Brad loves his Tivo, as does seemingly everybody else that owns one.

I have considered buying one myself, but there's one thing in particular that has stopped me from doing so so far: Tivo has yet to make any money, and a Tivo box without a Tivo service is worthless. This is because you're not just buying a piece of hardware, you're buying a piece of hardware that's dependent on a service. If I buy a Tivo system today, and a few months from now Tivo goes under, their service will stop and I'll have a $350 paper weight.

Brad has some suggestions on how Tivo could make money tomorrow, I have one too: adopt the business model of a cable company and start leasing Tivo hardware instead of selling it. It would take away the risk for the consumer and make them a lot more willing to give Tivo a try. People like me would not have to worry about Tivo not being around anymore, and people who aren't sure if Tivo is for them can give it a try without the commitment of buying the hardware.

If Tivo is as good as every Tivo owner out there thinks it is, most consumers that try it will end up keeping the service for a long time and will tell all their friends to get it too. I for one would be more than willing to get Tivo'ed that way, and I'm sure I'm not the only one.

TrackBack URL for this entry: http://www.hutteman.com/scgi-bin/mt/mt-tb.cgi/36

Google: tivo lease hardware

CNET News.com (July 25, 2000): Coming Soon to NJ: digital VCR rentals

BusinessWeek Online (April 2, 2003): A Cable Lifeline for DVR Technology

Looks like the lease idea has been around for a while. But I think TiVo would rather sell the hardware. They're more likely to keep subscribers for the long term that way. If they lease, there's no down-side to cancelling the TiVo service.

The real issue for TiVo is critical mass. I think they will reach it this year if they haven't already. If you look at that News.com article, it says they had 51,000 subscribers in July, 2000. As of their last financial report, they've climbed to 624,000 -- adding 115,000 new users last quarter alone.

They expect their base to almost double in the next year, which could happen since they have been "building a loyal and passionate subscriber base with over 97% of customers surveyed recommending TiVo to a friend."

Posted by Brad Choate at April 19, 2003 6:18 AM

What a second--Tivo doesn't make or sell the hardware! Sony and Phillips make and sell it from designs by Tivo. So Tivo couldn't lease and why the heck should Sony or Phillips?

Posted by BillSaysThis at April 19, 2003 10:24 AM

Of course Tivo would rather sell the hardware. It's less risk for them and, like you said, it makes it less likely for people to cancel their service. The problem is that that having to buy the hardware puts up a $350 barrier that makes many people that may love a Tivo not want to give it a try.

The down-side to canceling the service should be losing the service; not losing your initial investment. I can cancel my cable-service any day without losing any money. The reason I don't is because I don't want to lose the service.

I agree Tivo needs critical mass, I just think they could reach it a lot faster if people did not have to buy the hardware up front.

And in response to BillSaysThis: my digital cable box is made by Pioneer, yet I'm leasing it through Time Warner Digital Cable. Time Warner obviously buys the hardware from Pioneer, and leases it to their customers. Tivo should follow the same model.

Posted by Luke Hutteman at April 19, 2003 12:17 PM

Oh, just go buy one! Your life will actually be quantifiably better. My roommate bought one our last year in college a few years ago and I have not been without Tivo since then. Now my parents, brother, and myself own one. They are amazing devices.

Here's what you do, buy a box ($250) and get a lifetime subscription ($250). Now, you've spent $500. However, unlike a new car, a box with a lifetime subscription will retain at least 90% of its value. I wouldn't doubt if you could sell it for a profit on ebay one year from now. Spend a little upgrading the hard drive, and you could easily turn a profit.

So just buy one and love it, you won't regret it.

Posted by Brian at April 19, 2003 12:39 PM

Tivo & Longevity
Using a TV without a Tivo is like using a microcomputer without an internet connection -- sure, a lot of folks do it, but the rest of us all wonder just what the hell they get out of it...

Trackback from Nonliteral at April 19, 2003 2:47 PM

forget a tivo, look into an htpc many more options than a tivo plus you can customize it easier. im looking into a freevo solution extremetech.com has a great article about building one. and theres no subscription fee, uses xmltv.

Posted by jbreiding at April 19, 2003 5:12 PM
This discussion has been closed. If you wish to contact me about this post, you can do so by email.