Jose Palomino

Why Didn’t Tivo Take Over the World?

April 10, 2015

Tivo Branded

Image Credit: Katie Brady on Flickr

You don’t have to look far to find a company that has developed their value propositions, branding and messaging strategy from an inside-out perspective. Take, for example, Tivo. Why didn’t they take over the world? Why weren’t they Apple TV?

Selling to a Technophobe Market

The problem, I think, was that everybody in the company had a Tivo and understood how they worked. In their advertising, branding and messaging, Tivo never really explained what it was and what it would offer to its customers – their pricing models were complex, and there were expensive and involved hardware requirements. I think their interface was superior – but the functionality was new and alien to most consumers.

Communicating the benefits of something that you understand inherently is very difficult, and communicating those benefits to a technologically-averse public who crave new gadgets and toys but dread arduous setup is even more difficult. They needed to make the experience more desirable – the same way the new Apple watch commercials do.

We now know that customers would have loved them, as wholly evidenced by the booming popularity of on-demand and streaming services such as DVR and Netflix, but at the time, no one could figure out that that’s what they were being offered. Had Tivo communicated from the buyer’s POV instead of their own, they would be dominating the space right now that they helped create.

Growing Pains

Back in 2002, Slate predicted Tivo’s downfall and attributed it to what they called ‘first-mover disadvantage.’ According to them,

“Technology pioneers typically get steamrollered, then look on helplessly from the sidelines as a bunch of Johnny-come-latelies make billions. First movers, the theory goes, are too smart for their own good, churning out gizmos that are too expensive or too complex for the average consumer’s taste. The big boys survive their gun-jumping—think of Apple and its proto-PDA, the Newton,which might have dusted the rival PalmPilot had the company merely waited a year or two to iron out its kinks. Smaller fry go kaput.”

Tivo had myriad problems with their offering and interface, which were obvious even before 20/20 hindsight kicked in. They were trying to sell something that they explained to the public was like a “souped-up VCR”, without ever explaining why exactly their consumers should replace their old VCRs. Even though, at the time, the ability to rewind cable TV shows and fast forward through commercials was revolutionary! – much more so than the ability to record shows on VHS tapes, which had existed for some time.

Therefore, in order to convince consumers to lay down $300 and a $12.99 a month subscription fee, they needed a value proposition that showed exactly what was different, new, and better about Tivo than anything that had come before, and they were never able to get the job done.

How Did Apple Do It?

Once again, we can look to Apple to provide the example of how a tech startup should have adapted to survive, and how they could have understood their consumer base. In the 2002 article, Slate was already describing a “Mac renaissance”, looking forward to the Apple boom to come.

When I say that America is a very technophobic market, I don’t mean that they don’t enthusiastically consume new technologies and chase cutting-edge trends. But in the tech market, you’re selling products that consumers don’t understand inherently.

Today, Apple products dominate consumer’s pockets, backpacks, and messenger bags. They’re sleek, unencumbered little magic boxes that just work, with clean and simple interfaces, making users feel smart and savvy. Now, imagine most family dens and rec-rooms in the early 2000’s. Imagine the dusty, tangled mess of forgotten wires, cables, and black boxes that crowded on top of the TV, before wireless everything-in-one-place devices were the norm. Tivo was offering a wireless everything-in-one-place experience! But instead, consumers saw just another expensive black box to add to the pile. When competing cable providers started offering DVR services and devices for cheaper or free, they edged Tivo out of their own market.

According to Fortune,

“When Apple critics initially dismissed the iPod as an overpriced mp3 player that would lose share to cheaper rivals, Apple proved them wrong. The iPod was by far the best designed player on the market, just as TiVo was the best DVR on the market, but Apple’s brand, fan base and  marketing skills enticed millions into paying the premium.”

Did you ever own a Tivo? What did they do right, and what did they do wrong? Why do you think they failed to connect with consumers? Connect with me at @jpalomino and tell me in the comments.

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