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A strategic Analysis on

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List key events and dates you are aware of in the history of your company.

(Tom Jozinovic)

  • 1939 Television introduced to the public

  • 1950 Zenith invents the first TV remote called the “Lazy Bones”.

  • 1997 Michael Ramsey and James Benton developed the concept of Tivo that will give television viewers the ability to record, rewind, and replay live television.

  • 1998 Tivo name and logo are developed

  • 3/31/99 Tivo and Phillips Electronics sign an equity deal to support their partnership.

  • 4/27/99 Tivo signs with an equity investment with Direct TV

  • 7/27/99 Comcast International Capital, Cox Communications, Discover Communications, Walt Disney Company, Liberty Digital, Advance Newhouse, TV Guide International, make equity investments with Tivo.

  • Sony and Tivo form a business alliance.

  • 9/30/99 Tivo announces its official public offering.

  • 2/29/00 Tivo + British Sky Broadcasting Groups ally to sell personal TV’s in the UK

  • 6/07/200 Tivo unveils Tivo Takes. A fully interactive video program.

  • 6/14/00 America On Line aligns with Tivo to form a strategic agreement and equity investment.

  • 6/28/00 Thompson Multimedia to deliver Tivo in the UK

  • 7/25/00 Tivo and Comcast Cable announce single market deployment of Tivo services.

  • 5/24/01 Tivo granted new patent on personal video recording software and hardware design.

  • 10/17/01 Tivo wins Emmy Award for outstanding achievement.

  • 10/08/01 Tivo signs licensing agreement with Sony.

  • 11/07/01 AT@T Broadband and Tivo introduce video recorders to AT@T cable customers

  • 12/11/01 Tivo awarded two patents covering core DVR functions and home networking capabilities.

  • Direct TV selects Tivo for next generation digital satellite receiver with DVR recorder.

  • February 2002 Tivo airs an exclusive, promoting Lord of the Rings

  • January 2003 Tivo and Toshiba align to develop DVD/DVR system

  • January 2003 DirecTV introduces first HDTV with integrated Tivo DVR

  • April 2003 Home Media Option available

  • May 2003 Tivo has 88% increase in growth compared to 1st quarter with 703,000 subscribers

  • 11/03/03 Tivo reaches 1 million subscription milestone

At what stage in the industry life cycle is the industry in which your company is based? What are the implications of this for the intensity of competition both now and in the future? (Larry Kuechler)
Tivo Inc. is a part of the personal digital video recorders (DVR’s) Industry, which currently lies within the embryonic phase of the industry life cycle. While it is gaining popularity slowly, the advantages of having a DVR is still a mystery to many consumers, which gives the industry ample room for growth. As a result, competition in this industry is extremely high. Currently Tivo has approximately 1 million subscribers, which puts them slights behind Echostar, a satellite and generic DVR producer. Other competitors include Comcast, Scientific Atlanta and ReplayTV. According to estimates, 25 million consumers will be using DVR’s by 2007, leaving it clear that the future competition in the DVR market will be extreme.
How dynamic is the industry in which your company is based? Is there evidence that innovation is re-shaping competition? Has it done so in the past? (Larry Kuechler)
Tivo is based in the Digital video recorder industry. This industry is very dynamic and is characterized by innovation and low costs. Companies competing in the industry must be able to innovate with new features and options while keeping costs low enough to compete with low-cost leaders in the market.

The constant innovation that occurs in this industry forces the re-shaping of competition. ReplayTv, with its 30-second skip feature, has innovated in such a way that they are facing legal troubles resulting from lawsuits by the major television programming providers. Tivo’s innovative thumbs up/thumbs down suggestions interface has resulted in Echostar and Comcast attempting to lure customers in through other methods, such as low prices or free units. These innovations have re-shaped the industry and how competitors market and produce their products.

Apply the 5 forces model to the industry. Overall, what conclusion does it lead you to draw about competition? (Larry Kuechler)
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 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.
5. 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 any subscription fees has recently hit the market. Many technology savvy individuals might be interested in a product like this.
Is the competition in your industry global? Or do companies compete mostly within a single country or region? Is their evidence it is becoming more global?

(Larry Kuechler)
Because Tivo and the DVR industry is still in the embryonic phase it seems that they have yet to venture out as a global industry. In fact, the industry is still attempting to make itself known in its current location of current competition, the United States. In spite of this, Tivo has teamed up with major partners such as Sony and DirecTV, showing its possible preparation for an eventual entrance into the global market.
Analyze the impact of the national context on the industry in which your company is based? Do local demand conditions, factor conditions, related and supporting industries, or the intensity of rivalry in the country your company is based help or hinder it? (Larry Kuechler)
The demand for digital video recorders has steadily grown since the general public began to understand and have access to the technology. Television has long been a centerpiece for American life. Television is used for entertainment and information, by a variety of homes, lifestyles and people. Tivo taps into this resource, offering a complimentary product that it hopes will become a certified household necessity. The company experienced a growth of 107,000 subscriptions in the second quarter of 2003, and just recently hit the 1 million mark for total subscribers. No other country surpasses the large T.V. viewing population of America, making the demand conditions of the United States a definite advantage for the firm.
The factor conditions of the U.S also prove to be an asset to Tivo. Capital can be obtained from private individuals or large corporate banks. Though it is dimmed, the spirit of entrepreneurship still lives in the U.S.A. With a vast supply of skilled and educated workers, Tivo has the ability to choose from a knowledgeable workforce that can’t be replicated in most other countries. Another advanced factor that the U.S.A provides is the communications infrastructure. Most homes already have televisions or phone lines in them. This factor helps contribute to the demand conditions as well.
Related and supporting industries for Tivo include cable and satellite companies, broadcasting stations, VCR’s, computer chip manufacturers and television set manufacturers. The broadcasting companies, such as ABC or Fox, have the ability to dictate the success of Tivo. Because Tivo is a complementary product to televisions, if Fox, ABC and other channels begin to offer substandard quality programming, the use of Tivo will drop considerably. But because the broadcasting firms in the U.S.A put out a surplus of television programs the public wants to see, a market for Tivo is created. The vast coverage of cable and satellite companies offerings services in the U.S also help Tivo. And though much of chip and television manufacturing is done over seas, this doesn’t impact the operations of Tivo in the U.S. to much extent. As long as the chips and T.V. sets remain compatible with the Tivo receiver, Tivo doesn’t have too much to complain about.
The intensity of rivalry for this industry is considerable. Tivo faces major competition from Echostar and Comcast, both companies that provide generic DVR’s given out with their satellite and cable service plans. ReplayTV is the largest competitor in the stand-alone DVR market, while SnapStream offers an alternative method for DVR’s by providing software that allows a PC to perform the same function as a digital video recorder. The amount of competition in the industry is forcing Tivo to evolve. Currently, Tivo is considering altering their business plan by shifting the production and research focus from DVR units to the development of software. The intense competition is forcing Tivo to cut costs while innovating its product, creating a better end product for consumers.

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