Unique promotional and advertising capabilities
Generic DVR’s such as Comcast and Echostar’s units
Buying power of satellite and cable companies
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 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.
Tivo also faces the threat that the stand-alone box could become obsolete. DVR’s are being integrated into other set-top boxes and the stand alone version, which made up roughly 25% of Tivo’s third quarter new subscriptions, are being phased out. Because of this, the need for Tivo to form more strategic relationships with cable and satellite companies has magnified.
Low barriers to entry are another obvious threat Tivo must be concerned about. As seen by the latest influx of heavy weight competitors, Tivo must continue to be wary of new competitors coming in who can offer cheaper, more innovative, or easier to use products. Tivo will face a serious struggle to hold onto market share if they can’t differentiate themselves through low price of product innovation.
Lastly, consolidation of the DVR industry is a substantial threat facing Tivo today. Purchasing power of buyers is high because the possible customers of Tivo products, like Comcast, DISH, DirecTV, have a high degree of influence on the end users of television related products. By providing television services to their subscription bases, these communication giants can leverage their existing relationships with the consumers to better market and sell their products. An individual who can get a free or cheap DVR unit from Comcast that flawlessly connects to their cable system will rarely decided to purchase a Tivo, not matter how many features and add-on’s that are provided.
The demand for digital video recorders has steadily grown since the general public began to understand and have access to the technology.
Identify whether your company has a competitive advantage in its primary industry. (Tom Jozinovic)
At this time it is clear that Tivo does not have a competitive advantage in its industry. In fact it is currently a company that is not receiving profit at all. However many analysts are saying the time of profit is coming quickly. Some say by the beginning of next year Tivo may actually be “in the black”, which makes this an extremely exciting and competitive time. Who will be able to step ahead of the rest and lead the market? We may soon find out.
For the industry where your company has the most sales, evaluate your company against the four generic building blocks of competitive advantage. On which building blocks is it strong? On which is it weak? What lessons can you draw from this to understand the performance of your company relative to its competitors?
Tivo is rarely on the forefront of innovation in the industry. Instead, they are usually just a step or two behind. ReplayTV, a competitor of Tivo, introduced the concept of digital video recorders to the public several months before Tivo rolled out their own product. Also, ReplayTV introduced several add-ons that Tivo later implemented. ReplayTV was the first to offer 30-second time skips or the ability to automatically record any show with the viewer’s favorite actor or actress in it. The failure to be the innovation leader has not harmed Tivo significantly. In fact, television operators sued ReplayTV over an innovation that automatically skipped commercials on recorded shows. Even though Tivo is not the leader in innovation, it still remains strong in the industry. Tivo has shown and ability to improve their product without falling far behind the innovation leader, while maintaining stable relationships with companies such as Direct TV. They have not done well as an innovator but have done well to improve the technology. They have done this through developing a user-friendly operating system that can be easily integrating with existing satellite receivers such as those that Direct TV produces.