TiVo Outlines Aggressive Growth, Marketing Strategy

Facing questions from Wall Street about its long-term survivability and at least one competitor looking to take away its biggest client, TiVo outlined how it will execute an aggressive strategy to grow what has been so far a high-profile but no-profit business model.

The San Jose, Calif.-based digital video recorder pioneer stunned analysts in February when it said it would hit 10 million subscribers within four years. During a conference call Tuesday night following the release of its first-quarter earnings, TiVo executives laid a foundation that includes a deepening product line, rebates, and other pricing strategies--and a marketing program aimed at what the company said were the types of people who would be interested in its products.

They also repeated TiVo's vision of going beyond the DVR, whose business model has been under stiff competition from other satellite and cable providers that have been introducing their own service--often with lower initial and monthly charges. Last year, TiVo made a major move to make the TiVo box the center of not just the television viewing, but other media consumption within the home. Later this year it's expected to unveil TiVoToGo, which will allow customers to burn DVDs of their favorite shows.



Some observers have doubted that TiVo is more than a one-trick pony--helping to usher in the era of the DVR but perhaps unable to cash in, as it looks more like a commodity. There's also concern that a major source of TiVo's growth, a deal with DirecTV, could dry up if the satellite service cozies up to fellow News Corp. unit NDS PLC, a TiVo rival.

It certainly wouldn't have been as good a quarter if it weren't for DirecTV, which is responsible for about half of TiVo's almost 1.6 million subscribers. TiVo increased its subscription base by 264,000 in the quarter ended April 30--five times more than the same period a year ago and a record for the company. It was well ahead of the 180,000 to 200,000 that TiVo had earlier predicted.

Nearly 196,000 of those subscriptions came as a result of its deal with DirecTV.

TiVo chief Mike Ramsey said Tuesday night that the retail channel--through deals with consumer electronics manufacturers packaging TiVo service with DVD recorders--will grow increasingly important.

While the company expects to achieve profitability by the end of next year, increased marketing costs took their toll in this past quarter. Its net loss was $9.1 million in the quarter, compared to a $7.9 million a year ago. Revenues were up from $28.5 million in the first quarter of 2003 to $34.5 million in the first quarter of 2004.

Next story loading loading..