Seems like I’m not the only one displeased with TiVo’s new pricing initiatives… Alex of TiVo Blog is considering a new hobby, HDTiVo is considering Vista, and the 477 posts on the TiVo Community Forum suggest there are many confused and/or angry customers. TiVo responded today with a Fall 2006 Pricing FAQ to clarify their new plans.
Q. What happened last Sunday and why?
A. TiVo modified its pricing plans to lower the upfront cost for its Series2TM boxes to customers. It also made TiVo pricing consistent for both tivo.com customers and retail customers.
Q. How can you justify increases in some of the service fees?
A. The overall price that a customer pays for the TiVo box and service came down in most, but not all scenarios. You can still get TiVo service for $12.95/month, but with a 3-yr commitment. The upfront price of the Series2 box was either lowered or went away completely depending on the model. You can also get a TiVo box and service for significantly less than $12.95/month when you prepay for 3 years of service. As another example, you can get a single tuner TiVo DVR with one year of service for $199 total under the new plan. Under our previous pricing, the offer would have cost a total of $224 — $69 for the box and then $155 for one year of pre-paid service. Overall, we want to reward customers who expect to utilize the TiVo service for a longer period of time by offering discounts for multiple year commitments and prepaid plans.
Q. How does this change what I am paying today?
A. The new pricing doesnt affect any of our current customers rates for boxes that they own. If you are a monthly customer today, the monthly fees on your current boxes will not change with this change in pricing. This also applies to boxes currently covered under our multi-service discount program. New pricing applies only to new boxes purchased.
Q. What happens at the end of my service commitment period?
A. At the end of the service commitment period, subscribers may be charged, on a month- to-month basis, the most current rate applicable for the term of service the subscriber has just completed. For instance, if you chose a 2-year package at $14.95/month, at the end of two years, you will be charged the monthly fee associated with a two year commitment at that new point in time. You become a month-to-month customer, unless you want to lower your price by committing to an even longer period or by taking advantage of a new promotion.
Q. What if I bought a TiVo under the previous 1 year commitment program (monthly or pre-paid options) before November 4, 2006?
A. Our current practice is to allow these subscribers to continue their service on a month- to-month basis at $12.95 / month. TiVo does, however, reserve the right, at any time, to charge the current applicable monthly fee for a one-year commitment of service, which may be higher.
Q. What happens to any boxes that I currently have under the $6.95 / month Multi-Service Discount (MSD) program?
A. Boxes currently covered under the MSD program will continue to be billed as they are today as long as the status of the account does not change and they continue to be eligible for the discount under the original program.
Q. What happens if I currently have a TiVo box eligible for the Multi-Service Discount and I add another TiVo box to my account?
A. While your existing second box is grandfathered at the $6.95 monthly pricing, the new third box will be subject to the new MSD pricing. In most cases, the new pricing is comparable or favorable to the old pricing when you factor in the discounted cost of the box.
Q. What if I currently have only one box, but want to add a new TiVo box to my account?
A. This new second box will be billed under the new terms, which is at a $6.00 discount to your monthly bill. The base price changes depending on your commitment period. Again, in most cases, the new MSD pricing is either comparable or even favorable to the old pricing when you factor in the discounted cost of the box.
Q. Why would I consider any of the prepaid options?
A. Weve heard from customers that some prefer to pay fees upfront rather than on a monthly basis. In order to reward customers for paying upfront, we offer a a discount off the corresponding monthly fee. For example, a three year pre-pay option $299 equates to about $8.30 / month.
So what do I think? TiVo made a choice to lower hardware fees and recoup the difference through subscription fees in order to bring in new subscribers. They believe they can pick up more customers with a lower up-front fee, but their timing is poor with standard definition on the way out — Pushing people towards a three year commitment is somewhat sketchy, especially when you consider the Series2 model in its current form can only be sold a few more months due to FCC regulations requiring a digital tuner accompany any analog tuner. Additionally, I think the new rebates coupled with the new pricing plans devalue existing hardware and make subscribing used boxes a poor deal which will limit their success in the secondary market (ebay and hand-me-downs, where many of us got our TiVo start). I’m surprised TiVo is expanding unfavorable terms compared to cable and satellite who in many cases offer lower monthly service/rental fees without requiring any upfront hardware fees or commitment. TiVo has made it clear the intend to use this cell phone/service business model, BUT their competitors aren’t… There’s no question TiVo needs to make money to survive, but I’m not sure this is the way to do it.