TiVo hobbled by TV providers' HD monopoly
TiVo Inc. is having trouble cracking the Canadian PVR market because of the monopoly on high-definition television recorders held by Canadian providers.
Alviso, Calif.-based TiVo, which launched its popular personal video recorder in Canada last November to compete directly with similar offerings from the likes of Rogers Communications Inc. and Shaw Communications Inc., has been unable to offer a version of its device here that records high-definition television.
In the United States, HD cable subscribers use a set-top box to receive their signals. A card inside the box, which is programmed with the channels the customer is subscribed to, can be removed and inserted into a high-definition TiVo recorder.
Set-top boxes from Canadian cable companies, however, do not have removable cards, which means subscribers can only use HD recorders from their respective providers. A high-definition TiVo in the United States costs $299 US with an annual service plan starting at $129 US. High-definition video recorders from Canadian providers sell for around $600.
A source close to the company said TiVo is retreating from Canada to review its options and has pulled its marketing efforts here.
"They had trouble making inroads," the source said. "They're regrouping."
Joshua Danovitz, general manager of international business for TiVo, denied the company was pulling back but conceded it is having difficulty in offering an HD recorder here.
"I totally agree that the world is going HD," he said. "North America, Canada, the U.S. — HD is definitely the trend. We know it, everyone knows it, our consumers would like it and we continue to look forward to how to offer that to Canadian subscribers."
Consumer electronics experts say it's impossible for a third-party PVR maker to gain any traction in Canada without having a major television provider as a partner.
"TiVo ended up being a bit of an orphan without a distribution deal with a company like Rogers, Bell or Shaw," said Kaan Yigit, president of Solutions Research Group. "Without that promotional muscle, you are in retail competing for wallet share with all the other household and mobile tech products."
TiVo has managed to capture only about four per cent of the Canadian PVR market with the standard-definition offering it is still selling, despite having a 20 per cent share in the United States, Yigit said.
About 1.5 million Canadian households, or 12 per cent, have a PVR and just over half of them are high-definition, according to figures from Solutions Research Group. The trend among consumers is toward HD recorders, making it a market TiVo can't ignore if it wants to succeed in Canada.
TiVo has been unpopular with U.S. television providers because it has taken PVR market share from them. The company has ameliorated much of that animosity in recent years by cutting deals with providers, a strategy it may have to apply here in order to crack the Canadian market.
Danovitz said that while a deal with Canadian providers was one option, other possibilities — such as seeking regulated access to high-definition signals — was another.
"[Making deals is] a pretty big strategy for TiVo. That's one way for us to work within Canada," he said. "We're considering all avenues today."
TiVo also announced a deal with Waterloo, Ont.-based Research In Motion Ltd. on Thursday that will allow its video recorders to be programmed using a BlackBerry. The functionality will be introduced in Canada later this year, Danovitz said.