Tivo Case Study

1. Threat of new competition: TiVo took its technology security and privacy very seriously, nearly 70 patents related to DVR technology are owned by TiVo by 2005. However it’s easy to enter the industry because the biggest part of the technology is available to anyone such as the hard-drives.

Threat of substitute products or services: VCR and PVR have some same functions, but VCR offers a higher acceptance with lower price. It is possible to add PVR functionality to VCR so both VCR and PVR could be substitutes. DVD writers are also a potential substitute.

Bargaining power of customers: TiVo has strong customer loyalty, but they are also price sensitive. Since PVR is a new technology, mass acceptance is important.

Bargaining power of suppliers: Cable and satellite providers have high bargaining power because they can access to the customer bases directly.

Intensity of competitive rivalry: the providers of cable TV are corporate to create stand-alone set-up top box with DVR technology.

2. Advantages: According to exhibit 7, TiVo’s product price is relatively low (including hardware and service, etc.). Total subscribers keeps increasing progressively from 2000 to 2005 (exhibit 10). TiVo is the first and easiest to use DVR (vertical integration). TiVo has strong customer loyalty and software/technology

Disadvantages: TiVo has privacy concerns that it didn’t provide any information about individual viewing habits when collecting the usage data. The other thing is, ViVo is lack of hardware and its hardware it costly.

I think there are network effects in the DVR business. When the more people use TiVo, the more advertisers and content providers will invest to it, and ViVo grows bigger and more valuable. It matters because in the DVR industry, it’s hard to have multi-homing situation since the cost is high to be a part of multi-platform.

3. According