TiVo Competition: German Market Analyses

List of content

Competition, Substitutes, and potential entrants
Introduction
Competition, USA
Competition- Germany
Software and hardware provider

Conclusion

Bibliography

List of figures

Figure 1: Overview Network infrastructure

Figure 2: Global development in IPTV subscribers (www.gartner.com)

Figure 3: IPT Development in Germany according to Goldmedia-BITKOM

Competition, Substitutes, and potential entrants

Introduction

Compared to the United States, where TiVo is a successful pioneer in, and even a leading provider of multimedia home entertainment^[1], the German home entertainment market shows a stuttering image in this field. This Sector in German households is still dominated by game consoles, on the other hand there is a lot happening in the cell-phone sector. In the last 35 years, crucial changes in consuming media content occurred in Germany^[2]. While yesterday it was mostly television and radio transmission, today nearly three quartesr of the community, especially young people are using computers (89% of households) and game consoles. A huge amount of technical devices are existing nowadays with wide variety of applications, growing ever more. The internet, DVD players, MP-3 players, multimedia-cell phones are component parts of current living environment^[3].

As mentioned before, there are several branches of industry dealing with the interactive entertainment opportunities and are trying to establish a high performance level to strengthen their market position compared to their competitors in a dynamic, competitive environment. When TiVo wants to launch new products to find its way into the interactive television industry, adapting, and modifying known features for a new community with different likes and dislikes requiring a high level of market research to shape the needed marketing strategy. Therefore addressing the challenges of monitoring, and understanding consumer response^[4] in new generation entertainment should be the driving force instead of aimlessly adapting used features step by step..

Competition, USA

First of all we have to clarify that all possible processes according to the United States as the motherland of interactive home entertainment (new generation television) are influencing the competition within that range of new generation television all over the world. So the battlefield for a range of providers in home entertainment systems is not only the United States.

TiVo as a U.S. grown approach started in 1997 into the market as a huge idea of interactive relation to the digital entertainment world. “TiVo Has Changed Your Life”, “TiVo is better than the Competition”, and “Don't follow a TV schedule; make it follow yours” see 6 are a few challenging slogans from TiVo^[5].

A list of the top 10 reasons of why TiVo is better than the competition see 5: is followed in order of appearance. The “peanut”-shaped remote won design awards from the Consumer Electronics Association, easy to use, quite ergonomic. Online scheduling from the Internet, from anywhere. The wish list, a powerfull feature gives the ability to find shows that include your favorite keywords. The new dramatically adjustment of cost, we mentioned the unbalanced Cost sheet in the past. The technical autonomy, that doesn’t tie you to any provider. If changing a provider is needed, you can take your TiVo with all your preferences and saved features with you. Juke box, ability to stream MP3s and view slideshows of photographs from networked PCs into a home entertainment device. TivoToGo allows you to transfer shows to, and from Personal computers, with additional software, to your portable device, like PSP, and apples ipod. Continuous improvement. Season Pass Manager means the ability to prioritize which shows should record when a conflict in television content occurs. The included Self updating menus only records new episodes of TV shows, which have not been watched by users. Last but not least the User Interface, which is very easy to navigate. Everything is very intuitive.

All that was going straight to the ultimate slogan “Millions are discovering TiVo”^[6], "TiVo is God's machine”, „TiVo is God in my household, and “I can't wait to walk in the house each day to see what it's recorded for me." For example this was delightfully raved by leading Chairman (Michael Powell) of the federal communications commission during 2003/04 Consumer Electronics Show in Las Vegas^[7]. And many celebrities, like Oprah Winfrey followed, and developed general thought, that it was really a holy box, filled with miracles. But it is miracle why there are only about 600,000 subscribers since their foundation in 1997. That showed TiVo isn't even on the top of the respective U.S. market see 7. On the one hand Sonic blue, ultimate TV (a joint venture between direct TV and General Motors) force the competition in the U.S.. On the other hand EchoStar Communications Inc., a satellite-TV provider ranks first by gaining about 45% of the North American DVR market, compared with 38% for TiVo, according to a report by Trace Strategies Inc., a Cambridge, Mass., research and consulting firm that monitors and inquires consumer electronics and media see 7.

In context of an innovative technology like TiVo´s DVR (digital video recording device) there is maybe an initial cause of slow business in home entertainment systems, and that is the cost-benefit ratio, that has been bad balanced in the past. DVD-DVR combinations have been expensive, ranging from $600 to $1,000. Consumers are afraid to pay more than $450 for hardware and $12.95 per month in subscription costs see 6. Competitors like Zenith Inc., and Apex Inc. are offering cheaper alternatives, without any subscriptions. But TiVo is going to be adjusting its price politics to be consumer friendly. The DVR market is still not the largest in North America, but competition is heating up.

Potential competitors have to compete with the features above, and the wide range of distinct technical equipment delivered by TiVo. It makes sense to distinguish between field into Current Competitors, sort of competitors, and future competitors. The Current competitor Digeo Inc . enters nationwide joint venture with Scientific Atlanta (owned by Cisco Systems), and Motorola Inc.^[8],^[9] They aim a building up a network of next generation digital services to be used within their new Explorer media center box that runs Emmy award winning Moxi multimedia center^[10]. To make things better, Digeo Inc. settled a similar line of media center with well known Motorola Inc., a manufacturer of wireless telephone handsets, also designing and selling cellular transmission base stations and signal amplifiers as equipment for wireless network infrastructure. Motorola's home and broadcast network products include set-top boxes, digital video recorders, and network equipment used to enable video broadcasting, computer telephony, and high-definition television^[11],^[12]. Scientific-Atlanta and Motorola claim a big share of cable-network systems, and of digital set-top boxes deployed in the United States see 7. Therefore Digeo can adapt its Moxi media service to nearly all U.S. cable operators and even non TiVo cable, and satellite operators. There are Sort-of Competitors like Apple (Apple TV, ipod, itunes,iphone), LG (DVR built into TV, TV build into cellphone), and maybe a future competitor Microsoft corp. as designer of media software, and hardware supplier for companies that are building Media Center PC`s (e.g. IPTV and MSTV software on cable boxes)<sup>[13]</sup>. Pioneer Digital (makers of Passport software that goes on many cable boxes). NDS (software that runs on DirecTV’s current PVR`s), Zenith Electronics Corp., Apex Digital Inc., Panasonic, as well as Sony corporation, are pushing new TiVo-style DVRs, amongst their wide offer of multimedia systems.

New entrants, defined as future competitors, are knocking on the door, Fox Communications, as one of the first nationwide cable operator runs the slogan “Never miss your favorite shows with a DVR from Cox”. With that, the fourth-biggest cable operator, introduced a new combination digital cable box-DVR engaging into the competition^[14]. As mentioned Microsoft started a global attempt to promote a special media version of its Windows systems that includes a DVR function, while Sony Corp. has bundled a DVR program called GigaPocket for the more expensive Sony Vaio desktops for everyone.

Competition - Germany

Every major supplier of home entertainment systems, selling on a global level, is also a big combatant in the market of new generation television in Germany. But an overall home entertainment system, which complies with the demand and satisfaction of customers in Germany, does currently not exist. The estimated average of old fashioned television sets receiving via outdoor antenna, satellite (free to air) or cable covers approximately 99 % on the market. Therefore a huge number of households do not use a fresh advancement in the field of home entertainment, like IPTV^[15]. In spite of various offerings in interactive home entertainment. Gaming consoles from Microsoft (X-Box 360°), Sony (PS 3), and Nintendo (Wii) are ruling the living room. The mobile area is ruled by the same approach like Sony psp. Nevertheless mobile phones, lap tops, and handhelds with internet access are dominant.

Germany`s Media environment met the first pay TV provider Premiere in 1990. A Suisse pay TV provider helped by developing the first pay TV provider in Germany offering several channels of digital content via satellite and cable. Originally started as a single analogue satellite channel, showing films dubbed in German, live football matches from the German Bundesliga and European leagues. As well as documentaries, and movies, even late-night erotic films. Because of financial struggle and absent subscriptions a big German media holding, named kirch group made a joint venture with premiere. But based on several insolvencies of media branches within the kirch group (e.g. DF1), the holding was soon forced to exit the relationship. As time passed Premiere forced to be a digital media content platform provider. The following chart shows an example of the inefficient structure of digital pay TV according to kirch media group at those years.

Another big pay TV provider is called Unidigital TV Arena arised by uniting by uniting the cable operator’s is in North Rhine-Westphalia and in Hessen in 2005 to form the Unitymedia Group. In 2007 Germany’s second largest provider of media and communication services via broadband cable, so called triple play services, and operates changed the brand into the new one. Underlayed by a broad product portfolio which engaged high-quality media offerings and access to the world of innovative telecommunications, to flatrate telephony packages and surfing the Internet at high speed^[16]. Unidigital TV supplies up to 4.7 million customers see 19.

In the recent years a way around the classical of mentioned consuming of home entertainment, without direct payment to a content provider became popular, social circles are using a formally semi legal new technology called IPTV (Internet protocol television). Nowadays this form has a legal setting and is steadily gaining popularity as a number one competitor distribution channel for content providers.

IPTV (Internet protocol television) in Germany

The recent implementation of new generation television is becoming a more and more crucial competitor to for TiVo`s interactive home entertainment system. IPTV that was first viewed in 1994^[17] (e.g. ABC’s World News Now was the first television show to be broadcast over the internet, using the CU-SeeMe video conferencing software, Internet radio company AudioNet started the first continuous live webcast in 1998). IPTV, a system where a digital content service is delivered using IP (internet protocol) over a network infrastructure^[18] is used recently measured by about 100.000 customers in Germanysee19. Often provided in combining with Video on demand and Internet services, such as Web access and VoIP (voice over internet protocol), the commercial bundling of IPTV, VoIP and Internet access is referred as “Triple play” service^[19]. Additional included mobility would be called "Quadruple Play". IPTV is typically supplied by a service provider using a closed network infrastructure^[20]. The network approach is in competition with the delivery of TV content over the public Internet, called Internet Television. In businesses, IPTV may be used to deliver television content over corporate LANs see 19.

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^[1] See: Yoffie, Yin, Darwall (2004), p.1

^[2] See: Mark et.al. (Dezember 2007), p.21

^[3] See: Mark et.al. (Dezember 2007), p.21

^[4] See: Tybout, Hennessy (Jan. 2004), p.8

^[5] See: http://www.tivoblog.com/archives/2005/12/20/why-tivo-is-better-than-the-competition-by-dave-morse/ (accessed July 16, 2008)

^[6] See: https://www3.tivo.com/store/home.do (accessed July 25, 2008)

^[7] See: Evangelista, B. ( 2003),the San Francisco chronicle, p.E-1

^[8] See: http://findarticles.com/p/articles/mi_hb5932/is_200506/ai_n23876692?tag=rel.res5 (accessed July 25, 2008)

^[9] See: Digeo does deal with Motorola.(HOME NETWORKING), the online reporter, (June, 2005)

^[10] See: http://www.digeo.com/press_pressrelease.aspx?id=4, (accessed July 25, 2008)

^[11] See: Motorola corporate profile: (2008) p.2

^[12] See: http://www.motorola.com/content.jsp?globalObjectId=8892(accessed July 25, 2008)

^[13] See: Evangelista, B. (2003), p. E-1

^[14] See: http://www.cox.com/digitalcable/dvr/(accessed July 25, 2008)

^[15] See: Grote, A.(2008) p.30

^[16] See: http://www.unitymedia.de/investor/ourbusinesses/index.html(accessed July 25, 2008)

^[17] See: www.economictimes.indiatimes.com/(accessed July 10, 2008)

^[18] See: What is IP television? The economic times (November 27, 2006): at http://economictimes.indiatimes.com/(accessed July 10, 2008)

^[19] See: Goldmedia-BITKOM Studie: 2,5 Millionen IPTV-Anschlüsse in Deutschland bis 2012, (September 20, 2007), p.2

^[20] See: Grote, A. (2008), p.30