Struggling Tivo Revamps Pricing

Digital Video Recorder (DVR) pioneer Tivo has altered its pricing strategy amidst slowing subscriber growth. The main change is that there will be no charge for the “box” which previously cost up to several hundred dollars (but was usually much cheaper with rebates) will now be “free.” Monthly charges rise slightly, and they run on a sliding scale from $19.95 to $18.95 to $16.95 on a 1, 2, or 3 year contract. Subscribers can also prepay for those periods at discounts of nearly 25%.

The changes represent slight price increases, but they align Tivo more closely with cable companies, who do not charge for hardware. The high upfront fees may have scared off many consumers, especially with cable operators like Time Warner bundling their own DVR technology and “giving away the box.”

Fans love the device, but the company has had trouble communicating the value of the service. It’s one of those “I didn’t know I couldn’t live without it until I got one” devices. (Note that even here, I’m confused– is it a “service” or a “device”?) The value is in the service, and Tivo must figure out a way to articulate it better and keep adding related services (such as displaying pictures from a computer share) to stay ahead of bigger rivals. Whether the pricing changes can save Tivo is still unknown, but it’s a good start.

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