tivo inc dvr vs cable & satellite tv dvr

• Introduction on TiVo Inc – (Tan Kee Siang)

• Environmental Scanning – (Tan Chai Foo)

• Strategy Formulation – (Khairul Ashraf)

• Strategy Implementation – (Mohd Syariz)

• Evaluation & Control, & Conclusion – (Abdul Hisham)

• Q & A

• Satellite and cable channels present a dilemma for consumers– Too many favorite shows, conflicting times, – busy life

• VCR– Record your shows– Problem: Incovenience, hard to program,

picture not perfectly clear, does not allow you to record and play a tape at the same time

• Then came TiVo• Founded in 1997 by Mike Ramsey & Jim Barton

– TiVo revolutionized the home entertainment industry when it pioneered the DVR technology

– PVR = DVR personal / digital video recorder

– 30th Sept 1999, TiVo made itspublic offering for 16 per share inNasdaq

• It offer subscription-based television service that allow user to record, watch & control :

- Live TV, Movie, TV show (satellite, cable, air)

- Broadband content (eg: YouTube video,

picture, music video, songs, & Internet radio)

• Turn data into a digital form & stores in hard drive instead of video cassette (VCR) & watch it during leisure time.

• TiVo consumers can pause live TV, fast forward through commercials, go back for instant replay and watch programs at a convenient time

• External

• Internal

• Natural Environment

• Societal Environment

• Task Environment.

Environmental Scanning

Strategy Formulation

Strategy Implementation

Evaluation and Control





• Those physical resources, wildlife & climate that are an inherent part of existence on Earth.

• TiVo does not use or not directly or affected

• because produce a unique product and service to people for entertainment.









• Those social systems that influence the long-term decisions. – Economic Forces– Technological Forces– Political-Legal Forces– Socio-cultural Forces









– Economic Forces (regulate the exchange of materials, money, energy and information)

• TiVo understands trend of U.S people with good economic situation

– Technological Forces (generate problem-solving inventions)

• TiVo has made the first–move • Identified the weakness of VCR • Created DVR.









– Political-legal forces (allocate power & provide constraining & protecting laws and regulations)

• TiVo has acquires license from same concept as VCR

• Using the broadcasting program to record in their DVR.

– Sociocultural forces (regulate the values, mores, and customs of society)

• LED TV with HD, 5.1 Dts sound system• Change the lifestyle of people to focus

on more entertainment.









• Refers to groups that directly affect a corporation and are affected by the corporation.

• Porter’s 5 forces to analysis for TiVo.









• Threat of new entrants: – TiVo created their own pattern and

license their product from being copy.

– Other companies copy the ideas are still in the law cases.

• Rivalry among existing firms: – Because of the Blue Ocean Strategy,

TiVo currently considered to be monopoly.









• Threat of substitute products:

–TiVo may have afraid the people of still using VCR as the price are far more cheaper.

–People may select use VCR than DVR.









–TiVo monopoly–TiVo has control the

buyers. –Buyers cannot force the

price go down–But buyers can use VCR.

• Bargaining power of buyers:









• Bargaining power of suppliers:

– TiVo is monopoly and the product

that they sell is unique. – The product is unique

– Supplier not easy to find new customer, tend to follow the needs of TiVo









• Concerned with identifying and developing an organization’s resources and competencies.

• Using resources to gain competitive advantage or gain sustainability.









High(Hard to Imitate)

Low(Easy to Imitate)









• TiVo is an Entrepreneurial model

• Specialized products of DVR and services to market niches.

• Nobody knows what is a TiVo service and DVR are.

















GROWTHGROWTH

• ConcentrationHorizontal Growth

(Strategic Alliances with other players)

STABILITYSTABILITY

• Not utilizedChange strategies

to cover losses (layoff 25%)

RETRENCHMENTRETRENCHMENT

• TurnaroundHire new CEO

(Tom Roger in July 2005)









High

Low

Low

High

Ind

us

try

Gro

wth

Ra

te

Relative Market Share

Question Marks Stars

DogsCash Cows

• The sum total activities required for execution of a strategic plan

• In TiVo, each level of management involve in their strategic implementation

• Among steps has been done by TiVo are developing programs, budget and procedures









1) Rebate to customer

Introduced rebate $100 for each new 100,000 subscribers. But half of them failed to apply rebate due shoebox effect which helpful for TiVo revenue









2) Patented technology

Patented the company’s advanced software and technology platform and licensing its technology to third party and generated excellent revenue

















3) Catering people viewing habit

With the on demand program and online streaming, TiVo able to capture customer favorite program.

4) Implement rating system

Rating system program set into TiVo box allow viewers to rate each tv program they already watch. They spend R&D & IT infrastructures to develop software for rating system by pressing controller to rate









5) Creating subscriber forum

TiVo forum composed of communication through TiVo community. It allows customer’s feedback and discuss current issues. TiVo provides dedicated server database for this purpose.









6) Introduce HD technology

With the introducing of TiVo High definition series 2 top boxes, they can sustain the market so that not left behind by broadcasting

industry HD programs.









• Strategic partnership with Virgin Media Inc, UK

• TiVo become theexclusive provider ofmiddleware for Virgin Media's next generation TV platform set top boxes

• Virgin Media become the exclusive distributor of TiVo services in UK









• TiVo employed 451 employees. Among them:• 48 in service operations• 246 in R&D• 44 in sales and marketing• 113 in general and administration

• They also employed part time andcontract basis consultants









TiVo make staff retrenchment exercise in 2001 whereby they laid off:•80 employees (approx 25% of their workforce at that time) in April•40 more employees (approx 20% of its remaining workforce) in October•By doing that, they eliminate unnecessary workforce and plan for long run efficiency









The solution:

• Device would have to come to them by expand advertising scheme.









1) Develop TiVo's Strategic Advertising Agency Partnership Program

• Interactive advertising and enhance e-business solutions to boost sales

• Advertising to specific viewers with the information it gains about viewing habits









• A forty foot trailer with TiVo units outside, a home theater inside, and oversized floats tethered to the roof.

• The trailer then drove it to NASCAR events, which commonly drew 80,000 spectators.

2) Multi part campaign - Road show, sponsor, celebrity testimonial









• The Problem– TiVo cannot found a price point– Drop price (selling hardware at a significant

loss)

• The Solution– New Pricing Strategy









• To increase sales & drive penetration of TiVo service

• Market research (new & existing subscriber)• Result favorable bundling TiVo unit & services• Launch a subscription option (combines sales of services & box)• No more upfront hardware costs.









• Previous method– Pay $399 for hardware– Pay $ 12.95 monthly for service subscription– Or pay one time $ 200 lifetime service subscription– Total = $554.4

• New Pricing Strategy– Bundled Offering, Flexible Pricing and Service Commitment– Contract Base– Eliminate lifetime service option– Monthly and prepaid options plan









• Research showed:• Favorable for bundled deal• Flexible pricing options

Number of Year

Price per ($) Prepaid ($) per YearMonth Year

1 19.95 240 224

2 18.95 455 369

3 16.95 610 469









• After implementing new pricing and advertisement strategies:

– The income increase to be positive value– Year 2007 = -$47 754– Year 2008 = -$31 457– Year 2009 = $ 103 592









The solution:

•Hire new and experience CEO, the former NBC Cable, Tom Rogers.•Develop new strategic management for the company.









The solution:

•Create product differentiation that gave extra advantages compare to their competitor’s product•Product Differentiation:

• Easy to install• Give viewer controlling power on commercial

advertisement









The solution:

• Need to develop or change business direction• Example: ASTRO









• TiVo has counter the previous problem by implementing new marketing strategies.

• Under new CEO, TiVo start making profit and be a market leader• New Advertising strategy increase TiVo reputation generally.• New Pricing Strategy help the company to expand it market share • Overall conclusion, TiVo can survive in the industry due to

improvement of their growth performance









tivo inc dvr vs cable & satellite tv dvr

Documents

bargaining

strategy implementation

strategy formulation

virgin media

environmental

pricing strategy

entertainment

product