DirecTV slashes TiVo subscription costs4 Sep, 2002 By: Paul Bond
TiVo users who subscribe via DirecTV are getting their subscriptions more than halved.
The price cut from $9.99 to $4.99 goes into effect Sept. 17 and is a land-grab effort on the part of DirecTV, which is pushing its digital advantage over cable. Not to mention a response to rival EchoStar's free digital video recording service.
TiVo reportedly gets about $3 per subscriber by way of its marketing arrangement with DirecTV. Although executives at both companies declined to discuss financial details of the arrangement, analysts suspect that TiVo's $3-per-sub fee won't be tampered with as a result of the price cut.
Of TiVo's 464,000 subscribers, some analysts say as many as one-third come from the DirecTV relationship, though the companies won't comment.
TVPredictions.com president Phillip Swann said that, from TiVo's perspective, the move is positive. A boost of subscribers and sales of set-top boxes by way of DirecTV and similar relationships that might be forthcoming is crucial if TiVo is to survive the threat of "generic" DVRs.
"If cable operators go the generic route, TiVo is in big trouble," Swann said. "In five years, TiVo got 464,000 subscribers. That's not good, but nobody will dispute that it's a very passionate audience."
A component of the price cut includes free TiVo for subscribers of DirecTV's Total Choice Premier service, which sells for $81.99 per month.
While EchoStar gives its DVR service free to all subscribers, DirecTV director of communications Bob Marsocci said his company's market research suggests consumers are willing to pay for the TiVo brand. "And $4.99 is a small enough fee for the best DVR out there," he said.
Added Marsocci: "We're big believers in DVR technology. There's a lot of upside growth there. Our TiVo users are our most loyal customers."