Tivo SWOT

Opportunities

Potential in solving media clutter problem

Dying VCR market – replacement opportunity as recording device

Exploding plasma/LCD TV market – bundling opportunity

Growth of pay channels and blockbuster programs – increase in TV recording needs

High penetration of PCs with DVD Recorder – opportunity to be compatible

Rivalry between satellite and Cable – opportunity to negotiate deal

Increase installed base – targeting opportunity for advertisers

 

Threats
TiVo’s main threat is their competitors and the threat of substitute
products. TiVo’s competition from other TV providers is a
substantial threat to TiVo’s success and or survival. Cable and
satellite companies are rolling out their own bargain DVR models,
and most of them do not come with monthly fee. As new
competitors enter the industry, TiVo’s competition will increase
and so will the difficulty of turning a profit.
Another threat to TiVo lies in their partners that manufacture the
TiVo products. These manufacturers could encounter unforeseen
problems and be unable to sufficiently produce TiVo products and
in turn create delays in delivery time. These delays, product
shortages and other types of unforeseen problems could damage
TiVo’s brand image and make it difficult to attract more customers
(TiVo 10-K, 2005). The Threat to TiVo if their brand image is
damaged or diluted may cause them to be unable to attract
subscriptions and effectively compete in the digital video recorder
market.
TiVo is dependent on major retail partners for distribution of their
products to consumers (TiVo 10-K, 2005). TiVo currently relies on
their partnerships with Best Buy, Circuit City, Target, and others to
distribute their DVRs. TiVo’s weakness in relying on partners to
distribute their products could severely harm their business if one
of these partners were to discontinue selling TiVo products.
A Threat to TiVo steams from the intense competition within the
industry. The DRV market for in-home entertainment is intensely
competitive and subject to rapid technological change. The threat
to TiVo can come from a rapid change in the DVR technologies. If
new technologies render the DVR market obsolete, TiVo may be
unable to generate sufficient revenue to cover their expenses and
obligations (TiVo 10-K, 2005).
Intellectual property claims against TiVo could be costly and could
result in the loss of significant rights and therefore creates a
significant threat. From time to time, TiVo receives letters from
third parties alleging that TiVo is infringing their intellectual
property (TiVo 10-K, 2005). Regardless of their merit, TiVo is
forced to devote time and resources to respond to those letters
(TiVo 10-K, 2005). In addition, if any of those third parties or
others were to sue us, TiVo’s business could be harmed because
intellectual property litigation may: be time-consuming and
expensive, divert management’s attention and resources away
from their business, cause delays in product delivery and new
service introduction, cause the cancellation of new products or
services and require TiVo to pay significant royalties and/or
licensing fees (TiVo 10-K, 2005). Additionally, many patents
covering interactive television technologies have been granted but
have not been commercialized (TiVo 10-K, 2005). For example,
TiVo is aware of multiple patents for pausing live television (TiVo
10-K, 2005). A number of companies in the enhanced-television
industry earn substantial profits from technology licensing, and the
introduction of new technologies such as TiVo’s is likely to
provoke lawsuits from such companies (TiVo 10-K, 2005). A
successful claim of infringement against TiVo could cause: their
manufacturers to cease manufacturing DVRs that enable the TiVo
service, retailers to stop selling the product and cause TiVo to stop
providing their services.
TiVo faces a threat from Entertainment companies. These
companies could make claims that some of the TiVo features of
their DVRs violate copyright laws. This could force TiVo to incur
significant costs in defending such actions and affect their ability
to market the TiVo service and the products that enable the TiVo
service (TiVo 10-K, 2005). This is a real threat to TiVo although
they have not been the subject of such actions, one of their former
competitor’s digital video recorders was the subject of several
copyright infringement lawsuits by a number of major
entertainment companies (TiVo 10-K, 2005). These lawsuits
alleged that the competitor’s digital video recorders violate
copyright laws by allowing users to skip commercials, delete
recordings only when instructed and use the Internet to send
recorded materials to other users (TiVo 10-K, 2005). TiVo-enabled
DVRs have some similar features, including the ability to fastforward
through commercials, the ability to delete recordings only
when instructed, and the TiVoToGo™ service allows the ability to
transfer recordings from a TiVo-enabled DVR to a PC (TiVo 10-K,
2005). Based on market or consumer pressures, TiVo may decide
in the future to add additional features similar to those of our
former competitors or that may otherwise be objectionable to
entertainment companies (TiVo 10-K, 2005). If similar actions are
filed against TiVo based on current or future features of their
DVRs, entertainment companies could seek injunctions to prevent
them from including those features and/or seek damages. Such
litigation would be costly and would further hinder TiVo’s lack of
cash. Also if TiVo was ordered to remove features from their
DVRs it would make it difficult to market the TiVo service and
related TiVo-enabled DVRs and essentially their revenue would
suffer.

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