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TiVo adds 1-year contracts

Dave Zatz pointed us to this new part in TiVo's service agreement:

WITH RESPECT TO ANY NEW TIVO SERVICE SUBSCRIPTION ACTIVATED ON OR AFTER SEPTEMBER 6, 2005, YOU AGREE TO SUBSCRIBE TO THE TIVO SERVICE FOR NO LESS THAN 12 MONTHS (THE "SERVICE COMMITMENT"). IF YOU FAIL TO MEET THE SERVICE COMMITMENT BY CANCELLING YOUR SUBSCRIPTION TO THE TIVO SERVICE (OR IF TIVO TERMINATES YOUR SUBSCRIPTION TO THE TIVO SERVICE DUE TO A BREACH OF THIS AGREEMENT), YOU AGREE THAT TIVO MAY CHARGE YOU A $150 EARLY TERMINATION FEE, AND YOU AGREE TO PAY ANY SUCH EARLY TERMINATION FEE.

This fits with their August 2005 investor call where they announced they would be moving to a mobile phone-like retailing strategy.

On the one hand, I kind of like this.  I would rather see TiVo's retailing for $50 with no rebate instead of $200 with a $150 rebate.  By adding a service commitment they can get rid of rebates, although I should emphasize that I have not seen anything that says TiVo is ending rebates.

Still, I'm hopeful that they're replacing one customer hassle with another, less annoying one.  I'm constantly surprised that friends with $300 mobile phones think a $50 TiVo is too expensive, I think the rebates have encouraged people to think of them as $200 boxes.

On the other hand, this is much less customer friendly.  People hate mobile phone contacts but everyone goes with them because they're going to be paying for the service anyways so they might as well save $100-$200 on their phone.  The mobile phone companies are some of the least-liked business around, I know TiVo will lose a few evangelists over this.

Also, like I said, I'm simply speculating that this will end annoying rebates.  They could simply add this on top of the rebate system (which TiVo employees have defended).  That seems like a net-loss for consumers since someone who didn't like their TiVo would be out $50 before, now they're out the full $200.

by George Hotelling September 25, 2005 in TiVo

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