Sunday, March 13, 2005
Mega Rebuttal Rant - TiVo DeathWatch Is Overblown Hype
PVRBlog has a great feature on a rant by a guy named MegaZone on why the current deathwatch is overblown hype. We love to squash overblown hype, so here are some excerpts from his interesting commentary and cheers from us on taking on the wave of negative commentary with a well thought-out rebuttal:
"Most of the deathwatch stuff I've read is crap. People who don't seem to know what they're talking about are just spouting off. Many companies lose money while starting out, in fact, most do - I've seen people say that the fact TiVo loses money means they'll die. Sure, if they can't *stop* it - but they've said, for a while, that if they stopped spending money on acquisitions and just went to operations with their current users, they'd be profitable. They are already turning an operating profit, the losses are caused by the marketing expenditure to grow that user base. If they're willing to slow down growth, they can turn a profit overall.
"Then there are people who say that because they don't have a cable HD solution today they're dead. Which is idiotic. The *vast* majority of the TV viewing market do NOT have HDTV. Only recently have sales of *new* televisions tilted to a majority of HD and HD-ready sets. Until then most new sales were still SD sets - and that's just *new* sales, which is a drop in the bucket compared to the installed base. People talk about the millions of HD sets, which is nice - but out of context. In context those millions are a very small percentage of buyers. And most of them are in the higher-end, early adopter segment - which is *not* actually TiVo's target demographic.
"Does TiVo need to do something with HDTV - yes, no question. HDTV is here to stay and continues to grow. But they don't need to have it *now*. Notice that there aren't exactly a ton of CableCARD (the only way to do 3rd party HD cable recording) DVRs on the market. CableCARD as had a painful rollout with many issues and delays, most vendors have held back. Right now there are a fair number of CC enabled TVs, and that's about it. Most sets, even most HD sets, aren't CC enabled. The market is still young with a lot of time.
"So it is really the early adopters pissing and moaning that because TiVo isn't giving them what they want right away that they must be 'out of touch' and a dying company. Which is just asinine. If TiVo can deliver HD products in fiscal 2006, as they've said, that should be well in time to still catch the market on the start of the growth curve. In the meantime their SD products suit the vast majority of users just fine.
"And, of course, people cry doom and gloom over the potential of TiVo losing DirecTV as a channel. First of all, DirecTV has no plans to drop TiVo support. The existing agreement allows them to support users indefinitely, and they'd be stupid to turn off ~2million systems. They're not that dumb. Even if they did stop selling new units, and even that isn't clear - TiVo says that when/if the NDS units ship they will do what is needed to remain a competitor - TiVo gets revenue from the existing users. But even if they did lose that, DTV is less than 10% of their revenue. They may be nearly 2/3 of the total subscriber base, but TiVo gets just over $1 a month per user. They've said they could lose that revenue base and absorb the loss - of course they'd also be free of any expense of supporting DTV."
Read the complete rant/rebuttal here. Source: PVRBlog
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