TiVo Backed Out of Comcast Deal

[Chris Blount]

The New York Times reported on its Web site Monday that during the past summer TiVo reached an agreement with Comcast that would've allowed the nation's largest cable operator to offer customers its DVR product, but the DVR company pulled out of the deal at the last minute.

TiVo's decision to pull the plug on the pending Comcast deal came after months of tough negotiations. But at the end of the process, TiVo Chairman and CEO Michael Ramsey determined the deal wouldn't pay the company enough money, nor would it give TiVo enough control over its DVR product, The Times reported.

The Times, citing unnamed sources, also reported that Ramsay told the company's board about the failed Comcast deal, and that the board backed Ramsay's decision.

TiVo supplies DVRs to DirecTV, but that business is under pressure now that News Corp.-controlled DirecTV has its own DVR and is working with NDS Group, News Corp.'s TV technology company, on DVR technology. Also, Ramsay announced last week that he could step down from his CEO position, but keep his chairman role at TiVo.

http://www.skyreport.com (Used with permission)

[AllieVi]

I believe TiVo's survival is in serious jeopardy. When it was the only game in town, things looked bright, but the landscape has changed now that lots of competition exists. It needs to align itself with companies like Comcast that have a large subscriber base if it expects to be around for long. It's no longer in a position to demand control the way it once was.

[Mark Holtz]

From New York Times:

TiVo Struggles to Find Its Niche After Quitting a Deal With Cable

After months of hard bargaining, TiVo reached an agreement last summer to offer its pioneering video recording system to customers of the Comcast cable system, according to several people involved in the discussions.

Yet, at the last minute, Michael Ramsay, TiVo's chief executive, decided to pull out of the deal. Comcast was not going to pay TiVo enough money or give it enough control over its service, Mr. Ramsay told the company's board, according to people involved in those discussions.

Doing business with cable and satellite companies offers far less money, but from far more customers. TiVo receives about $1 a month from DirecTV customers (Comcast offered even less, people knowledgeable about the deal said), rather than the $12.95 a month it receives from its direct customers.

FULL ARTICLE HERE (http://www.nytimes.com/2005/01/17/technology/17tivo.html?oref=login)

[dbronstein]

I believe TiVo's survival is in serious jeopardy. When it was the only game in town, things looked bright, but the landscape has changed now that lots of competition exists. It needs to align itself with companies like Comcast that have a large subscriber base if it expects to be around for long. It's no longer in a position to demand control the way it once was.

I agree - the growth of DVRs is in integrated satellite/cable boxes, not stand-alone units. They blew a big opportunity.

[TerryC]

Doing business with cable and satellite companies offers far less money, but from far more customers. TiVo receives about $1 a month from DirecTV customers (Comcast offered even less, people knowledgeable about the deal said), rather than the $12.95 a month it receives from its direct customers.What am I missing here? One dollar a month per subscriber is better than zero dollars a month. Especially for a struggling company. Why not take what they can get?

[gcutler]

And that is probably why Michael Ramsay the CEO is now about to become the Former CEO. He probably could not shake his old mindset when dealing with Comcast.

[pomeroy]

Comcast has 22 Million subscribers! compaired to 14 Million Direct has, Even less than a Dollar with 8 Million more customers they could make up the difference maybe even more! Tivo messed up big time on this one, Its almost like they want to go under? :confused:

[Cholly]

Comcast has 22 Million subscribers! compaired to 14 Million Direct has, Even less than a Dollar with 8 Million more customers they could make up the difference maybe even more! Tivo messed up big time on this one, Its almost like they want to go under? :confused:
No doubt TiVo looks at things in a different light. They get $12.95 a month for a subscription with each standalone DVR they sell, and the standalones work just fine with ANY cable service. Why, then, should they give the store to Comcast?

[TerryC]

They have to hope that at least one out of every 13 users who would have gotten this dead deal is going to get Tivo at the full monthly price. I don't know if that's a safe bet but I guess their bean counters figured it was.

[Mike123abc]

The only way I can see Tivo getting out of this is if they come out with a 2 tuner cablecard ready box and compete with the rental fees the cable companies charge. If they had a monthly fee that was competative with the typical $10/month the cable companies charge (minus the cable card fee) they could build a business.

[Jacob S]

They could have gotten half of what they get from DirecTv and still would have half more than what they get from DirecTv since Comcast has so many subscribers. The extra money would make up for what they wouldnt get from DirecTv when they get their own DVR on the market. This basically would just keep Tivo afloat and Comcast trying to take advantage of the situation. I guess Tivo didnt like the fact that they would have had to do a lot more work for about the same amount of money.

[dbronstein]

No doubt TiVo looks at things in a different light. They get $12.95 a month for a subscription with each standalone DVR they sell, and the standalones work just fine with ANY cable service. Why, then, should they give the store to Comcast?

So they can stay in business?

Most customers don't have any attachment to Tivo software - they just want a DVR. And given a choice between being able to rent one for $10 a month from their cable company with no upfront cost that has 2 tuners and is an integrated box, or having to buy a SA and then pay $12.95 a month or buy a lifetime sub and then only have one tuner and have to deal with an IR blaster, it's not even close. Even if the Tivo has better softwrare, most people don't know and don't care.

In another year, there isn't going to be a market for stand alones any more. So they won't be selling any new units, and people who have the SAs are going to move away from them to get the boxes from their cable companies, what's going to be left? Just the die hard Tivo lovers, and that's not enough to keep the company in business.

[gglockner]

Amen.

The only long-term hope for TiVo is if they can somehow dominate the media hub business. But even more people, including Microsoft, are trying very hard for that market. Otherwise, let's hope that Rupert buys what's left of TiVo.