Ti vo inc

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Strategic appraisal
“TiVo Inc”
TIVO VS. CABLE AND SATELLITE DVR
Prepared for:
ATM Sayfuddin
Instructor
College of Business Administration (CBA)
Prepared by:
FRIENDS FOREVER
MGT-403
Section- B
Department of CBA
IUBAT—International University of Business Agriculture
and Technology
11 March 2014
ATM Sayfuddin

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Course instructor
IUBAT (International University of Business Agriculture & Technology)
4 Embankment Drive Road, Sector 10,
Uttara Dhaka, 1230.
Subject: Letter of transmittal.
Sir,
We are very pleased to submit our report on Strategic appraisal “TiVo Inc” TIVO
VS. CABLE AND SATELLITE DVR. It was a great opportunity for us to work as a
reporter on the topic, in this report we have to elaborate our knowledge what we
learn from our academic career & give experience about “TiVo”. We tried to give
our maximum effort on preparing this report as best.
Considering the level of hard working, information, processing, and analysis we
believe that this report is a complete one. We provide our full concentration to
prepare this report. We hope that our study will meet your expectation as well.
Sincerely yours,
Group: FRINDS FOREVER

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STUDENT DECLARATION
We are the students of Bachelor of Business Administration (BBA), at IUBAT-International
University of Business Agriculture and Technology and declaring
that, this Case on the topic of CASE “TiVo Inc”TIVO VS. CABLE AND
SATELLITE DVR” has only been prepared for the fulfillment of the course of
MGT-403.
Sincerely Your
1. Md. Noman Mahamud ………………………..
2. Sabiha Yeasmin ……………………………………….
3. Afrin Nahar ………………………………………..
4. Khadiza Tuzzahan……………………………………….
5. Mohammad Shahin………………………………………

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“ FRIENDS FOREVER”
GROUP MEMBERS
SL NAME ID
1 Md. Noman Mahamud 12102020
2 Sabiha Yeasmin 12102029
3 Afrin Nahar 12102034
4 Khadiza Tuzzahan 12102030
5 Mohammad Shahin 11302101

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Acknowledgement
It is a great pleasure to prepare Case project paper on this subject MGT-403 and
gain an experience on Performance Appraisal. I would like to thank and convey
our honorable faculty ATM Sayfuddin (CBA) IUBAT (International University of
Business Agriculture and technology), for giving us an opportunity to prepare this
Case Study. I would also like to express my sincere appreciation to his
wholehearted support and guidance.
Many thanks are due to Tanvir H Dewan course coordinators of College of
Business Administration & A.B.M. Monirul Haq for their help and encouragement.
I am grateful to all of them, their help and support made it possible for to make
this report into a desired & successful ending.
Table of Content

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SL Description Page Number
01 Introduction Part 1-6
02 Introduction 7-13
03 Corporate Governance 14-15
04 PEST Analysis 16-18
05 Industry Life Cycle 19-21
06 Value Chain Analysis 22-25
07 Porter’s Five Forces 26-28
08 Ansoff Matrix Analysis 29-34
09 Financial Report 35-36
10 SOWT Analysis 37-40
11 Recommendation 41
12 Reference 42
Introduction
Background

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THE HISTORY OF TELEVISION BEGAN IN 1939 with the purpose of
providing people with entertainment in their homes. It was followed in 1950 by
the invention of the remote control—an extraordinarily successful invention.
Forty years later, two creative Silicon Valley veterans, Mike Ramsey and Jim
Barton, invented an innovative and advanced technological development, a digital
video recorder (DVR) called the TiVo. They created TiVo to be “TV”
You’re Way.” According to its founders, “With TiVo, TV fits into your busy life,
NOT the other way around.” By now, many people may have heard of TiVo from
its being mentioned in popular TV shows and motion pictures. Even Oprah
Winfrey wondered in the September 2005 issue of her
“O” magazine: “Why can’t life be like TiVo?” Unfortunately, even by 2007, not
very many people knew what TiVo did or how it did it.
Overview
Pioneered by Mike Ramsay and Jim Barton, TiVo redefined television
entertainment by delivering the promise of technologies that up until then had
only been promised. Incorporated in Delaware and originally named Teleworld,
TiVo was founded as a company on August 4,
1997. As proposed, the original concept was to create a home network–based
multimedia.
The main purpose of this paper is to conduct a strategic appraisal of TiVo. The
entire discussion is divided into three phases. The first part examines the external

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environment of the company by various tools (PESTEL, Porter’s five forces
analysis, Industry life cycle). The second stage conducts an internal analysis of the
company through value chain analysis, Ansoff Matrix and financial appraisal.
Finally, the last part suggests some recommendations based on the investigations
done in the first two stages.
Now, before we analyze the external environment let us have a look at the
background of the company.
Current Product of TiVo:
Currently, Tivo develops DVR software and stand-alone units with a selling focus
towards television viewers seeking an improved and interactive viewing
experience. A DVR unit is a set-top box that performs three different main
functions:
Tivo and live television – Tivo allows the viewer to pause and rewind live T.V.
programs so they don’t miss a moment of their show. No longer does a trip to
the bathroom or the refrigerator keep the viewer from watching their entire
program. Tivo also automatically records the show you are watching as you are
watching which allows you to rewind it as far as fifteen minutes into the past.
This means if a friend walks in the room and didn’t catch the first ten minutes of
the show the viewer can rewind it back to the beginning and watch it again. Tivo
also allows the viewer to fast forward through commercials that took place as it
was recording the show. So typically after starting the show over the viewer
could eventually catch back up to live television by fast forwarding through
commercials.
Tivo and recording – Tivo also works as a video and television program library
storing the viewers recorded movies and programs on its hard drive. Tivo’s hard
drive comes with a certain amount of memory and the customer can choose
anywhere from 40-120 hours of memory when they purchase their unit. Viewers
can then set-up their Tivo to tape any show they want, much like a VCR, however
Tivo can store many more programs than a VCR tape would be able to. In

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addition the viewer can program Tivo to tape the favorite shows every time they
come on no matter what channel they are on. This means that if a viewer likes
“Friends” the Tivo is able to record all six episodes in one day from different
channels through just one command. Viewers are also able to give Tivo
commands of what shows they like and Tivo will automatically find similar shows
and tape them.
Tivo Home Media Option – A final option with Tivo for extended cost is
networking Tivo programs throughout your household. This means that a viewer
can save a program on their living room T.V. and later transfer it to their bedroom
television. This allows the viewer much more memory space because they have
multiple units but also more convenience because they are not limited to a
certain room in their house to watch a movie or program they have saved.
As the above indicates the DVR is a very versatile machine and because it allows
consumers to watch what they want, when they want, the Tivo and DVR market
may prove to be more profitable than any of us realize.
Quality:
Tivo had not developed a clear strength in the quality of their product however
they have stressed quality in product design and customer service. They offer a
new user-friendly interface with such menus as the “To-Do List”, a list that helps
users navigate through the Tivo recording process helping to ensure a quality
experience for the consumer. In spite of Tivo’s features the performance of the
machine doesn’t match up well when compared to ReplayTV’s unit. ReplayTV has
higher quality video output due to special video input plugs on the rear console as
well as a commercial skip button, which many consumers find appealing. They
were also the first to offer networking to enable the customer to watch saved
programs in different locations throughout their house; a feature Tivo has now
added for an increased fee.
Efficiency

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The efficiency building block is hard to analyze. Tivo is attempting to be a stand-alone
unit, while other DVR providers in the industry, such as the non-name
brand unit linked with EchoStar satellite services, come in conjunction with cable
or satellite services. Tivo has clearly not been efficient in producing and selling
their stand-alone units, however Tivo has been successful in selling and
integrating their software into satellite systems such as Direct TV. The main
competitor for the stand-alone market segment, ReplayTV, is a privately held
company, thus making the financial records hard to gain access to. Although ROA
is not an effective method of rating efficiency, when compared to Echostar, Tivo
looked inferior. Tivo had a ROA of –68% compared to Echostar’s –10%. The
economies of scale that Echostar can utilize give them a definite advantage when
efficiency is considered.
An interesting realization regarding Tivo that evolved from this analysis is that
they lack a competitive advantage in any of the four building blocks. They are not
the first to innovate; yet they are not the low cost leader. Though they are above
average in all categories, they lead none of them. The strength of Tivo lies in the
marketing efforts they have undertaken.
Current Situation of TiVo:
Tivo has not and is not on its way to creating a sustained competitive advantage
in the industry. Though the most easily recognized brand of DVR’s, Tivo has yet to
make a profit in its near six years of existence. The latest figure was a 4.4 million
dollar loss for the third quarter of 2003. Although that is a $10 million dollar
improvement from the previous year, the Tivo situation still faces considerable

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roadblocks to sustained profits. Tivo remains reliant on developing and
maintaining relationships with satellite and cable providers in order to remain
competitive in the industry. Sixty-two percent of Tivo’s subscription growth came
from an existing partnership with DirecTV to offer DVR services in conjunction
with satellite television. As of now, the situation of this current relationship is up
in the air. Presently, DirecTV’s parent company is in the works to be acquired by
News Corp. News Corp. already owns the British firm NDS, which is developing it’s
own DVR technology. If this relationship breaks down, Tivo will find it difficult to
find another parent with enough clout in the cable/satellite industry to record
profits. Other communication giants, such as DISH network and Comcast (DVR out
in Jan. 04’), supply generic DVR’s and services for a lower price and cheaper
monthly fees. With television viewers separated so clearly based upon service
providers, a long-lasting mutually beneficial relationship with a cable/satellite
company is a required element for Tivo to achieve success.
The prospects of Tivo being successful in this industry for a
sustainable amount of time are slim and uncertain. The stand-alone unit for the
Tivo cannot financially compete with the DVR packages that television providers
are offering at discount prices. Tivo is at risk of becoming a niche product,
comparable to Apple computers in that only a select few will have a desire to own
the product. On the other hand, Tivo may be able to achieve profitability and
success by concentrating on their core competencies of software development
and marketing.
Tivo has diversified itself in the industry by promoting its DVR as the user-friendly
system in the market. This is due to their software, which is made up of
many different menus the viewer will use when operating a Tivo DVR. These
menus are said to be simpler for the viewer to understand and use which had
pushed many consumers towards Tivo however high quality software isn’t the
main thing that has sold their DVR’s. Marketing seems to be Tivo best
competence thus far because it has established their name in the market resulting
in many consumers acknowledging DVR’s as “Tivo’s”. This has been extremely
beneficial for Tivo because they have the set the standard in the market and are
the most well known manufacturers of DVR’s. Tivo could attempt to leverage

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their visibility to consumers as a selling point in creating profitable relationships
with third party DVR manufacturers.
The question however, is will the competences be enough to bring Tivo to
profits? While the answer is hard to find, currently it seems these competences
will not suffice. Tivo does have a brand name advantage but consumers are
slowly seeing more advertising for generic DVR’s and the price is so much less it
has been hard for consumers to ignore. While some are still chasing after the
name and the user-friendly system others will gladly take the more complicated
less popular DVR for the drastic price cut. Currently a Tivo unit will cost a
consumer $100-250 with a $10-15 per month fee. Customers of a cable company
such as Comcast will be able to get a DVR unit in January 04’ for free and pay only
$10 per month. Some other cable companies have advertised as low as $5 per
month. This is the very reason that competition is growing so quickly in the DVR
market and why so many companies, especially in cable and satellite, are
interested in manufacturing their own units.
An important lesson learned from Tivo is that consumer demand of the DVR
market is less oriented toward superior quality and differentiation than it is
towards low costs. With the amount of complimentary products to television
viewing, along with considerably high monthly cable and satellite bills, consumers
are looking to save money in certain areas. With generic DVR’s offering the same

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basic abilities as Tivo, though in an inferior manner, consumers are choosing to
save their dollars.
If executives expect to turn Tivo into a profitable company in the DVR
industry, they must focus on company strengths such a software development
while phasing out their weakness of manufacturing. Tivo cannot compete with
the economies of scale that Comcast and DISH possess, thus making the Tivo
stand-alone unit a financial liability to the company. By ceasing unit production
and instead redoubling efforts to research and development, Tivo can continue to
generate innovative and consumer friendly software for DVR devices. Third party
manufacturing companies that lack sufficient research and development could be
possible suitors of Tivo’s widely known software interface.
Corporate Governance

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Top Management
In its early years, TiVo’s top management had been personally
involved in operations and marketing. Founder Mike Ramsay often made overseas
trips to conduct meetings and seminars with consumer electronics manufacturers.
This was as an attempt to convince the manufacturers to embed TiVo’s software
into their products. In order to make sure everything went well and accordingly to
plan, Ramsey focused on maintaining partnerships. He would rarely be in his
office. He would instead be on the road talking to companies that could help
TiVo build software and subscribers. During his tenure as TiVo’s CEO, Ramsey
did co m m it a nu m b e r o f m a n a ge r ia l e r ro r s.
Board of Directors
TiVo’s board of directors consisted of three executives from
the venture capital firms of Kleiner Perkins Caufield & Byers, Redpoint Ventures,
and New Enterprise Associates, three senior executives from NBC, Coca-Cola, and
Univision Communications, an independent consultant who had been CFO at
Univision Communications, plus TiVo’s current and past CEO, for a total of nine
members of the board. The board selected Jeffrey Hinson as its ninth member on
January 26, 2007, for his financial experience as an ex-CFO to join the board and
serve as chairman of its audit committee.
Board of Directors: TiVo
1. Board of Directors: TiVo Inc.
Name of Director Age Principal Occupation
Term

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Expires
Director
Since
Michael Ramsey1 56 Former Chairman of the Board & CEO, TiVo Inc. 2009 1997
Geoffrey Y. Yang1 47 Managing Director, Redpoint Ventures & General Partner,
Institutional Ventures Partners
2009 1997
Randy Komisar1 51 Partner, Kleiner Perkins Caufield & Byers 2009 1998
David M. Zaslav 46 Executive Vice President, NBC & President, NBC Cable 2007
2000
Mark W. Perry 62 General Partner, New Enterprise Associates 2007 2003
Thomas S. Rogers 51 President & CEO, TiVo Inc. 2008 2003
Charles B. Fruit 59 Sr. Vice President, Chief Marketing Officer,
Coca-Cola Company
2007 2004
Joseph Uva 50 CEO, Univision Communications, Inc. 2008 2004
Jeffrey Hinson2 51 Consultant. Past-CFO, Univision Communications Inc. 2007
2007
Notes:
1Elected at 2006 annual meeting.
2Added in January, 2007.
2. Board Committees
(as of 1/31/2007)
Audit: Hinson (Chair), Fruit, Perry
Compensation: Yang (Chair), Uva
Nominating & Governance: Komisar (Chair), Yang
Pricing: Zaslav (Chair), Perry
Technology: Ramsey (Chair), Komisar, Yang
PESTEL analysis

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The political segment centers on the role of governments in shaping business.
This segment includes elements such as tax policies, changes in trade restrictions
and tariffs, and the stability of government’s .Immigration policy is an aspect of
the political segment of the general environment that offers important
implications for many different organizations.
E Is for “Economic”
The economic segment centers on the economic conditions within which
organizations operate. It includes elements such as interest rates, inflation rates,
gross domestic product, unemployment rates, levels of disposable income, and
the general growth or decline of the economy, the economic crisis of the late
2000s has had a tremendous negative effect on a vast array of organizations.
Rising unemployment discouraged consumers from purchasing expensive,
nonessential goods such as automobiles and television sets. Bank failures during
the economic crisis led to a dramatic tightening of credit markets. This dealt a
huge blow to home builders, for example, who saw demand for new houses
plummet because mortgages were extremely difficult to obtain.
S Is for “Social”
A generation ago, ketchup was an essential element of every American pantry
and salsa was a relatively unknown product. Today, however, food manufacturers
sell more salsa than ketchup in the United States. This change reflects the social
segment of the general environment. Social factors include trends in
demographics such as population size, age, and ethnic mix, as well as cultural
trends such as attitudes toward obesity and consumer activism. The exploding
popularity of salsa reflects the increasing number of Latinos in the United States
over time, as well as the growing acceptance of Latino food by other ethnic
groups.

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T Is for “Technological”
The technological segment centers on improvements in products and services
that are provided by science. Relevant factors include, for example, changes in
the rate of new product development, increases in automation, and
advancements in service industry delivery.
E Is for “Environmental”
The environmental segment involves the physical conditions within which
organizations operate. It includes factors such as natural disasters, pollution
levels, and weather patterns.
L Is for “Legal”
The legal segment centers on how the courts influence business activity.
Examples of important legal factors include employment laws, health and safety
regulations, discrimination laws, and antitrust laws.
Indrustry Life Cycle analysis

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The industry life cycle is not the same as the product life cycle, because within an
industry there is a constant updating of products. For example TiVo Inc.TV
manufacturers first produced monochrome TVs, then colour TVs and
subsequently home entrainment systems. Within the colour TV segment, the
screen technology has evolved from cathode ray displays to flat screens such as
plasma screens. Recently the first 3D TVs and Internet enabled TV sets appeared
on the market.
However, eventually some industries may contract sharply and even disappear.
For example passenger sea transport (other than cruising) has been replaced by
air travel; photo-chemical photography has been replaced by digital photography;
video rental shops are being replaced by digital downloads or video on demand.
Industries evolve over time, both structurally and in terms of overall size.
The industry life cycle is measured in total industry sales and the growth in total
industry sales. The industry structure and competitive forces that shape the

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environment in which businesses operate change throughout the life cycle.
Therefore a business's strategy must adapt accordingly. It is useful to consider the
evolution of the industry life cycle in the context of Porter’s 5 Forces.
Introduction
In the introduction stage there are few competitors and there is no threat from
substitutes because the industry is so new. The power of buyers is low, because
those who require the product are prepared to pay to get hold of supplies that
are limited. Suppliers exert some power, because volumes purchased are still low
and the industry is relatively unimportant for suppliers.
Growth
In the growth stage the number of competitors increases rapidly as other firms
enter the growing industry. However, because at this stage growth in demand
outstrips growth of capacity, rivalry among firms is kept in check. The power of
buyers is still very low because demand exceeds supply. Often industry growth is
associated with high profitability. While at this stage firms may profitable, they
could still be cash absorbing and running risks as they jockey for position and
market share.
Maturity
As the industry enters maturity, the power of buyers is increasing because
capacity matches or exceeds demand. In contrast, the power of suppliers has
declined because by now the volumes purchased by the industry are very
important to suppliers. Losing a large customer could be very damaging to
suppliers. The threat from substitutes is now growing. The industry will start to
consolidate, possibly through mergers and acquisitions. Mature industries are
settled in, risks are low and cash is generated. However, rivalry among
competitors is fierce and falling prices pose a serious threat to profitability.
Decline
The decline stage poses new challenges. Capacity exceeds supply thereby

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increasing the power of buyers. The weakest competitors will withdraw from the
industry, leading to a decline in the rivalry between firms. At this stage firms may
also combine forces to ask for government intervention or subsidies to help to
protect the declining industry. The threat of substitutes is high; indeed substitutes
are often the root cause of decline. However, managed correctly, a slowly
declining industry can produce attractive returns for investors because there is no
new investment as the industry is gradually run down and milked for cash.
Value Chain Analysis

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Value Chain Analysis
Value chain analysis is a powerful tool for analyzing the activities within an
organization that bring products and services to market. The difference between
the cost of conducting these activities and the amount customers are willing to
pay for the final product or service is the profit margin. Information technology
can reduce the cost of these processes, thus increasing profit margins.
A value chain has primary and supporting activities. The primary activities are
those that take some raw material and transform it into something of greater
value — converting oil into gasoline or data and information into a report, for
instance. Some primary activities are: inbound logistics, operations, outbound
logistics, marketing and sales, and service. Inbound logistics entails purchasing

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and receiving the raw materials. Operations handle the actual conversion of the
raw materials into the finished product. Outbound logistics get the product to the
customer. Sales and marketing ensures that the customer will actually buy the
product. Finally, service makes sure the product keeps working after it is
purchased.
Supporting activities are those functions, such as accounting and human
resources, which the company requires to do business, but that do not directly
add value to a product or service.
Companies can gain a strategic advantage over the competition by focusing on a
particular portion of the value chain. For example, a company that primarily
provides service and support would focus on the service activities.
Exploring the rest of TiVo product is value chain we see that operations are the
actual assembly of the computers. However, most other computer makers are
able to assemble computers as efficiently as TiVo. Outbound logistics is concerned
with getting the finished computer to the customer and is primarily handled by
third parties, such as DVR. Marketing and sales develops marketing campaigns
and handles taking orders. TiVo has an extensive service operation, which handles
customer calls, but contracts with other companies for its onsite service. A variety
of supporting activities, such as human resources and research and development,
ensure that the primary activities run smoothly.
When a company starts to hear their customers saying “it’s very difficult to do
business with you” without providing exact details; when a company sees their
internal customer service scorecard showing good numbers, but the customer
survey result shows “poor service”; or when a company starts to see their long
term customers switching to their competitors; it is the time for the company to
evaluate their value chain to understand what they need to do win the trust and
confidence back from their customers.
However, it seems difficult to figure out what customers are really looking for,
and it’s difficult to decide which actions to take to improve the customer

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experience. There are many functions in the company, what exactly are the areas
causing negative customer experiences? In order to understand what activities
are leading to customer satisfaction, we can begin with the generic value chain
and then identify relevant firm specific activities. “A value chain is a chain of
activities. Products pass through all activities of the chain in order and at each
activity the product gains some value.” (Wikipedia) Using value chain analysis will
quickly help a company map out “touch points” with customers, capture pain
points, and identify opportunities for process optimization. I’d like to use a case of
an equipment rental company to explain how value chain analysis is used to
identify issues in order to enhance customer experience.
In this case, customers choose to rent instead of buy equipment for a lower cost
but at the same time expect good service. Customers can have the company
deliver equipment to them or pick them up with their own trucks. After finish
using the equipment, the customer can self return them to the company service
locations or the company will arrange collection from customers upon request.
Customers pay an initial fee when they receive equipment and then start to pay
rent based on the days of usage. Below is the value chain analysis I did for the
company to understand how each function interacts with customers and how
they can impact customer services. Please note below analysis only include
primary activities. Supporting activities such as procurement, technology, human
resource and firm infrastructure are not in the analysis, although they can also
indirectly impact customer experience from different prospective.
Primary functions of inbound logistics, operation, outbound logistics, marketing &
sales, and customer services are interacting with customers on a daily basis;
hence activities under those functions directly influence customers’ satisfaction
and their purchasing decision. By breaking down those functions into activities,
we can easily see the components in the value chain and how they create and
build value for customers. By asking questions for each activity, we can thus
realize what customers are expecting for each activity and whether there is
enough to be done to guarantee customer satisfaction.

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I’m not going to explain each activity in detail. The result of this exercise is to help
TiVo executives realize the challenges from their existing process structure and to
make the right decisions and actions to truly “serve” customers. Executives
should also face the fact that internal metrics are not always reflecting a
customer’s true experience. When the metrics are designed to meet internal
criteria and when those numbers are tied to employee performance bonuses, we
can expect that employees are incented to make a good number instead of to
provide good service. The company measures on-time based on the final date
stored in the system. When a shipment is going to be late, the employee in
Logistics calls the customer to get “approval” of changing the date of delivery in
the system, as if customer had another choice. At the same time, the TiVo defines
the on-time delivery window which is not necessarily what the customer is asking
for. Using a six sigma term, there is a gap between internal specifications and
external customer measurement. Unfortunately, because of political reasons and
high pressure for “performance”, even functional high level executives are not
willing to change the wrong measurements to correctly reflect real performance.
No wonder that even with high performance numbers in the service scorecard,
we cannot prevent customers from switching to competitors.
From such a value chain analysis exercise, many functional experts can identify
process improvement opportunities and take necessary projects to reengineer
processes. However, without further data analysis, the analysis won’t lead to a
priority list to allow the company to put the limited resources to the most critical
processes. Besides, the TiVo will not make fundamental changes without
establishing performance metrics truly reflecting customers’ requirements. Value
chain analysis can help companies to understand where they can create value for
customers. However, only when the company truly embraces “customer
experience” and makes fundamental changes will the value chain create real
value for customers.
Porter Five Forces

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1. Risk of entry by potential competitors- The risk of new entrants is high.
There are low barriers to entry in this industry, as seen by the latest influx of new
competitors who have produced generic DVR’s to compete with high end units
such as Tivo. The market is still growing at an exceptional rate, so more and more
potential competitors are jumping in to attempt to gain some market share.
Though Tivo does have a strong, loyal following, there is still a large amount of
consumers out there who don’t need all the features that Tivo has to offer, and
are willing to purchase cheaper versions provided by new competitors.
2. Rivalry amongst established companies – The rivalry amongst
companies is heating up. Price wars, especially because Christmas is around the
corner, have begun to dominate the industry. Echostar provides a free DVR unit
integrated into their satellite receiver, along with cheaper rates than what Tivo

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can offer. Comcast is coming out with its DVR that it plans to market the same
way Echostar did. Even ReplayTV has cut the cost of its monthly service in order
to tempt consumers to purchase their unit. Switching costs are relatively high for
a consumer, so the initial purchase of a unit is where the battle for market share
is won and lost.
3. The bargaining powers of buyers – This is very high for the DVR industry.
There are ample substitutes for the end-user consumer to purchase that offer the
same service that Tivo does. Tivo also faces high buyer power when dealing with
satellite and cable industry, potential buyers of their technology to integrate into
their own systems. There are relatively few cable and satellite providers, leaving
Tivo with little power over them. These companies have the ability to dictate
pricing of the Tivo technology because they can always develop or purchase their
own generic DVR provider.
4. Bargaining powers of suppliers – this is low for a few reasons. The
products that the suppliers sell have many substitutes; no single supplier has a
product that is clearly unique or different. Tivo could even possibly build the same
products its suppliers sends them. The main rationale for why supplier power is
low is that the electronics industry is saturated with thousands of suppliers who
produce similar products, and if required, a company could easily produce a
product that they have never produced before just to meet demand.
6. Substitute products – There are few available. The VCR is a viable
substitute product for consumers who want to record live television but
don’t want to pay for a service like the DVR. Computer software also offers
a viable option to record live television. Snapstream, a program that allows
the consumers computer processor to record live television without paying

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any subscription fees has recently hit the market. Many technology savvy
individuals might be interested in a product like this.
Ansoff Matrix Analysis

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Market penetration
Market penetration is the name given to a growth strategy where the business
focuses on selling existing products into existing markets.
Market penetration seeks to achieve four main objectives:
 Maintain or increase the market share of current products – this can be
achieved by a combination of competitive pricing strategies, advertising,
sales promotion and perhaps more resources dedicated to personal selling
 Secure dominance of growth markets

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 Restructure a mature market by driving out competitors; this would require
a much more aggressive promotional campaign, supported by a pricing
strategy designed to make the market unattractive for competitors
 Increase usage by existing customers – for example by introducing loyalty
schemes
A market penetration marketing strategy is very much about “business as usual”.
The business is focusing on markets and products it knows well. It is likely to have
good information on competitors and on customer needs. It is unlikely, therefore,
that this strategy will require much investment in new market research.
In the Ansoff matrix, market penetration is adopted as a strategy when the firm
has an existing product and needs a growth strategy for an existing market. The
best example of such a scenario is the telecom industry. Most telecom products
are existing in the market and they have the same market to cater to. Thus in
such cases the competition is higher and you might have to go out of the way to
cater to your market or to increase your firm’s market share.
Several things have to be considered when adopting the Market penetration
strategy. By using market penetration, you are ensuring that only the existing
resources of the firm are used and no extra costs need to be incurred in setting up
a new unit for . At the same time, your current group of employees is the best
people to notice any growth opportunities in the existing market. Thus they need
to be used optimally by providing them the right information at the right time.
There needs to be a combination of marketing and sales promotions if you have
to grow in an existing market with an existing product.
On the other hand, market penetration might not be the strategy you are looking
for. What if the market becomes too saturated? Fighting for a higher market
share in a saturated market accounts for higher expenses and lower profitability.
Thus the market analysis needs to be spot on and the market penetration strategy
should be adopted only if there is scope for increasing market share in an existing
market.

31
Market development
Market development is the name given to a growth strategy where the business
seeks to sell its existing products into new markets.
There are many possible ways of approaching this strategy, including:
 New geographical markets; for example exporting the product to a new
country
 New product dimensions or packaging: for example
 New distribution channels (e.g. moving from selling via retail to selling
using e-commerce and mail order)
 Different pricing policies to attract different customers or create new
market segments
Market development is a more risky strategy than market penetration because of
the targeting of new markets. Market development is the second market growth
strategy which can be adopted as per the Ansoff matrix. The market development
strategy is used when the firm targets a new market with existing products. There
are several examples of the market development strategy including leading
footwear firms like Adidas, Nike and Reebok which have started entering
international markets for market expansion. Every other day we hear of one or
the other companies thinking of lunching their products in a new country. That’s
the perfect example of market development. Similarly, on a micro level,
expanding from a current market to another market where your product does not
exist is also an example of market development.
For market development, you have to treat your product as a new entrant in the
market. Thus there are several factors which influence the market development

32
strategy of a firm. If the product already has a high brand equity, it possibly just
needs distribution points in the new market (Example – Walmart). The same goes
if the product is a needs product and known to be of high quality. On the other
hand, if the product is not established in your current market, it is not
recommended to start a market development strategy. You need to first cater
your existing markets.
The risk factor of a market development strategy is higher. This is because lots of
investment needs to be done when entering new markets. You need to advertise
and market your product for the customers to adopt it. For the same you need to
invest in admin expenses, advertising expenses, possibly new production facilities,
so on and so forth. Thus you might have to develop new strategic business units
itself to have a strong market development. This is exactly what is done in
international firms, wherein the unit in another country is treated as a separate
business unit or a profit center.
Product development
Product development is the name given to a growth strategy where a business
aims to introduce new products into existing markets. This strategy may require
the development of new competencies and requires the business to develop
modified products which can appeal to existing markets.
A strategy of product development is particularly suitable for a business where
the product needs to be differentiated in order to remain competitive. A
successful product development strategy places the marketing emphasis on:
 Research & development and innovation
 Detailed insights into customer needs (and how they change)

33
 Being first to market
Product development in the Ansoff matrix refers to firms which have a good
market share in an existing market and therefore might need to introduce new
products for expansion. Product development mainly happens when you have a
good customer base and you know that the market for your existing product has
reached saturation. Thus you cannot apply the market penetration strategy. You
can therefore opt for a new product development strategy which caters to your
existing market.
Lets take an example – Why do firms like P&G and HUL keep on introducing new
products in different categories? This is because both of these top FMCG firms are
already present in the market. They are only leveraging their strength in the
existing market by introducing new products. Imagine if HUL today introduces a
soap. It is already selling its shampoos and soaps in all grocery stores across a city.
Thus it will start selling this new product in the same distribution channel and
achieve new product launch as well as an improvement in profitability just by
using its current market.
The product development strategy, like the market development strategy is risky.
This is because product development involves investing in developing a
completely new product. The product will also need further investments for
distribution, marketing and manpower. Furthermore, by introducing a wrong
product which does not gain acceptance in the market, you might be affecting
your brand equity. Thus plotting your firm in the right quadrant on the Ansoff
matrix becomes critical.
Diversification

34
Diversification is the name given to the growth strategy where a business markets
new products in new markets.
This is an inherently more risk strategy because the business is moving into
markets in which it has little or no experience.
For a business to adopt a diversification strategy, therefore, it must have a clear
idea about what it expects to gain from the strategy and an honest assessment of
the risks. However, for the right balance between risk and reward, a marketing
strategy of diversification can be highly rewarding.
Diversification is a strategy used in the Ansoff matrix when the product is
completely new and is being introduced in a new market. The best example for
Diversification can be big groups like Tata or Reliance which initially started with
one product but have expanded into completely unrelated segments by
introducing new or their own products. Tata for example has presence in steel,
motors and now in retail.
However, Diversification should be taken as a last option and should be adopted
only when the company is very strong financially. As seen in the above two
strategies, if the product or the market changes, the company has to do some
heavy investments to be successful. In case of Diversification, both product and
market are new and hence the amount of investment required would be high
thereby considerably increasing the risk factor. Therefore we see larger groups
with deep pockets and multiple SBU’s actually using the process of diversification.
Thus depending on your product and your existing customer base, you can decide
which quadrant you fall under in the Ansoff matrix. Once you know your position,
the Ansoff matrix also outlines the right kind of strategy to adopt. The Ansoff
matrix is especially useful for multi product organizations or organizations which
are planning to increase market share.

35
Financial Report
Year Ending January 31, 2007
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 89,079
Short-term investments 39,686
Accounts receivable, net of allowance for doubtful accounts of $271
Inventories 29,980
Prepaid expenses and other, current 3,071
Total current assets 182,457
LONG-TERM ASSETS
Property and equipment, net 11,706
Purchased technology, capitalized software, and intangible assets, net 16,769
Prepaid expenses and other, long-term 1,018
Total long-term assets 29,493
Total assets $ 211,950
Liabilities’ and Stockholders’ Equity (Deficit) Liabilities
Current Liabilities
Accounts payable $ 37,127
Accrued liabilities 36,542
Deferred revenue, current 64,872
Total current liabilities 138,541
Long-Term Liabilities
Deferred revenue, long-term 54,851
Deferred rent and other 1,562
Total long-term liabilities 56,413
Total liabilities 194,954
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’EQUITY (DEFICIT)
Preferred stock, par value $0.001:
Authorized shares are 10,000,000;
Issued and outstanding shares – none — —
Common stock, par value $0.001:
Authorized shares are 150,000,000;
Issued shares are 97,311,986 and 85,376,191, respectively and

36
outstanding shares are 97,231,483 and 85,376,191, respectively
97 85
Additional paid-in capital 759,314
Deferred compensation — (2,421)
Accumulated deficit (741,845)
Less: Treasury stock, at cost – 80,503 shares (570) —
Total stockholders’ equity (deficit) 16,996 (29,372)
Total liabilities and stockholders’ equity (deficit) $ 211,950

37
SWOT Analysis
Tivo, a company currently on the forefront of the DVR industry, has an array of
opportunities at its fingertips. First, the DVR industry is on the rise, with analysts
expecting an increase to 25 million homes in 2007, up from 3 million homes
today. With this exploding consumer base, Tivo can maintain high profit margins if
it can secure a long- term significant market share. Tivo can also license out its
product to electronic companies such as Panasonic to form strategic partnerships.
The opportunities of new product innovations such as the new DVD recorder with
Tivo capabilities could garner a lot of attention from television consumers in the
near future.
Advertising and promotion also lends itself to being an opportunity for Tivo.
Tivo has sponsored content such as free concerts or special features that are paid
for by companies seeking to advertise their products in a unique way. From
special movie behind the scene features to free live concerts to promote a new
CD release, Tivo has the opportunities to utilize this marketing aspect of their
operating system.
The global market is another temping opportunity. The United States is just
one of many countries that enjoys viewing television and that can provide a
strong consumer base for Tivo’s products. Once Tivo becomes more stable and

38
accepted in the United States, a push for control of foreign markets could become
the next step for Tivo, Inc.
The DVR industry is not without its threats though. A major threat to Tivo’s
survival is that cable and satellite providers are producing their own generic DVR
unit to market to their subscription base. DISH networks has already introduced a
generic DVR that reached 1 million subscribers two months before Tivo hit that
plateau, even though Tivo had been working towards the goal several years more.
Comcast Cable is also beginning to introduce their own DVR technology to be
offered out in conjunction with cable services. Ad campaigns have hit the air wave
on behalf of Comcast that are essentially designed to increase the awareness of
Comcast technology while eliminating the branding that Tivo has over the DVR
industry.
Opportunities:
 The embryonic DVR industry
 Unique promotional and advertising capabilities
 New relationships with cable companies
 The Global market

39
Threats
 Low barriers of entry
 Generic DVR’s such as Comcast and Echostar’s units
 Buying power of satellite and cable companies the stand alone box
becoming obsolete
Strengths

40
 Equity investors such as Cox Cable, Comcast, Showtime, Disney, and TV
Guide Interactive.
 Patents for pioneering innovations associated with DVR software &
Weaknesses
 Stand-alone systems are not accepted as TIVO expected.
 Need to have Board of Directors from companies that influence future of
DVR industry. IE) Cable
 Single supplier for key product components
 Over reliance on partners
 Separated from customers by partners
 Cannot make financial obligation without more investments
 Outsource key value added functions
Recommendation
hardware.
 Marketing campaign has developed brand recognition in the DVR market.
 Licensing technologies to Sony, Toshiba, Pioneer, and DirecTV.
 With TIVO integrating their technologies with other company’s products,
TIVO can drive adoption for these next-generation products which will
drive adoption for the TIVO service.
 Unique capabilities to measure audience viewing of programs and
commercials that can help broadcasters design programming with greater
value to advertisers & help them effectively target messages.

41
Tivo does not have a sustainable competitive advantage. This is due primarily to
the fact that they are competing in a market that is in the early stages of
development. To date, Tivo has been experiencing a negative return on invested
capital, which is how we measure the competitive advantage that a company has
in its industry. However, Tivo does have strengths that can potentially lead them
into a leadership position and attain a competitive advantage in the DVR market.
They currently provide a multitude of features that are not available with the
generic versions of the DVR that are offered by their competitors. They are the
first movers in the industry and are constantly searching for ways to keep an edge
on the rest of the field. By advertising through mainstream media channels and
creating partnerships with well established firms, Tivo has been able to get their
name out into the public which is helping them gain market share.
Tivo may be able to become a major player in the home electronics market
by broadening their product lines. With only the DVR Tivo is limiting their
potential to the acceptance of this one product and is making themselves
vulnerable to competitors, such as the cable and satellite providers. By
diversifying their product offering they may be able to use their marketing efforts
to segment different markets and provide more security to their long-run viability.

42
R E F E R E N C E S
http://www.TiVo.com/
http://en.wikipedia.org/wiki/TiVo
http://en.wikipedia.org/wiki/High-definition_television
http://egotron.com/ptv/ptvintro.htm
http://news.com.com/TiVo,_Comcast_reach_DVR_deal/
2100-1041_3-5616961.html
http://news.com.com/TiVo_and_DirecTV_extend_contract/
2100-1038_3-6060475.html
http://www.technologyreview.com
http://www.fastcompany.com/magazine/61/TiVo.html
http://iinnovate.blogspot.com/2006/09/mike-ramsay-cofounder-of-
TiVo.html
http://www.acmqueue.org/modules.php?name_Content&pa
_showpage&pid_53&page_7
http://www.internetnews.com/stats/article.php/3655331
http://thomashawk.com/2006/04/TiVo-history-101-how-
TiVo-built-pvr_24.html
http://www.tvpredictions.com/TiVohd030807.htm

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