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OK...long time lurker first time poster....
- PTCM: NO. This is rude and to in-your-face. nuff said.
- Menu Additions: NO. Adding advertisements to a functional interface is completely wrong. Functional interfaces need only functional items, especially in TiVo Central!
- Email: NO. There is too much SPAM now and I don't need more.
- Ads in Showcases: MAYBE. I struggle with this one. (See below)
Opinion on TiVo's Economic Strategy
I have read all posts in both threads and agree with points on both sides; however, I still don't like the idea of ads in TiVo. As stated, TiVo does not make money on the hardware, but does on the service. So, in my case, TiVo has a revenue stream of $120 ($9.95 a month) a year to provide me the following:
- Software for my TiVo
- TV Listings
- Cable lineups
- Customer Service
This is a reasonable fee for this type of service. I am paying for the recurring expenses for supporting/developing OS/software and delivering a guide. I would suspect that the guide data is almost free to TiVo, as it is to many Internet portals (yahoo, excite, etc). The OS is mostly free, because itís a UNIX variant. So, this boils down to a relational database that can update itself with data everyday with from the user in the form of preferences/season passes and from TiVo in the form of guide data.
Looking at generic relational database like Access or Filemaker, you will discover costs between $250 and $350 new. At first sight, $120/year does not cover the entire cost. Where does the balance of the non-recurring expenses (NRE) come from: TiVoís investors. So, I am only paying for recurring cost on the software. Returning to the database analogy, the yearly cost to maintain Access is $120 a year. Remember also that Access is a generic database, so there is actually more development involved with Access than with TiVo. I would suspect TiVo uses Oracle or something similar, which means they only have to write an Oracle app and GUI, which is not tremendously tough. So, I believe there is some profit built in a constant recurring revenue model that I am in ($9.95 a month).
Of course, this simplified analysis does not take into account the honking-database and support structure at TiVo itself, which can cost big bucks; however, this too is mostly NRE and is covered by the investors. Investors make money by absorbing risk. Their view is if enough people sign up then they can outstrip NRE and make a profit.
In a nutshell, I am paying a reasonable amount for this software. If TiVo wishes to include more ads than what is currently in Showcases, then my recurring cost should be lower, because TiVo would have an additional revenue streams above my recurring cost. In fact, the more ads added, the closer to $0 my recurring costs should be IMHO.
Personally, I believe TiVo made a big mistake allowing a one-time fee. One-time fees only guarantee revenue for a certain period of time. Eventually that stream will disappear, and TiVo must look for other ways to generate revenue. The only thing I can figure is that TiVo is betting that Moore's Law (technology doubling every 18 months) will force owners to buy replacement TiVo and another service contract. I donít see that happening on this board. In fact, IMHO, I believe the one-time fee is the whole reason we are seeing ads pop up now, because revenues are finally starting to drop-off from the one-time service contracts that started 2 years ago.
Oh well, I guess we have some choices to make:
- Pay the one time fee, hold your TiVo forever, and get ads
- Buy a new TiVo every 18 months and pay the one time with no ads
- Buy a TiVo and pay $9.95 a month with no ads
I think itís as simple as that. This whole situation is really simple economics at work.
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