Friday, July 8, 2011

TiVo – A Brand Tied To a Single Technology

The stock markets are buzzing about a possible TiVo takeover.  The company, which has been an underperforming stock and losing money, won a patent infringement lawsuit settlement from Dish and EchoStar in May for $500MM.  It is also looking for another $300MM more from ATT & Verizon settlement.  Rumors are that Microsoft and Google might like to purchase the company – perhaps to integrate the technology into expanded in-home offerings.


TiVo is  a company that created a technology 10 years ago - a really cool technology – allowing  consumers to “time-shift” their live television viewing.  This “time shifting” technology was a huge game-changer for cable TV, broadcast and even the advertising industry. The brand, itself became synonymous with time shifting.

Fast forward to 2011.  TiVo has lost money in all but one year since it was introduced.  It began to license its technology and equipment to cable companies that were placing digital video recorders (DVRs) into homes around the world.  But TiVo makes very little money on every one of those licensed boxes according to its financials.  It’s stock traded at close to $60/share ten years ago and now is trading at around $10/share.   Cable companies now place generic DVR players into homes.  Cable TV itself is under pressure as consumers are beginning to watch video directly from the internet or movie subscription services such as Netflix. TiVo subscriber base has shrunk from 4 million to less than 2 million since 2007.

What TiVo did upon introduction, was great marketing and branding.  It launched a surprising and delighting technology to the consumer and branded it very well.  Its technology delivered a strong consumer benefit, allowing the consumer to consume  programming on their own terms whenever they wanted.  This benefit tapped into a consumer insight that threatened to make television less relevant in an increasingly internet-enabled world.   This benefit of programming that can be “consumed on my terms” was a much bigger benefit area in the long run than simple time-shifting TV programs.  

TiVo allowed the industry to borrow the technology and deliver it on its own.  They also allowed newer players such as Netflix and web-based video streaming to push it aside and deliver the consumer benefit in a new way.  And finally, it could not price the technology in a way that made sufficient profits. From a marketers standpoint, TiVo is a real example of tying a brand to a technology and not a consumer benefit.  TiVo could have been the next Netflix, delivered new ways to stream video, etc.  The brand was big enough and known by all consumers.  The brand began with a technology, but was ultimately bigger than the technology.

TiVo may live to complete the story.  Some needed cash, a win in court and bigger partners or owners may take it forward.  But the lesson for marketers is this: building a brand around a technology is not nearly as strong as building a brand  around a consumer benefit and using the technology as merely one of many steps of delivery against the ultimate benefit.

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