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December 16, 2004

Advice to Tivo: "Kill Subscription Fees"

Ross Rubin, director of industry analysis of NPD Techworld, writes a weekly column in Engadget. This week's column, Mr. Rubin had some advice for Tivo: drop the subscription fees. His argument:

" Without the subscription fee requirement, TiVo would turn the marketing tables on cable DVRs that now soundly beat it at face value. Paying a one-time $400 fee for stable DVR service with home networking links and a great interface is compelling versus paying $8 or more per month to your probably beloved cable provider for which the only “Lifetime” option is a barrage of sappy women’s TV movies. TiVo will never be able to beat cable and satellite providers at a subscription price war, so why fight one? And when compared to a Media Center PC for $1,500 or more, TiVo would be closer to the price of a far less versatile Media Center Extender."

As a monthly check writer, I like the idea of no subscription fees but I would worry that it might hurt Tivo more than help it. Some people end up paying their monthly fee because they aren't sure of Tivo's long term future, and adding another $200-$300 to the price tag may be enough to turn them from toe-dippers into swimmers in a different pool. If I were a consumer who wasn't certain about DVR technology but wanted to give it a try, would I pick a $0 cost, no long term commitment monthly fee from a cable provider or a $400 Tivo?

There is no doubt, long ago, my wife and I were reluctant to purchase a Tivo given the monthly fees, uncertain about the value a DVR can have on television viewing. If there were a no cost alternative, I certainly think we would have tried it before purchasing a Tivo.

I'd suggest the opposite position for Tivo: offer a 60 day, full refund, no questions asked, return policy. That would encourage people to try Tivo before waiting in line for their cable or satellite operator. Calling the cable company, let alone being home for a 4 hour block of time so a cable guy can plug-in a DVR, puts cable and satellite operators at a disadvantage. Going into Circuit City or Best Buy is a heck of a lot easier, and with 60 days to try risk free, most people will learn they can't live without it.

I think consumers are still questioning whether they need a DVR at all, not whether they need the best one out there. The monthly fees can be daunting to a potential buyer, but so is a high initial purchase price. Tivos, once in use, sell themselves so from my point of view, removing the obstacles to getting them in the front door is objective #1. Making it risk-free and "cable guy"-free, seems like an easier sell.

Posted on December 16, 2004

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