The television industry changed forever back in January 1999 when a new home entertainment device debuted at the Consumer Electronics show in Las Vegas. Presented by TiVo Inc., this technology gave TV viewers recording capabilities far beyond the limits of their old-fashioned VCRs. The company officially introduced its TiVo box in March that year and it caught on like wildfire, revolutionizing the way we watch television. Essentially, TiVo has jumpstarted an entirely new technology known as digital video recorders (DVRs), or personal video recorders (PVRs). Other terminology has emerged since TiVo's introduction, like DDR, DSR, DNR, and HDDR for digital disk, digital satellite, digital network, and hard-disk-drive recorder, respectively. But DVR has taken hold, and advertisers and TV producers are concerned (see "Is DVR Technology Pushing The Legal Limits?" below).
The TiVo DVR has become so popular among home-entertainment "technofiles," TiVo users' groups have formed, and TiVo fan clubs have become widespread. People now say "TiVo it" instead of "record it." TiVo's popularity has even reached the point of user addiction. According to the company, 96% of users say they'll never give up their TiVo service.
Even though the firm continues to lose money, losses have narrowed dramatically, and it was on a pace to break even financially by the end of 2002. It claims over 500,000 subscribers, and this steadily climbing figure has more than doubled since a year ago. The company hopes to achieve at least 1 million subscribers, which should provide respectable profits. Judging from the subscription rate, that goal is certainly attainable.
Of course, success is a matter of perspective. Naysayers see the cup as half-empty. They note the firm's record of losing money. They also compare TiVo to Marconi, who invented radio, and RCA, who pioneered television, only to lose their grip on the technology to upstart competitors. And there are lots of competitors, including Digeo, Metabyte, Microsoft, and SONICblue. But Michael Ramsay, TiVo's cofounder, chairman, and CEO, is unabashed. He's confident the company will win out. TiVo's market share in its number of subscribers seems to bear him out.
WHAT'S A TiVo? Basically, the device is a digital recording and playback disk. Users can program it through an on-screen menu using its "peanut-shaped" remote control (Fig. 1). Users select, upload, and download program information via the home telephone line, usually during off hours like after midnight. Some people call it a souped-up VCR, but that's really an understatement. "Under the cover, the TiVo is really a complex computer, but the user never sees that," says Howard Look, vice president for TiVo Studios.
With TiVo, viewers never have to miss their favorite show, nor will they be bothered by phone calls or other interruptions. The unit can pause for as long as 30 minutes on any TV channel at any time, letting viewers tend to whatever they need and return to the program without missing a moment. Viewers can watch what they like when they choose, without videotaping, as well.
Users can buy TiVo directly from the company or via outlets like Best Buy, Circuit City, Amazon.com, Good Guys, and Tweeter. They can also get it from other consumer electronics and media giants like Sony, DirecTV (part of Hughes), and Toshiba. TiVo licenses the technology to these companies to use in their receivers. TiVo costs about $349 (after a mail-in rebate), which includes 80 hours of programming for the Series 2. Subscribers also pay an additional $12.95/month for the program service or a one-time $249 product lifetime fee.
TiVo licenses its program data from Tribune Media Services, the same outlet that supplies program information to daily newspapers. Tribune delivers program data for the next 14 days daily to the TiVo over the phone line and updates the information automatically as the television networks update their schedules.
But there's more to this system than just the program data (Fig. 2). "Let's say you know your favorite football team is playing a game this coming Sunday," Look suggests. "There are several different ways you can tell TiVo to record that team's showing. One would be by creating a 'wish list' on the on-screen menu and enter in your team's name as a keyword. The system then automatically records anything to do with that team's name, including pre- and post-shows, local and national interviews of team members, etc."
From a hardware-only perspective, TiVo may be a complex computer. But its software, with its user-friendly menus, makes the difference. "The TiVo service is really all about putting the consumer in control of their TV experience," explains Brodie Keast, senior vice president and general manager for TiVo Services. "It makes sure that TV fits into one's life instead of planning one's life around it. It automatically records all of a viewer's favorite shows upon user command and organizes them so a user can watch them whenever they have time to do so."
The idea for TiVo goes back to the early 1990s. That's when cofounders Michael Ramsay and Jim Barton, the firm's senior vice president and "technical visionary," were involved with TV and entertainment at Silicon Graphics Corp. Ramsay dealt with the studios that used Silicon Graphics equipment during production, while Barton handled early video-on-demand trials. "They learned what works and doesn't work and were looking for better ways to serve TV viewers," Keast says. Next, they started their venture-funded company in 1997 and went public in August 1999.
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