example storiesfuture index storiestemplate of index coveragemore informationthe Meyer Group home page

The Meyer Index home page

subscribe to the index

TV Your Way but not a new market

examples index

Who is Working to Create the Market?

TiVo, Inc. Founded in 1997. Based in Alviso, CA, USA. (Silicon Valley). Revenue was $4.1M in most recent quarter. Traded as TIVO.

What Is the Market?

In 1997 the founders of TiVo, Inc. set out to create a new market, personal television control systems and services. The television content market was (and is) saturated, as was (and is) the market for video recording. However, there was no market for personal control of the content. The concept - create a way for owners to take control of their television experience, recording shows while they watch other shows, and eliminating commercial interruptions even while watching TV "live." The product set - personal video recorders. The company, however, makes its revenue from subscriptions (a user pays a monthly fee for programming service) and from licensing the technology. Sony and others are license holders. With around a quarter million customers/subscribers, the company is running at a revenue rate of about $20M per year.

How is TiVo Working To Create That Market?

The most successful and repeatable path to creating a new market is to solve a specific problem that is strongly felt by your prospective customers. If the problem is substantial, customers will work to resolve it. Another path, somewhat harder to follow, is to pick a less critical problem and then reduce the cost of solving that problem to the customers to the noise level.

TiVo does not solve a very real problem for TV viewers. It is certainly more convenient to use (after the learning curve) than a VCR, but passing commercials and tailored recording of TV shows are not solutions to critical problem for most viewers. For viewers, TiVo is a solution looking for a problem.

Perhaps in response to this, TiVo's sales strategy has become more focused on problems faced by channel partners. Instead of selling directly to the end users, the company is selling to channels that use personal control of television as a competitive advantage. For companies like DirectTV, TiVo is a sales tool. The product solves a problem for hardware companies and for satellite broadcasting companies.

As long as the customers of companies such as Sony, DirectTV, AT&T, and Phillips feel strongly about the problem, or the channel and TiVo combine to discount the product so far that it feels inexpensive, the channel strategy will work. However, if the end users do not place a high value on the problems to be solved, the channels rightly will look elsewhere for the right competitive advantage.

What Is the Benefit?

To DirectTV and the other channels, an opportunity to differentiate the product. For Sony, this represents a chance to dabble in a new path for home entertainment and perhaps set top boxes. For a very loyal group of consumers, this represents a way to control their viewing experience. The model fails however because that group is not significant in size.

Is the New Market Working?

A critical factor for success in existing markets is the skill of the supplier to handle basic operational requirements. If the product does not work, can't be shipped on time, or if customer service is inadequate, cost cutting will not overcome the deficiency. These operational skills are less critical in new markets, but they are still important. A gating factor to TiVo's success will be basic operational competence. We are not suggesting that the competence is lacking, but if that competence is missing the new market may fail.

More fundamentally, interactive television seems to be about making television a more rewarding entertainment experience. For many of us, that is a nice feature, but it is not a serious problem. TiVo is not likely to create a new market.

Index Examples

Drug-Eluting Stents



Celgene and Thalidomide

email: index@meyergrp.com
phone: (831) 439-9607

the Meyer Index home page | example stories | future index stories | template of index coverage
more information | the Meyer Group home page

© 2014 The Meyer Group | All rights reserved