What’s responsible for Tivo’s decline?
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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.

8 thoughts on “What’s responsible for Tivo’s decline?

  1. I had to stop about halfway through this, because I was reminded why, ultimately, I never bothered with TiVo in the first place, never got a cable company DVR, never switched to digital cable with the set-top box, etc.

    I have the barebones basic cable package (just my local channels plus CNN, TBS and WGN), plus an Apple TV, Netflix, and iTunes season passes to a (very) few of my favorite shows; TV’s just not good enough to be worth it.

    The utter contempt cable companies have for their customers, the hideous user experience of a set-top box with impenetrable UI and three or four remote controls with (combined) hundreds of buttons, the 3-digit monthly bill for all of these services. All of that is bad enough, but ultimately the programming just isn’t WORTH it. Sure, my setup limits what I have available to me, but even as it is, there’s more programming at my fingertips than I’ll ever have time to watch, and with much lower cost and far less aggravation than a traditional cable TV setup.

    I read all of Marco’s post last night (and have heard him rail against cable before), and I agree 100%.

  2. I also love Tivo, but I think that my hatred for the cable companies is what will eventually kill me as a customer for them — when my $20 basic deal (like room34′s) became $75 monthly for digital service at no improvement (and still with no ability to record more than one program at a time), they made me question whether the ability to occasionally do some mindless channel-surfing (for a NCIS rerun or some Seinfeld) is worth the hassle. Still hanging in, but not for much longer…

  3. Once you’ve go on-demand, it’s tough to go back. We dumped our cable years ago. These days I watch only what’s available on Netflix. Admittedly I don’t get the latest and greatest shows, but there’s plenty there to keep me occupied and happy. If it’s not on demand and available precisely when I want it, and on whatever device I feel like using at the time, then I don’t even bother with it. The future surely will be on-demand viewing.

  4. Bittorrent: Quicker, easier, less bother, less hassle.

    If media companies didn’t hate their customers, piracy would hardly exist.

  5. Over here in the UK, TiVo is finally making its appearance. They have teamed up with Virgin Media, the biggest cable provider in the UK, to provide them instead of cable boxes. Virgin have had their own on-demand system for a couple of years, so it integrates this as well as apps: iPlayer, YouTube and the like. http://tivo.virginmedia.com/

  6. I read this post back in November, then again just a few days ago, as I had a decision to make.

    I had just purchased a 55″ LCD flat screen (replacing a 32″ tube set). This is my first HD set and I needed to decide what kind of DVR would be in my future. I’ve been with Tivo since about 2006, when I inherited a Series 2 with product lifetime service from my parents, who made the switch to a cable company DVR when they bought an HD set.

    After re-reading this post, I actually felt MORE compelled to get another Tivo. Even if I thought yours was a on in a million case, here’s a guy who’s been through the Tivo wringer and STILL has a preference for their product, faults and all, over standard issue crap DVRs.

    I plunged head first into Tivo. I purchased a new 75-hour* Premier with lifetime service ($100 existing service discount). I went to pick up my CableCard. I thought I was done. Getting the CableCard setup was simple enough with a phone call, but then… Missing channels.

    It turns out, I was supposed to get a tuning adapter too. The rep at the service center neglected to mention that when I picked up the CableCard. So back to the service center for a tuning adapter. Got home, set it up, couldn’t get it to properly register. It appeared it wasn’t getting any signal from the cable company. I tried any and all common-sense approaches to get it working, with and without the assistance of a tech over the phone. I even let it go overnight – nothing.

    Another call to the provider had me back to the service center yet again to swap the tuning adapter. Same problem with that one.

    It was only when a technician was sent out today that I learned they “just got a new process” for connecting tuning adapters that seems to solve a number of the problems. Low and behold, it worked. I might suggest this for anyone that experiences issues with their tuning adapter. Rather than install the adapter in-line, add a two-way splitter. Connect one output to the Tivo and the other to the tuning adapter. The adapter need not connect “out” to anything via coax, as communication with the Tivo is via USB.

    In the end, the frustration turns out not to be too much for me either. Count me as (still) a happy Tivo customer!

    • Recommendations for increased capacity: I use Tivo Desktop (spring for the not-free “Plus” version) to easily transfer recordings to my server (you can use almost any Windows PC or Mac). Programs can be watched on your network-connected Tivo from whatever computer they reside on. You can use the software to further burn to DVD, format for portable, etc. The same software even lets you share your music library, photos, videos, etc to your networked Tivo. True, this is offered by most new TVs and boxes, but it’s nice to have it all in one place.
  7. I wound up getting a Premier Elite (four tuners of power) after writing that post and I’m extremely happy with it.

  8. I feel compelled to add here, that a couple of months later, a $50 charge appeared on my cable bill that was labelled as “Failed CableCard Self-Install.” I got the company to reverse it, on the grounds that the setup instructions I was provided with by phone and colorful brochure bared no resemblance to the finished configuration when the tech came out. I also pointed out that including any kind of line-item on customer invoices that essentially says “you [personally] have failed” was probably a bad idea and an invitation to dispute.

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