Is Seven Media Ready To Flick TiVo?

COMMENT: Is Seven Media having second thoughts about Tivo and has their business model for the US personal video recorder blown out because of poor sales and emerging problems with the NSW Office of Fair Trading and the Australian Competition and Consumer Commission over home networking?

According to Robbee Minicola, CEO of Hybrid Television Services a 100% owned subsidiary of Seven Media and the organisation charged with marketing Tivo in Australia the cost of operating the device is blowing out due to exchange rate fluctuations and the “high cost” of modifying TiVo software and hardware to enable the original devices to deliver a home networking capability.

In a comment to the Sydney Morning Herald Minicola said “At the end of the day, if our business doesn’t work, nobody gets a TiVo”. Which in laymen’s language could mean that if Seven Media don’t see an increase in demand for Tivo, that they could drop the US PVR in the future?

After failing to sell the initial order of 50,000 Tivo units at $699 and despite a multimillion dollar prime time TV advertising campaign backed by print advertising in Pacific Magazines and extensive catalogue advertising in Harvey Norman, Dick Smith and JB Hi Fi catalogues, Hybrid Television Services is struggling to get sales traction for TiVo and has now resorted to offering a $79 subscription service that is wrapped around movie content from Blockbuster delivered over an IP network.

Yesterday Adelaide based Internode started offering unmetered access to TiVo content via Internode’s ADSL network.
Under the deal Internode customers will be able to download TiVo’s electronic program guide, software updates and the Blockbuster Movie of the Week, all without any impact on the Internode ADSL customer’s monthly download quota. Further unmetered content is planned for later in 2009 the Company said.

In Australia online video content is in it’s infancy and the Blockbuster content according to TiVo users who have contacted SmartHouse is “pretty ordinary” .

Another problem for Tivo is that when they initially launched the Tivo brand in July 2008 consumers who paid $699 were told that it would only cost a “few dollars” to upgrade the system to receive IP based content over the Internet.

Now consumers are demanding refunds after Hybrid Media Services started charging $199 for a basic home network upgrade which had been disabled in launch models.

According to the Sydney Morning Herald The NSW Office of Fair Trading said it was “interested in investigating” claims the move breached fair trading laws but said it would need affected TiVo users to file a complaint by calling 13 32 20 or visiting its website.

The NSW Fair Trading Minister, Virginia Judge, said she was “concerned” by the allegations and would ask the NSW Office of Fair Trading to investigate the matter jointly with the ACCC.

The problem for Seven Media is that Tivo was launched for all the wrong reasons. Firstly Seven Media despised Foxtel and their pay TV subscription service and by launching Tivo they thought they could hurt Foxtel that is 50% owned by Telstra.

  Then Seven Media tried to convince consumers that for $699 they were getting a good deal with Tivo despite the fact that it only allowed free to air TV stations to be recorded. This exercise can easily be achieved with Microsoft Media Centre software and an IceTV EPG subscription which costs around $2.50 a week.

Then when the going got tough and sales were flagging Tivo offered a $79 subscription for a movie download service which in reality played right into Foxtel’s hands because for a mere $10 a week consumers can now get access to Foxtel and for a few dollars more upgrade to the Foxtel HD iQ service which also allows users to download movies.

The bottom line is that things are not looking good for Tivo and if I was Robbee Minicola I would definitely be polishing up my resume or looking for a slot somewhere else in the Seven Network.