TiVo deathwatch update: it's still on
As some of you may remember, a couple years back we (begrudgingly) posted a TiVo deathwatch, which was to remain active until TiVo becomes consistently profitable (or gets bought, or dies). Well, as of two days ago TiVo did in fact post its first profitable quarter, taking in $835k.
Context & Ripple Effects
Engadget opened its 'deathwatch' on TiVo back in 2005, swearing to keep it running until the company turned consistently profitable, got bought, or died — a bet that reflected how precarious the DVR pioneer looked against cable-operator boxes. Two years on, the ledger finally flipped: TiVo booked its first profitable quarter, taking in $835K.
The milestone lands on top of real leverage TiVo has accumulated. Its Series3 HD recorder entered the market in September 2006 at $799 plus monthly fees — a price that drew open debate over whether HD TiVo was worth it while HDTV set prices kept falling. Meanwhile, an August 2006 court ruling found EchoStar's Dish DVRs infringed TiVo patents, and reports circulating in May 2007 suggested a cheaper, mass-appeal HD box was in the works.
First-order effects
- The $835K profitable quarter takes TiVo off the sale-or-shutdown clock for now, giving management breathing room to keep operating independently rather than shop itself.
- TiVo's court victory over EchoStar's Dish DVRs converts its patent portfolio into a live bargaining chip — settlement or licensing income becomes a plausible second revenue stream beside subscriber fees.
Second-order effects
- A rumored mass-market HD DVR priced under the Series3 would attack the very objection — the $799 entry cost — that let cable boxes like Scientific Atlanta's SA8300 and Motorola's 6412 hold their ground, forcing cable operators to defend their DVR value proposition on features rather than price alone.
- EchoStar faces mounting incentive to settle or license rather than keep fighting an infringement judgment it has already lost, a dynamic other DVR vendors watching the case cannot ignore.
Third-order effects
- If hardware margins stay squeezed between cheap cable boxes and falling HDTV prices, TiVo's durable asset becomes its patents and brand — pointing toward a company that monetizes DVR intellectual property across the industry instead of selling boxes.
- DVRs and devices like Apple TV are reported to threaten the traditional 30-second TV commercial itself; if ad-skipping spreads, broadcasters and advertisers — not just TiVo — inherit the disruption.
The trend: Consumer DVR pioneers are shifting their center of gravity from subsidized hardware sales toward patent licensing and service economics as cable-company boxes commoditize the device itself.