Jim Barton and Michael Ramsay left their jobs at Silicion Graphics in August 1997 in order to work on their own business idea. At the beginning this was meant to be a user-friendly home networking system, but as soon as they were facing many difficulties they focused on a progressive digital video recorder. That product includes revolutionary features such as recording, fast-forwarding and rating live TV-programs. It was produced by Sony and Philips and sold nationwide in shops like Best Buy, Circuit City and Sears. The different models of their black-boxes were sold for 999$ or 499$ and an additional charge for the service. The key elements of TiVo’s business strategy were partnerships with some networks (NBC, CBS), collaborations with Phillips and Sony promising to deliver a better TV-watching experience to consumers. Furthermore TiVo offered advertisers a way to target certain demographics more effectively using TiVo’s ability to track the watching preferences of its users. TiVo’s strategy was a revolutionary concept for “couch commerce,” a growing niche of consumers that TiVo felt was underserved. However, sales in 1999 did not meet predictions since many factors in product pricing and marketing were not thought out well. In order overcome the problems these issues were revised.
Analysis of the Marketing-Mix
In 1999 TiVo was a pioneer product with advanced features such as pausing and replaying live TV, Electronic Program Guide (EPG), recording without DVD, VCD or video cassettes, a season pass feature, "Thumbs up" and "Thumbs down" buttons for rating user's favorite shows, suggesting users, the shows they would want to watch and many others. In fact, the user could really control what he watched and when he watched it.
Furthermore, everyone who owned TiVo seemed satisfied with it, with 72% of owners even claiming that TiVo had made TV “viewing a lot more enjoyable”.