TiVo May Give Away Set-Tops

Facing stiff competition, TiVo may rest its corporate fate on digital services and not hardware.

Feb 28, 2006

Game console makers have long understood that the real value of home entertainment isn’t in the hardware – it’s in the services that make that hardware hum. That’s never more true than now, particularly as network-connected consoles become the norm. Users will pay monthly fees for connectivity, downloads, upgrades, and wireless services – all of which eventually outstrip the revenues generated from the onetime sale of hardware. In fact, game console makers lose their shirts on their products.

It’s the old razor-and-blade axiom. Razors costs almost nothing. They are extremely cheap. But blades – the functioning, replaceable component – are extraordinarily pricey.

Now TiVo – which has long been rumored to be one bad quarter away from oblivion – is floating the idea that it may give its set-top boxes away in hopes of creating a large enough critical mass (and enough digital services) that it can recoup its hardware losses and make itself profitable.

From the Reuters article: 

Chief Executive Tom Rogers said the company, whose name has become synonymous with the ability to pause live television and skip commercials, was close to offering a range of pricing options, including one plan that would include a free set-top box.