Comcast Contrarians

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Comcast Contrarians

Not everyone is singing the praises of the TiVo/Comcast deal announced last week. Ed Bott is concerned that Tom Rogers championed the deal, and shows a host of bad deals Rogers has been involved in previously.

On the other hand, Alex Rowland sees a TiVo divided. With Comcast throwing it's weight around TiVo will need to focus on carriers and advertisers ahead of consumers. I'm not sure I buy his argument that consumers will come last; TiVo didn't stop innovating just because DirecTV didn't want the Home Media Option. Also, letting the innovation slide will hurt TiVo's status as a premium brand.

Problems with business priorities have been a problem in the past. Ex-president Marty Yudkovitz was seen as a supporter of media ties, while ex-CEO and current-Chairman Michael Ramsay is a champion of the technology. The conflict between those goals has produced quite a bit of outcry from the community (and this site). So is the Comcast deal good news for TiVo? I'm still in the supporter camp, but there's certainly room for skepticism.

[Update: PVRblog pal Thomas Hawk sends along an interview with Comcast CEO Brian Roberts on the TiVo deal. Obviously Mr Roberts is in the supporters camp, but questions starting with "this is a juggernaut that will change the fabric of television" leave me expecting Jeff Gannon to tell Lost Remote's Richard Warner to calm down a little.]

by George Hotelling March 21, 2005 in Op-Ed, TiVo

Comments

There always have to be a few people who look for the grey clouds.

Posted by: MegaZone at Mar 21, 2005 11:47:25 AM

"There always have to be a few people who look for the grey clouds."

Amen to that.

Every silver lining has a cloud. Yeah, I bet TiVo wished they had these "clouds" hanging over their heads years ago.

Yes, they will be pulled in opposite directions by networks, providers, advertisers, and consumers, but that was TiVo's plan all along: to place themselves in the middle and provide services to all these groups, that gave these groups value for money greater than they could have gotten on their own without TiVo.

Consumers included.

TiVo has had to keep adjusting its stance in order to keep the proper balance in order to pursue its long term strategy, but whenever they do this, some alarmist comes along and claims that a temporary shift in balance is a permanent change in direction, which it is not.

The more subs TiVo has, the more consumer data they have to market and they more attractive they are to advertisers; they more money they make selling marketing data and services to advertisers and providers, the less they need to charge (either in monthly subs or in marketing costs) to get new subscribers, the less they need to charge, the more subs they get, which makes them more attractive to advertisers and providers, and so on, in a virtuous circle.

This doesn't mean that TiVo becomes less dependent on consumers, or more dependent on advertisers or providers, because TiVo's strategy does not work if they alienate any one of these groups. They have to keep them all happy, without sacrificing the interests of one at the expense of the others, and that is not an easy balancing act.

Once TiVo has "turned the corner", however, and gotten this "virtuous circle" spinning nicely, they will have created an entirely new, and potentially huge, business.

So, yes, if you want to find the negatives in any deal that TiVo does, that is easy to do, but it's no longer easy to fall for the panic that TiVo is doomed, and that's what is the most important thing. TiVo has a more than even chance of making it big, and that's something that no one was prepared to admit to just over a week ago.

Posted by: David Deane at Mar 21, 2005 6:10:21 PM

Totally agree with David - great post.

Posted by: New York at Mar 21, 2005 7:06:38 PM

I certainly hope that TiVo does manage to balance the interests of each constituent. (Frankly, my business model depends upon it.) So don't take my skepticism as that of a person looking for problems. All I've said is that TiVo will certainly survive as a result of this relationship (which was in doubt before), but I believe they are trading a brighter future for this security.

Having said that, a couple comments... TiVo has done some decent R&D work, but frankly I don't think they have done a good job of innovating since the DirecTV relationship. They released HMO and TiVoToGo, but HMO was not sufficiently marketed and TiVoToGo is essentially DOA. (at least in its current incarnation) Opening up their SDK is a good step, but this is less about great R&D and more about TiVos inability to keep pace with larger competitors (read: Microsoft) So I guess I’m not sure what innovations George is talking about. As a matter of fact, I think the poor implementation of TiVoToGo was due, in no small part, to TiVo’s desire to please content owners first and consumers second. I’m concerned that this pattern will be amplified as a greater portion of TiVo’s customer base originates from carriers.

As to David’s comments. I’m not sure any company that has a well defined business plan ever wants to serve so many masters. The problem is that each of these masters has a different agenda and different priorities. In many cases, these priorities are in direct contradiction with each other. I believe that TiVo has always had aspirations to use customer data to make advertising more effective, but this isn’t necessarily incompatible with a plan that puts customers first as long as they continue to derive a majority of their profits from customers. The problem is that companies have a nasty habit of doing the bidding of the constituent that is paying most of their bills. Once advertisers start paying most of the bills, you’ll see TiVo focus less on what customers want and more on what advertisers want. This doesn’t mean that what they produce won’t be acceptable to consumers; it just means they won’t have the same incentive to push the ball forward for consumers.

As for the solution you outlined, advertising revenue subsidizing monthlies to drive additional customer growth… If you buy my argument that it’s difficult to focus attention on two constituents that don’t always have the same priorities, you would also conclude that this solution only exacerbates the problem. If you don’t, well, time will tell.

TiVo is a tiny company; they need all the focus they can muster. I’m rooting for them to make this work; we need all the independent distribution channels we can find.

Posted by: Alex Rowland at Mar 21, 2005 9:07:43 PM

One last thing. If TiVo's going for the advertising model, they're going for volume. I'm not sure the premium thing will stick around that long. Someone else will fill the niche, especially if TiVo begins to really lose sight of the customer's priorities.

Posted by: Alex Rowland at Mar 21, 2005 9:10:12 PM

Alex:
Please can you explain how TiVo implementation of TiVoToGo is anti-consumer - thanks.

Posted by: New York at Mar 21, 2005 9:27:54 PM

BTW Alex:
Can you provide a more detailed explanation of what Cozmo Media is? Is it an advanced version of TiVo's existing online scheduling platform? Generally, sounds interesting...

Posted by: New York at Mar 21, 2005 9:35:19 PM

TiVoToGo is crippled by TiVo's effort to provide iron clad protection against content theft. The problem is, like with many similar efforts, this effort won't prevent this content from winding up on BitTorrent, but it does piss people off that try to use it. From my experience, and from what I've read, most people that have used TiVoToGo find that these efforts have yielded a product that is annoying to use, at best. So, the product is not anti-consumer. It's just pro-copyright holder before it is pro-consumer. This cripples the product.

Like I've said before. TiVo will continue to make people relatively happy, it just won't be breaking any new ground on many truly great consumer friendly applications. And this is sad.

As for Cozmo Media. We'll be releasing a product in June that essentially merges Netflix with TiVo HMO. Later this year we'll be adding support for user contributed video. Our Website should be up by mid April. It'll give you the full skinny.

Posted by: Alex Rowland at Mar 22, 2005 11:04:27 AM

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