TiVo Raises Rates. What Are They Thinking?
Update 11/06 @ 8:30PM EST: I’ve published a related post here.
I just received an email from Dave Zatz letting me know that TiVo has decided to raise their monthly service rates and screw around with the multi-service discount. Here’s how the new plan will work:
- If you choose the monthly TiVo Package Payment Plan, your options are as follows: (a) Commit to the TiVo Package for three (3) years at $12.95 per month; (b) Commit to the TiVo Package for two (2) years at $14.95 per month; or (c) Commit to the TiVo Package for one (1) year at $19.95 per month. Promotional Pricing may be available from time-to-time.
- Alternatively, you may prepay for your TiVo Package Payment Plan for either three (3) years at $349, two (2) years at $299, or one (1) year at $199. Promotional Pricing may be available from time-to-time.
Here’s how the new multi-service discount will work:
- The MULTI-SERVICE DISCOUNT reduces the Monthly TiVo service or TiVo Plus service subscription fee by $6 per month to $6.95 per month for (3) years; $8.95 per month for (2) years; or $13.95 per month for (1) year
What is TiVo thinking? Even though I’m truly one of the biggest TiVo fanboys, I don’t think I will be able to recommend TiVo to any of my friends given the new pricing structure. In fact, to be perfectly honest, I’m not sure what I would do if my TiVo were to die tomorrow. $19.95/month is a lot of cash especially when I already pay $80 for a cable bill. I really hope TiVo takes a closer look at this new pricing structure and realizes that it’s not going to get them new customers and that old customers may decide against buy another TiVo or recommending the service to their friends and family.
Right now, I am really discouraged and irritated by this decision. I understand that the company is trying to turn a profit but raising rates is definitely not a good thing. What does everybody else think of this? Is this going to make you think twice about recommending a TiVo or purchasing your first TiVo DVR?
November 5th, 2006 at 9:35 pm |
As I said over at Zatz, I was planning on buying a Series 3 after Chanukah, but I’m now strongly considering getting a Cox DVR.
I’d been wondering why they’ve got such great rebates right now, basically making dual-tuner and DVD burning Series 2s free. Perhaps they’re trying to make sure that there’s no secondary market for Tivos, so fewer current customers will drop.
November 5th, 2006 at 10:48 pm |
Actually the pre-paid bundle pricing has all come down quite a bit. It used to be $224, $369, or $469. Now it is $199, $299, or $349. The monthly price for 2-year plans dropped from $18.95 to $14.95.
TiVo said they were going to be moving to the bundle plans going forward, including trying to get retailers to sell bundles, so it is good to see the prices on those come down.
The service only prices were $155.40, $299, and $399. So the one year went up, 2 year stayed the same, and the three year came down.
I look at it as encouraging longer commitments to reduce churn. I’ve always been in favor of that. When lifetime was available I always told people to buy lifetime. Then, when it went away, I recommended the 3-year pre-paid plans as the best value.
So this doesn’t really change things for. I’d still buy them, and recommend them. I’ve never thought the 1-year deals were a good deal. MSD converted to a discount. Seems straightforward.
Since the prices on the S2s have come down so low, and there have been many specials where you basically get a free box, the secondary market hasn’t been strong - unless you had a lifetime box.
November 5th, 2006 at 10:51 pm |
I feel the same way. I love my Tivo and I was planning on getting a Series3 once MRV was available on it but this pricing structure combined with the high price for the Series3 is making me think twice about that. $800 plus $20/month is really more than I want to pay for anything connected to my TV.
I’m not going to get a DVR from my cable company to replace my Series2 anytime soon but I might give a Media Center PC a more serious look once Vista is released.
Hopefully something will change, even if its just a price drop on the Series3 or some great addition to the service because right now I just couldn’t see myself justifying the cost.
November 5th, 2006 at 11:13 pm |
It wouldn’t be so bad if they threw in the hardware for free. That’s how I got my Series2: They were having a promotion, and I paid for one year of service and got the box at no extra charge. Seems like they should do that all the time, like the cable companies do. Then the cost increase wouldn’t sting as much…
November 5th, 2006 at 11:29 pm |
Megazone…where are you??? I can’t wait to hear your response to this one…should be some more great unpaid TiVo propaganda! Like I said before, I own 2 Series 2 boxes and I love the product but hate the company!
Most of my friends and family already think I’m crazy for paying the current fees, how could I ever try to justify these increases? Unless this is a move to better position the company for acquisition, this move, at this time, just makes no sense.
My complaint is still the same…instead of focusing on building more stable and affordable products, TiVo is now trying to milk the service fees and drive away even more potential new subscribers…disgusting!
I already warned the TiVo lemmings once but now the cliff is getting even closer…
November 5th, 2006 at 11:52 pm |
Are you actually doing the math before you post?
I actually cancelled an order I made last night (on the old pricing structure) only to re-order today on the new prices.
By giving up an 80-hour, dual-recording box for $30 and instead paying $70 for it today, I get 3 year’s of service at $12.95 instead of $16.95.
You’re welcome to double-check my calculations, but I would say that saves me about $105.
November 6th, 2006 at 12:42 am |
They must be crazy…why would anybody get a new TiVo box instead of just a DVR from their cable company? I love my TiVo, but I could never justify getting a new one if this one breaks. I also have a Cablevision DVR and while my TiVo is better, it isn’t that much better. Especially with how slow all operations are now with TiVo, I wouldn’t pay anything for their service.
When I got my TiVo, I got the lifetime subscription plan and that ended up being a pretty good deal. I am really glad that I went with that now.
They really need to rethink this…if anything, they need to make themselves cheaper than other DVRs. There is currently very little reason to get a TiVo now.
November 6th, 2006 at 12:56 am |
Isn’t the Multi-Service Discount designed to keep existing customers happy, and encourage us to remain loyal? Now I’m going to have to give a bit more thought to whether or not I’m going to pick up a second TiVo box for my house. Before this news, the decision had already been made. Now, there’s a good chance that TiVo has lost a sale.
November 6th, 2006 at 1:12 am |
I’ve been done with TiVo for a while.
They need to partner with some cable companies, or just close up shop.
November 6th, 2006 at 2:35 am |
John - I replied, but WordPress is blocking it because it thinks it is spam. Probably because I used prices or something. Alex will have to approve it.
For a lengthier reply, see my post in TivoLovers. Short version - out of 30 combinations, 21 *DROPPED* in price, up to $154. One remained the same. Five went up in price a little bit, $18 or less. And three went up noticeably - two $40, one $54. All but one increase are 1-year deals, the other is $18 over two years.
So yeah, I think this is a good change overall - mostly *significant* price REDUCTIONS, a couple of noticeable increases, and some negligible increases.
Just do the math.
November 6th, 2006 at 9:09 am |
MegaZone,
I don’t have anything in my moderation queue. Try resubmitting your comment or send it to me via my feedback form.
November 6th, 2006 at 9:12 am |
True but you had to sign up for a three year commitment. With the way technology works, who wants to commit to anything for three years! Also, couldn’t you have gotten $12.95/month if you had bought your TiVo from any of the brick and mortar stores such as BestBuy? The thing that irritates me about these new plans is that you need to sign up for 3 years in order to get the lower rate. Like I said before, who’s going to want to do that. What if the TiVo dies within three years?
November 6th, 2006 at 9:36 am |
I’m glad I just switched to DirecTV and picked up an HR20. It was a hell of a lot cheaper than a Series 3, and is only an extra $5 a month. I do miss the Tivo interface, but not that much.
November 6th, 2006 at 10:49 am |
Exactly Alex! Who wants to commit to any technology for 3 years?!?!? Maybe the TiVo diehards like MZ would love to get locked in for years but let’s please put these significant price “reductions” in perspective! How anyone could view this change as positive for TiVo subscribers just blows my mind!
November 6th, 2006 at 11:21 am |
Damn, now I need to come up with a new idea for a x-mas present. My wife thought it would be easy this year. The interface is not THAT good. Does anyone see any similarities between this and what AOL, MSN and Earthlink did with dial-up a few years ago?
November 6th, 2006 at 6:50 pm |
Alex & John - look at the math. All of the three year plans are signficant price reductions.
All but one of the two year plans are *also* price reductions. And that one exception is an $18 increase spread over 2 years. Hardly a crippling increase.
None of the S2 bundles went up in cost. Pre-paid 1-year S2DT bundles went up $15, again, hardly a major increase. The monthly 1-year S2DT plans went up $40, effectively. That’s one of two notable increases. Personally I hardly think a 2-year commitment is a stretch, and those dropped $30 for pre-paid and $56 for monthly. Three years dropped $80 and $104 ($130 and $154 with the current special).
For service-only pre-paid, with the new rebates, the non-540 boxes are $13.60 more for a 1-year plan. All the other pre-paid plans dropped. Again, $13.60 is hardly a major increase.
For monthly plans, the non-540s went up $54 for one year. That is the largest increase and the only other one I consider notable. The 540s went up $14 for 1-year, negligible. The non-540s went up $18 for two-years.
I realize the rebates can go away, the current rebates are good through Dec. 31st. But TiVo has almost perpetually had some rebate in effect. There have been periods without a rebate, but the rebates keep coming back. I expect there will be another rebate post-holiday season. And, longer term, TiVo has said they’re working with their retail partners to sell the same TiVo.com style bundles via retail, so the who dichotomy between online and retail, and the necessity for rebates to level the field, should go away in time.
As for who wants to commit for 3-years. How many TiVo owners have used their box for 3 or more years? If long term commitments are so bad, why did people bitch about lifetime going away? Note that, save for one small increase, the 2-year plans also dropped in cost. So you can take 2 years if 3 is too scary. Though a 3-year pre-paid plan can cost less than a 2-year monthly plan, so if you have the money, it is still a better deal. And you can sell the box in 2 years with residual value if you want, and still be ahead of the curve.
Also, TiVo has, in the past, allowed users to buy newer hardware and transition a server contract to that box to continue the commitment. I don’t know if that’s official policy, of just nice CSRs, but people have done it.
November 6th, 2006 at 6:52 pm |
Alex - I didn’t save the comment from last night after I tried posting it.
Check your spam box - my comment at Zatz ended up in his spam folder. Something in WordPress didn’t like what I said.
And, DAMMIT, the long comment I just made to you and John got eaten too. I may be able to recover it if I go ‘back’ in Firefox.
I bet that is in the spam folder too.
November 6th, 2006 at 6:59 pm |
Bud - Seriously, check the breakdown: http://community.livejournal.com/tivolovers/372027.html
There are really only two noticable increases, both on one-year monthly plans. The other one-year plans had increases of $15 or less, that’s it. All the other plans, 2- or 3-years, dropped in price - save for one 2-year plan with a small increase. Even if you don’t like a 3-year commitment, most TiVo owners use their box for at least two years. In fact, you can get 3-years pre-paid for less than 2-years monthly, if you have the money to buy up front, buy the three years. If you decide to upgrade in two years you can sell it with a year of service left.
November 6th, 2006 at 7:56 pm |
I found it thanks :).
November 6th, 2006 at 8:18 pm |
Cool, thanks Alex.
November 10th, 2006 at 11:43 pm |
Looks like I am sticking to my DVR. I hadn’t heard about this until I stumbled on here tonight and now I am glad I never switched from my DVR to Tivo.
November 13th, 2006 at 2:59 pm |
You can still get a TiVo at a reasonable monthly rate but you need to sign up for the three year plan in order to get it. In my opinion, three years is just too long. I love TiVo but this new pricing structure has really ticked me off…
November 13th, 2006 at 3:01 pm |
Bud,
TiVo’s interface is a lot better then the competition. The only other DVR that I’ve seen with a decent interface is MCE. Other then that, all the cable company DVRs I’ve seen really suck.
November 13th, 2006 at 3:04 pm |
David,
Yes I did. I understand that TiVo has lowered the rates on several of their plans however, the thing I’m not happy with is the fact that the $12.95/month plan went up to $19.95 unless you sign up for three years. Three years is a long time. I personally like paying some money upfront for the TiVo and then paying a reasonable monthly fee.
November 13th, 2006 at 6:22 pm |
I think it’s pretty obvious that everyone here understands the difference between $12.95/mo with NO CONTRACT and $12.95/mo with a THREE (3) YEAR CONTRACT, except Megazone! Even the $19.95/mo is not month-to-month, you still have to sign a ONE YEAR CONTRACT!!! I’m sorry but not even MZ can spin this one!
And you also won’t get me to feel bad for TiVo because of the hardware and component costs associated with producing the Series 3. If so, please tell me how the Comcast DVR with dual tuners, a 120 GB hard drive and HD recording capabilities can be offered at just $9.95/mo with no up-front charges for the box and NO CONTRACT?!?!?
I can’t wait to receive my Comcast DVR to see just how badly this product really “sucks”…
November 14th, 2006 at 7:00 pm |
John,
There hasn’t been a ‘month to month’ for a long time now. The last time they revised pricing, when lifetime was dropped, they added the requirement that *ALL* activations had a minimum of 1-year commitment. Even used boxes. That is not a new requirement with this new pricing structure. Requiring the minimum of one year didn’t sink them then either.
So the difference is $12.95 with three years vs $12.95 with one year. Obviously that’s a difference, my opinion is - Big Freakin’ Deal. Most people use their TiVo for three or more years. And you’re not stuck with the same box anyway, since you can swap boxes and maintain the commitment. It is hardly an earth-shaking change. Especially when the acquisition cost has dropped and you’ll pay less now than before over the life of the contract.
On top of that, it isn’t the only option. Pre-paid is always a better deal for anyone who can pay the money up front. So for those people who’s big complaint is they’d rather pay more upfront instead - go ahead and do it, pay it all upfront.
And if you insist on going monthly, you can always go 2-years and pay $14.95/month. A whopping $48 more over 2-years. I just can’t muster a lot of indignity over that. On top of that, in all but one 2-year contract, the total cost is lower than before even with the higher monthly fee.
For those who just can’t commit to more than one year, most of them are looking at paying up to $15 more over that year. Cry me a river. Less up front, more per month. It balances out - and that’s exactly the pricing structure TiVo has found makes more buyers decide to go TiVo.
Fixating on the monthly price is myopic. There is a total cost of ownership, and in most cases that TCO has gone *down*, even with higher monthly rates. In the cases where it has gone up, most of the increases are small (no more than $18), with just a couple of larger increases.
You can’t argue with math, and I already posted the pricing tables showing the changes for 30 different product permutations. Yes, the monthly rate has gone up for those who commit to only one or two years. No kidding, thanks for telling me or I never would’ve notice. But harping on that one data point is missing the forest for the trees.
As for the S3, who said anything about feeling sorry for TiVo? As for the ‘if so’, that’s obvious. See, when you get a DVR from the cable company, or satellite vendor, you’re getting a subsidized box. The basic cable, or satellite, fee *already* has hardware fees bundled in the the cost. Since all digital cable, and satellite, services require hardware, be it a DVR or plain STB, the vendors just bundle the basic hardware costs into the subscription fee. So when you pay the additional DVR fee you’re paying a differential to offset the increased cost of the DVR box compared to the standard STB, as well as extra for the ‘privilege’ of using a premium service.
Cable and satellite companies amortize the costs of the hardware over a period of several years. They don’t make money on a box until it has been in the field long enough to pay back the acquisition costs. Note that most cable companies have substantial penalty fees if you fail to return their box when you drop their service - cable DVR fees can be $500-$800. That’s to cover the loss of the box and future revenue that would’ve gone toward paying down the acquisition costs.
They don’t need a contract because you either give them back their box, which they then rent to someone else and continue to make money, or you pay them for it, so they don’t lose anything. Either way you’re on the hook for the value of the box. And most cable boxes are kept in the field past the time they’ve paid for themselves, after that the bundled hardware fees go to profit.
November 25th, 2006 at 9:20 pm |
I have two Tivos and just got another TV. I love Tivo but I have to say that I do not like this price structure at all. I am building a PC DVR this week. That technology has gotten a whole lot better and thought I’d give it a shot. Not a good move Tivo.
December 4th, 2006 at 2:51 pm |
I was just about to resubscribe to Tivo when I discovered the new pricing structure. I have already given back my cable DVR and had hooked up my old Tivo again. When I went to reactivate it last night and saw the new pricing, I said forget it. $20 a month??? Are they nuts? And now they’re requiring an annual contract with a $200 early termination fee?
Tivo just majorly shot themselves in the foot. Bye bye, Tivo.
December 4th, 2006 at 6:16 pm |
$19.95 isn’t the only option. There are two other monthly options and three pre-paid options.
The one-year commitment requirement isn’t new. That’s been in place since early 2006 for all new activations.
April 3rd, 2008 at 3:45 pm |
[...] a post that I put together prior to TiVo announcing their new pricing structure. I thought I’d publish it even though I am taking a [...]