Introduction
In
the contemporary world, technologies progress so rapidly that they create new opportunities for
entering new segments of the market. In this respect, mass media, television, IT and Internet turn
to be probably the most attractive fields for investments due to the possibility of high revenues
resulting from implementation of new technologies and offering new services and products to
customers. In such a situation it is particularly noteworthy that television which is entirely a
constant domain is submitted to quite serious changes which are getting more and more critical in
recent years.
Obviously, one of the most successful companies operating in this segment of the market is TiVo which offered customers new services in the late 1990s. As a result, the company became a leader in the industry, being unique and practically deprived of any competition at first stages of its development. However, the recent years have revealed a dangerous trend of a gradual decline of the company’s revenues and subscriptions that indicate at approaching problems if not to say crisis TiVo may face in the nearest future.
In such a situation, it is necessary to thoroughly analyze the reasons for the deterioration of the position of TiVo and find possible positioning strategies which could improve the situation for the company.
The primary reasons for the falling off the growth rate of subscriptions and revenues of
TiVo
Speaking about the current problems of TiVo, it is probably better to start with its first successes
since they reveal the major reasons for the recent difficulties the company faces. First of all, it
should be pointed out that the company started to operate in the late 1990s and initially it was
supposed that the company would offer to its company the full range of services for the creation of
‘home network’ but eventually, the creators of TiVo should limit themselves by the sphere of
television. They created an new product, or to put it more precisely, a new service that they soon
managed to offer on the American market practically for all customers who wanted to enjoy it. What
they offered was the opportunity for customers to watch what they want at any time they prefer along
with recording their favorite shows and programs, pause, rewind, fast-forward, look at them in slow
motion. In short, the company offered to its customers a great opportunity to free themselves from
networks monopoly and schedule their TV as they wanted.
In the beginning, the services of TiVo turned to be extremely popular among customers, and the rate of subscriptions and, consequently, the company’s revenues grew progressively. This popularity of TiVo was not surprising since customers were tired and bored of the dominance of networks which control the TV schedule and decided what the audience should watch and when, while what TiVo offered was radically different from what viewers get used to. In such a way, TiVo attempted to revolutionized television, or to put it more precisely, the process of watching it.
At first glance, it may be considered that such a revolutionary invention could make TiVo the leading company in the field of television but, on the other hand, it is necessary to remember that television at large cannot be characterized by a high level of admittance of revolutionary inventions, especially concerning the process of watching. For instance, among the similar inventions may be considered to be the implementation of remote control. Anyway, it is necessary to take into consideration the fact that it is challenging to change customers’ habits, especially in such a rigid field as television. This is why, the latter, i.e. customers’ habits, may be considered to be one of the reasons for the further slow down in the growth of subscription and revenues of TiVo because the audience that was ready for the experiment has been eventually outsourced while the rest of the audience was simply not ready or willing to accept new way of watching television.
Furthermore, the role of TV companies and networks is also vital, and their relation to TiVo was vitally essential for the success of the company growth. In this respect, it is worthy to note that shortly after the first experience of TiVo entering the market revealed certain trends which were quite negatively perceived by networks. One of the most significant factors contributing to the deterioration of systems attitude to cooperation with TiVo was the problems the latter caused to advertisers.
In fact, the problem was that TiVo provided customers with an opportunity to watch what they want and, consequently, there was a great risk for advertisers that viewers wouldn’t watch their commercials. As a result, they would decrease their investments in the advertisement because of its lower efficiency and networks, in their turn, would also lose a significant share of their profits because of the decrease of revenues from commercial.
As a result, TiVo, after first successes, had to face a serious dilemma since three fundamental factors decreased the further growth of subscriptions and revenues dramatically: the conservative audience, advertisers disturbed by the inefficiency of their commercials, and networks, which profits depended on ads.
Positioning strategies
In such a situation, the company could not fail but to offer positioning strategies which would
satisfy all three categories influencing the level of subscriptions and revenues of TiVo.
First of all, the company in its relationship with customers should focus not on the benefits of their services for customers, since the main slogan of its advertising campaign was to make viewers able to program their TV schedule. Instead, it would be probably more efficient to explain better what the company offer and how can its services be used by an average customer. In such a way, the audience would not be anxious about the services TiVo offered to them. In other words, it is possible to recommend the company to the position as the company offering a traditional product in a new form and of a much higher quality.
As for advertisers, it is apparently necessary to position the company as commercials friendly one. It is possible to recommend to integrate advertisements into the final product customers will consume mainly. For instance, it is possible to deliver ads to customers during uploading.
Finally, to attract networks, TiVo should position itself as a company offering a variety of services to networks. To put it more precisely, it is possible to provide networks with detailed information about customers preferences, ratings of TV shows, etc.
Conclusion: the alternative strategy for TiVo
Thus, in conclusion, it is possible to finally to recommend the company to develop a new strategy of
its positioning to improve its brand image and consequently increase the level of subscriptions and
revenues.
In this respect, it is possible to recommend to position the company as such that implements new technologies and offers new services for customers and networks, improving the quality of the final product customers receive and enlarging networks information database concerning the marketing of their products. At the same time, it is necessary to sustain an image of the company that respects the interests of advertisers and naturally integrates ads into the product and services TiVo delivers to customers. As a result, it would be possible to overcome the problems TiVo is currently facing or may face in the future.
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