Strategic Inflection: Tivo in 2003

STRATEGIC INFLECTION: TiVo in 2003

TiVo and Digital Video Recorder (DVR) Industry

Since the first time of the new DVR (Digital Video Recorder) industry, TiVo was clearly the leader in this new field. The first commercial broadcast quality video recorder was released Betamax video system by Sony in 1975. Two years later, JVC released the competing standard VHS (Video Home System). JVC formed early alliances with Matshushita Electric which had a large global distribution network. As a result VHS took off and by 1993 Sony was forced to discontinue production of video recorders with Betamax technology.

In 1997, TiVo introduce the first DVR models in the US market. TiVo device serves a function similar to a VCR (Video Cassette Recorder), in that both allow a television viewer to record programming for viewing at a later time. TiVo device stores television programs onto hard disk storage. TiVo helped customer solve problems, ÐŽ§due to conflictsЎЁ, consumers were sometimes unable to watch their favorite TV shows when they were broadcast and as search engine for cable and satellite TV. Along with many other features, TiVo is going to change the way people relate to home entertainment.

TiVo and the DVR Disruption

Despite TiVo having the strongest brand, the most differentiated product in terms of features and one of the largest installed bases, TiVo facing dilemma about the competition had increased, the cable TV industry was in transition from analog to digital and TiVo had suffered $500 million in operating losses since it was founded. TiVo also have bigger challenges with regard technology platform that TiVo could not be easily adapted to different hardware and software environment.

TiVo operated in a complex ecosystem, which required the company to manage a wide array of potential competitors, partners and complementors. The battle between TV Cable and TV Satellite had important implications for TiVo. The TV Cable operators and the TV Satellite company were both potential DVR customers and potential DVR competitors.

TiVo would be at inflection point in 2003, management was debating many possibility strategy such as: manufacturing and selling a TiVo Basic DVR, manufacturing and selling a DVR ÐŽ§white boxЎЁ to CE retailers, lowering the license fee TiVo charge CE Manufacturers and also focusing resources on developing new DVR and home entertainment capabilities.

The Inflection Curve

A strategic inflection point is a time in the life of a business when its fundamentals are about to change. That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end. Strategic inflection points can be caused by technological change and competitors. A strategic inflection point can be deadly when unattended to. Companies that begin a decline as a result of its changes rarely