Tivo in 2005 strategic inflection lt4 rev 01
Post on 24-Jan-2015
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TiVo in 2005: The Way Forward
By LT4Anurag, Azlan, Carl, Goldy, Jen, Medel
Outline of presentation– DVR Business –Brief Intro• Consumer perception and profile• Trends• Competition
– Strategic Issues/ Challenges• Causal Factors• Way ahead – objective• Strategic Options • Org. Capability assessment , prioritization
TiVo’s Business• Personal TV provider for DVR technology (Software/service and
Hardware)
• Providers of unique services to the advertising industry for promotions and audience research – only available from TiVo
• Business model – Standalone sales online and thru national CE retailer -Ex. Best Buy etc.
– Licensee of DVR technology to the industry -Ex.Toshiba etc.
– Partnership with MSO’s (Cable TV and/or Satellite TV) –Ex.DirecTV
– Revenue -> combination of direct sale revenue, subscription fee, license fee and research/advertising revenues
• Over 3M subscribers as of 31st Jan 2005
• Competitors: EchoStar, Replay TV, NDS, Open TV, Scientific Atlanta, 2Wire, Akimbo even MS, HP, Sony and IPTV from telcos.
• Board members are NBC, Coca Cola, Sony, Omincon and Discovery
Consumer’s perception & Profile• Not clear on the usage– What TiVo could do and What TiVo could not do– Half of market analyst used PVR and rest DVR
• Customers were surprised on monthly fee• Average customers not grasped the concept
• 97% of TiVo users were very satisfied• Enthusiast– Comfortable with technology– Married, 25-45– Monthly Income: 70k – 100k– Families with young children (parent control feature)
TiVo subscriber trend and forecast
2005 2009*Total Household 105 114*DVR Market 8.4 (8%) 45 (40%)TiVO Share in DVR (36%) 3 16* Estimated, total household growth 2% per annum assumed
US TV Household and DVR Market
Competition
Competition Comparison
Core Issue/Challanges
• Significant net losses since inception• Threat of survival
Causal Factors• High payback period –new product new
market (single product –only service till 2001)
• Introduction of Hardware (initial investment, longer payback) in 2002
• Emergence of formidable competition-low margin /pricing pressure
• Limited Market -8mn as of 2005 (36% share)
Way ahead…Objective
Financial Turnaround by generating significant additional revenues to achieve sustained
profitability
How ?Strategic Options ?
Strategic Options
Is it the question of either of above or all (majority) of above with prioritization?
# Options + - Priority1 Aggressively pursue the stand-alone
business>97% customer satisfactionHigher ARPU (~$8.7)
Higher SAC ($182) 1
2 Focus on OEM deals with other cable companies, and possibly other telcos
Ready market - opportunity for alternate revenue offerings
$1 ARPUPotential competitor (once develop OFC network)
3
3 Become a content distributor Diversification, alternate revenue stream
Not core competency
4
4 Seek new market, outside US High growth opportunity in fastest developing market like India, China
Organizational capability ??
2
Further challenges …• Market- How to increase usage/adoption?• Future regulation relating to copyright law or evolving
industry standards and practices that could adversely impact the business
• Positioning – Mass market or niche?– Identity -“DVR business” or “entertainment service business”
• Organizational Capability– Financial leverage– Support function capability building for expansion
(do we have capability to scale the business?)
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