Introduction
TiVo Company is renowned for the pioneering of Digital Video Recorders (DVRs) technology and the TV category back in 2007. Despite its innovative reputation and loyal customers, TiVo faces financial hurdles in its profits. TiVo did not have any competition in the market a couple of years after its inception in 2000. However, the company’s customer base has drastically dropped after entry of various firms in the industry.
Chicken-and-egg problem discussed in this case
The chicken-and-egg problem with the TiVo is that interactive television (ITV) raised concerns regarding the production, development and its adoption. There is inadequate compelling content in the Set-Top Box (STB) thus the number of consumers declines, and also the number of viewers is not sufficient enough.
TiVo’s strategy during its initial years of operation
The TiVo is focused on an aggressive strategy aimed at signing subscribers, conducting marketing research, and generating content. Most of the strategies were based on research & development in producing competitive and differentiated products in the market. An increased customer base and subscription pushed TiVo to diversify its revenue sources through enhancement of its products and services (Zittrain, 2008). The expansion was focused towards meeting the increasing demands of the consumers and enhance its competitiveness in the market.
Strengths and weaknesses in the strategy
Strengths
Partnerships
The Company has employed network strategies in partnering with various stakeholders in the market. For instance, TiVo partnered with Sony and Hughes Network System in the manufacture, marketing, and distribution of personal video recorders.
High customer growth rates
The company had one of the fastest customer growth rates of over 450, 000 subscribers by 2002. TiVo had an improved customer service platform that allowed engagement with customers to probe their needs and preferences.
Multiple revenue sources
Enhanced product and service delivery in the firm took the company further into diversifying its source of income through some of its clients such as General Motors, and Toyota Motors among others.
Weaknesses
Single suppliers for the main product elements
The company faced one major weakness of a single vendor for most important elements and services in the firm. CPU’s, MPEG2, and secure microcontroller semiconductor devices are some of the items that the company dependent on a single supplier (Rumelt, 2011). The dependency on a single supplier creates a significant risk to the business because a failure of the supplier can result in a failure of the whole business (Chaffey & Smith, 2013). Further, a single supplier dictates the cost of materials, which is a major disadvantage to the organization.
No financial obligations
The firm has gone into a deep financial crisis that requires a massive pull out though a heavy investment. TiVo needs a huge cash injection in its finances for it to engage in further financial obligations and maintain healthy financial statements.
Tom Roger’s Vision for the Future of TiVo
According to Tom Rodger, TiVo wishes to meet consumers’ prospects by providing the freedom and opportunity for customers to control their experience. The company needs to be redefined to adapt to the current state of technology (Chaffey & Smith, 2013). Additionally, the company expansion and diversification in new sources of income bodes well with the general objectives.
Chances of its Success
The chances of TiVo succeeding in the manufacture of DVRs solely depend on the on the financial resources and cash flow injection (Rumelt, 2011). On the other hand, if the company could create a substantial market for its products, it may pull out of the current financial hurdle.
TiVo’s Strategic Options Going Forward
TiVo needs to concentrate on one thing at a time and make perfection out of the selected item. The TiVo value chain is composed of Broadcasting, delivery, software, and equipment. One of the challenges the firm is facing is to aim at influencing the entire value chain rather than concentrate on an area where it excels (Zittrain, 2008). TiVo requires focusing on the technology core and expanding its customer base through product differentiation. On the other hand, the firm needs to undertake aggressive promotion campaigns and advertisements with the aim of standing out in the vicious competitive market.
References
Chaffey, D., & Smith, P. (2013). Emarketing Excellence: Planning and Optimizing your Digital Marketing. New York: Routledge.
Rumelt, R. (2011). Good Strategy/Bad Strategy: The difference and why it matters. London: Profile Books.
Schaeffler, J. (2013). Digital Video Recorders: DVRs Changing TV and Advertising. Burlington: Taylor & Francis.
Zittrain, J. (2008). The Future of the Internet--And How to Stop It. Virginia: Donnelley.
