On the eve of a $15 million ad push touting the price cut of its standalone box to $99, News Corp.'s satellite TV operator DirecTV revealed that TiVo would no longer be the exclusive provider of its DVR technology. To wit, NDS Group, which has been News Corp's DVR partner in the rest of the world, will start working with DirecTV in the U.S. TiVo's current deal with DirecTV runs through 2007.
The pioneer of DVR technology has been buffeted over the past year by myriad threats to its struggling business model. The Alviso, Calif.-based outfit has been unsuccessful thus far in the pursuit of its "Intel Inside" strategy of licensing its technology to cable companies rolling out their next-generation of set-top boxes. As a result, the DirecTV relationship has taken on even greater importance to the company's future growth.
Despite the bad news, TiVo execs maintained a brave front. "This is the year of growth for TiVo," said Susan Cashen, VP-marketing. TiVo has promised Wall Street it will grow to 10 million subscriptions in the next three or four years from the 1.6 million reported in April and reach profitability at the fiscal year ending in January 2006.
Cashen's comments seemed to imply that TiVo can thrive even if it doesn't make good on the "Intel Inside" strategy heretofore pushed by TiVo President Marty Yudkovitz. According to Cashen, TiVo consumers "embrace premium brands" and are likely to stick with name brands, as opposed to "someone just going for free" DVR boxes from cable companies.
The print and radio campaign is designed to maximize its modest ad budget—ironically avoiding the potential for TV ads to be skipped or TiVoed. The standalone box's new price point, hopes the TiVo brass, will make the product more enticing as a holiday gift. TiVo's price tag started at close to $600 but has over time become more affordable with recent offers in the range of $200 to $150. "This is the moment. They are prepared to fight," said Brian Hurley, general manager, Grant, Scott & Hurley, San Francisco, TiVo's agency.
%%PULLQUOTE_RIGHT%% The campaign carries the tagline: "You've got a life. TiVo gets it." Creative features whimsical portraits by British artist David Hughes, each paired with what appears to be a handwritten testimonial for TiVo, smudges and all. One execution pushes new features such as TiVo's ability to display digital photos and calls out TiVoToGo, which allows users to send digital copies of broadcast shows to a limited number of friends over the Internet. The Federal Communications Commission recently gave its stamp of approval, in effect, to TiVoToGo over objections raised by the Motion Picture Association of America and the National Football League.
The campaign comes as TiVo has attempted to address questions about the long-term viability of its business model by pursuing multiple revenue streams. Beyond its "Intel-inside" licensing efforts and its emerging Internet-based offerings, it has also been offering advertiser branding and data services in its search for traction that will deliver scale and profits.
So far, it's been a tough slog. In May, the company announced a first-quarter loss of more than $9 million to $25.2 million. TiVo's stock price has also dropped from its high this year of nearly $13 to close at $4.78 last Friday.