetime, and eventually $300. These are fees on top of your monthly cable bill and the purchase of the box itself.

So, upon hearing that it was going to cost $12.95 per month for service, most people immediately rejected the potential joys of never watching commercials or missing shows again. I understand. I avoided buying a Tivo for the same reason myself, even at the $10 per month rate. So, out of the dozens of people I explained Tivo to, only a couple have actually bought one (and they incidentally love it just as much). That’s a pretty poor conversion rate and it’s soley due to the monthly fees.

Today, however, I believe that Tivo just drove the nail into their own coffin. They upped the monthly fee to $19.95 per month.

Wow… I would not pay that much and I’m already sold on the concept. What are they thinking?

Now, for your $20 per month in a one year commitment, you get the Tivo box itself for free. It’s a standard run-of-the-mill Series 2 – nothing special these days. That amounts to anywhere from a $40 to $100 value. So, for the first year, you just about break-even with the $20/month+free box vs. buying the box and paying the old $13/month rate.

But after that, you pay $240 per year for as long as you own the box!

Wouldn’t a person simply pay the lifetime fee of $300 after the first year to at least limit hemhorraging of cash? Oh, I forgot to mention that Tivo eliminated the lifetime subscription in this train-wreck of a new pricing scheme.

So, while it was nearly impossible to convince people that Tivo is worth $13/month, I won’t even bother trying now that it’s $20/month. As an aside, buying the $100 box was never an issue (and you’d have to be really lazy to not find one for quite a bit less than $100) – it was always the monthly recurring fee, which to be honest, is all I’d worry about as well if I didn’t have one.

Of course, in an attempt to make the fees seem more reasonable and also maybe grab your cash up front, Tivo has “discounted” monthly pricing if you pre-pay or commit to multiple-year contracts. So, if you’re willing to sign-up for a 3 year contract, you will pay $610 over the period, a whopping $17/month. Pre-paying a lump-sum is a slightly more reasonable $13/month, but that’ll cost you $469 all at once. Now, keep in mind that today’s society seems to prefer the “installment plan” rather than paying large lump sums, even if it costs less. Just look at credit card use these days!

So, considering the resistance to paying $13/month on the old pricing plan, how many people would you expect to jump on-board for $20/month? My guess is nobody I know. Of course, the people I know tend to be a bit more financially responsible and will shy-away from monthly wallet milkings, so maybe the general public, who run an average credit card debt of $8,000 from month-to-month, will have less of a problem with this increase. I don’t know. I do know that I will not be wasting my time trying to explain the values of Tivo to my friends because it’ll be a total waste of time.

Now, if my Tivo ever breaks, I’ll be looking at lesser alternatives (cable company DVRs generally suck but are much cheaper and will hopefully get better) or maybe I’ll even build my own DVR using MythTV or some other software-based alternative. Sorry Tivo, at those prices, you’ve lost a loyal convert. My eyes have been opened to the wonders of Tivo, but I’ve not gone blind to the cost.

I expect that this move will have the opposite effect Tivo is hoping for. They are undoubtedly looking to increase revenue, but my thought is that it’ll actually hurt their new sign-ups. Tivo has strugged financially since it’s inception and I fear this could be the final mistake they make if things are not quickly changed.

What do you think?

5 thoughts on “I fear the end is near, dear Tivo”

  1. Thank goodness I am still locked in w/ Direct TV and the cheaper rate. After you told me so much about it I thought I would love to try it. Then you told me how much you paid per month. I knew then there was no way I would be a Tivo fan.

    I later found (probably because you told me) that Direct TV had a great deal on it for something like $5/month. Heck, I could do that, and just in time to start watching Survivor (The Amazon). So I signed up and fell in love with it. Then I got talked into the dual turner about a year later and think that I am paying around $10/month.

    I thought I once heard that Direct TV and Tivo are seperating ways in the future. If that is true, I can only assume they will jack up the rate to the $19.95 per month. That is probably for the 1 tuner too. My wife will NOT be a happy camper when I shut it down at that price increase. Ahhh, I can hear it now. I may just have to scrap Tivo and buy her one of the movie channles for $5/month to keep her a tad bit happy. I wonder how my VCR plus works again?

    Looks like a good time to sit back and watch Tivo stock (Ticker: TIVO) come crashing down. Puts anyone?

    AL

  2. Fortunately for you, the DirecTivo is separate from the Tivo company and is not likely to get jacked. DirectTV licensed the Tivo brand software only and that’s why it’s cheaper than a stand-alone box.

    Now, DTV may, at some point, choose to jack the Tivo software DTV boxes up to “encourage” people to go to their home-grown box so they can stop paying licensing fees to Tivo. They have written their own software to save money and all new DTV DVR boxes use that software instead.

  3. I am also a very happy TIVO owner, at least I was, with their decision to drop the product lifetime license I will never be buying another TIVO. I was ready to go ahead and buy my second standalone TIVO (probably the DVD burner version) sometime later this year, but without the product lifetime license I just can’t justify it.

  4. Thanks for the update on things in the world of TiVo, Mike. I think.

    A few years ago when I had Dish network service, I had their PVR which was SO cool! It was wonderful just recording things with a single click, and the quality of the recorded material, on that hard drive instead of tape (nobody had DVD recorders at home back then, they cost a thousand bucks), has totally spoiled me for anything less, ever.

    But Qwest, bless their hearts, kept telling my ISP and me that DSL wasn’t available for me, and I really wanted high speed internet service at home. Finally three years ago this month I got Comcast internet service and it made sense to bundle it with Comcast cable TV service too.

    I do miss the PVR, and had thought idly about looking into TiVO. But at this point it’s just not worth it to me. Not at $20 per month with no end in site. Sadly, when the Comcast tech was here in my condo setting up my new service after my move last month, he said that Comcast’s digital box with recording capacity is no longer available to subscribers UNLESS they also sign up for an HBO-type premium package in addition to the digital service. Which we agreed is very short-sighted. I might have considered paying a little more for that magic box, but not if it also requires me to subscribe to a bunch of premium channels I wouldn’t otherwise get.

    Well, these companies may think they are cleverly exploiting a strong demand in the market for their products/services. But the price of greed in a competitive economy is that you create opportunities for new competitors to come in and give people what they want for less money (or a better product/service for about the same money), and the greedy older companies start losing out.

    It will be interesting to see how this one plays out.

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