What’s responsible for Tivo’s decline?
Marco Arment speculates on what an Apple television might be. He talks about the beauty of on-demand television, and the fact that DVRs are a poor substitute:
Cable TV customers have attempted to gain these benefits with the DVR, but it’s a bad hack. Even the best results are more like an automated VCR than true on-demand video, and almost nobody reliably gets perfect results. The way to escape the dysfunction of broadcast TV isn’t to record it and play it back later.
I want to talk about this part of his post.
As a long term TiVo customer and reluctant user of a DVR provided by Time-Warner Cable, I agree with this. Here’s the thing, though. When TiVo arrived, it was incredibly disruptive. The ability to pause and rewind live television as well as easily record shows and watch them at your convenience was something completely new in the world. Even today, the DVRs provided by cable companies cannot compete with TiVo in terms of user interface.
TiVo’s original capabilities are particularly impressive when you consider the network infrastructure available when it was introduced. For a very long time, TiVo downloaded its guide data over a telephone line using a built-in modem overnight. Broadband wasn’t pervasive enough for TiVo to ship a product that could assume a persistent Internet connection.
I, and a lot of other people, thought TiVo would become a major player in the television industry, mainly because once people experienced television on a TiVo, they would never go back to watching television without it. I was right about that — once you’ve had a DVR, you can give up on TV, or you can shift to a fully on-demand lifestyle, but you can never go back to regular broadcast television. It’s too painful.
Sadly, TiVo has not been doing well for a long time. Here’a report from earlier this year describing TiVo’s shrinking subscriber base. The question is, why has TiVo performed so poorly given their entry into the market as an incredibly disruptive force?
I can think of a few reasons, not all of which are entirely TiVo’s fault.
TiVo’s biggest problem is that they were unable to successfully license its software to cable companies. Cable companies don’t build their own DVRs or write the software. For whatever reason, they have gotten into bed with companies that provide awful hardware with slow, difficult-to-use software. The remotes are terrible, the units are unresponsive, and the on-screen interfaces are embarrassing. TiVo’s software would have been infinitely better. Unfortunately, those licensing deals never happened. What the cable companies offer instead is good enough for most people. The inferior boxes from the cable companies cost less per month and you don’t have to buy the hardware yourself. Most people, given the choice of hundreds of dollars in up-front costs (TiVos cost less now) and upwards of $10 a month, will instead choose to just tack on $5 to their cable bill for the lesser but still functional DVR.
The second problem for TiVo is digital cable and switched digital video. TiVo was at its best when the box at the end of the cable line just needed an analog cable tuner in order to work. Then the instructions for the TiVo just involved plugging the coax into the back of the TiVo and giving it power. When digital cable arrived, you had to connect an IR transmitter to the TiVo so that it could change channels on the cable box your cable company provided. When HDTV became available, the government mandated that cable companies support a standard CableCard interface so that people could tune in HD channels on their televisions. Theoretically, this should have simplified things. TiVo added CableCard support, but the cable companies have never done a good job of supporting them, and in practice, getting a Tivo set up with CableCards has traditionally involved multiple phone calls with the cable company and often a home visit from cable technicians.
Finally, cable companies started using switched video, which requires even more intelligence in the client. My TiVo has two CableCards and a separate tuning adapter, which is required to tune in switched videos. The setup is very flaky and the TiVo fails to record shows on a regular basis. None of that is TiVo’s fault, nor is there much they can do about it. They are dependent on the cable companies, who are ambivalent if not actively hostile when it comes to supporting anything other than their own boxes. The complexity of the required setup has eaten away at the user experience TiVo provides. It was once rock solid and dead simple, but that’s no longer the case.
And the third problem is that TiVo missed the boat on video-on-demand. TiVo supports most of the popular on-demand video services now, but that’s a minimum requirement for anyone who wants to sell you something to connect to your television these days. Netflix, Hulu Plus, Apple, and Amazon.com are the ones making money from video-on-demand. Netflix captured a bunch of subscribers via DVD rentals and has been moving them to video-on-demand. Apple is selling on-demand video through iTunes, and Hulu has key deals with broadcasters. TiVo could perhaps be in a better position had they offered a service that provides downloadable videos (as many people thought they would) long ago, but it’s certainly too late now for them to become a player in that market on their own.
What’s interesting to me is that TiVo clearly saw that cable television was just a data stream that they could tap into in order to let people watch whatever they want on their own time. Before downloading high-quality video of television shows over the Internet on a regular basis was really feasible, tapping into the cable stream and picking what you wanted really was the best option available. I don’t know whether TiVo didn’t see that transmitting shows directly over the Internet was in the nearer future than they predicted, or they saw it but were unable to put the deals into place to become a player in the on-demand market, but their inability to do so perhaps cements their decline.
It really is a shame. I am still a happy TiVo subscriber, and it’s still much, much better than the alternatives if you want to watch cable programming. Services like Hulu Plus and Netflix Instant aren’t viable options if you want to watch sports, or Food TV, or plenty of other channels. But it’s hard not to look at TiVo and think about what might have been. In spite of all of the difficulties, they still offer the best product on the market. The TiVo Premiere Elite looks awesome. You should ask for one for Christmas.
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