All PVR

The Yankee Group released a report saying that the “standalone DVR product category will cease to exist by 2010, and its dissolution will result in the end of TiVo as we know it.”

Although 2010 is just a few years away, it is conceivable. I believe that Tivo will switch from a subscription-based model, into an advertising revenue model. It’s inevitable. Tivo subscriptions are slowing, despite the popularity of DVRs.

Tivo Must Differentiate Itself.

Currently, Tivo’s advantage in the marketplace is its brand. In recent months, Tivo has run advertising to ensure that people know what a Tivo is and to accept no substitutes. That’s pretty tough work, when anyone with a few hundred dollars can build their own out of a spare computer.

But will stand-alone DVRs, as the Yankee Group reports, cease to exist? DVRs are popular today, in some part, but hasn’t reached mainstream acceptance. Many people I talk to, still have no idea what a DVR or Tivo is. Or they don’t own one. Simply put, DVRs offers just one functionality, and they must be more than DVRs and more like a media center.

I see DVRs morphing into media centers, that can play DVDs, connects to your cable or satellite provider and where you can watch photos and listen to your music library. I’m tired of having a separate cable box, DVD player, and DVR. I want an all-in-one device!

Already DVRs are becoming commonplace and Tivo is not the only option anymore. Customers can choose from a wide variety of DVRs–from their cable/satellite provider, non-Tivo standalone models, and PC-based DVRs. They all do the same thing: record TV shows, pause, rewind and store your media. Can Tivo provide something else?

Most people love the Tivo user interface which is a strong market advantage. That’s why it’s trying to build its brand even more. If customers clamor for the UI or features (Season Pass, Thumbs Up/Down), then Tivo can succeed. Witness the deal announced during CES, where Tivo will provide software for Comcast’s DVR. This can be Tivo’s future.

Tivo Must Switch To An Advertising Business Model.

Perhaps this is a shock to some people but Tivo is an advertising company more than a DVR. It serves up ads on its main menu, within TV commercials and by delivering advertising content from partners. Tivo also tracks what people watch, when they watch it and if they rewind–in aggregate form, of course. That’s a goldmine for advertising.

Now that the 30-second commercial is nearing the end of its usefulness, Tivo must capitalize on new forms of advertising. The Yankee Group report says that the future of DVR technology includes “time relevant advertising, location relevant advertising, ad telescoping, product placement and interactive advertisements.”

Don’t forget, Microsoft filed a patent last month, for changing advertising on saved DVR programs. That way, it can switch old advertisements for newer, more relevant ones. Tivo should step up R&D on how to maximize advertising revenues for the next version of Tivo.

If Tivo wants to survive, it must change.

Tivo, DVR , PVR, digital video recorder, personal video recorder, HTPC