Tivo Inc, an assignment1.0 IntroductionThe case concerns the introduction of Tivo, a new service that offers the television viewer the flexibility to watch what they want when. The product is expected to change the way people watch TV by giving them flexibility in programming, skipping commercials, pausing live TV and recording programs for future viewing. Furthermore, the service offers captures the subscriber's preferences and can automatically register programs considered to belong to this category. To obtain this service, the subscriber must purchase a Tivo set top box and Tivo service. The box is installed between the broadcast and the television and can store up to 30 seconds of live programs before sending them to the TV. While this introduces a delay in the signal, it ensures that the viewer is able to rewind and pause live TV, skip commercials, etc. While the product offers great benefits to subscribers, and in fact 72% of early adopters find the product to be very great, there are also many concerns. Television and cable operators fear that this service will become a threat to their industry, similar to the concerns they had with the introduction of the remote control. Advertisers are also worried. fears that if users have to ignore advertising, it will be difficult for consumer goods manufacturers to increase their sales. These concerns are however addressed by the ability to leverage new technology to effectively reach consumers.2.0 A statement if the problemTiVo's market penetration has been very poor. Fourteen months after its introduction only a penetration of 0.04% was achieved out of a total of 102 million television viewers. This is also reflected in the company's poor earnings situation. Exhibit 3 shows that the company has posted a loss every quarter since the product was introduced in September 1999, and that it has been getting worse. 3.0 Issues arising from the case 3.1 The TiVo product is a combination of a set top box and a service. Users will have to purchase a box and subscribe to the service separately. The product offers the user a lot of flexibility in watching TV with the following advantages: • Alternative to the VCR; no need for videotapes and longer recording times.• Better recording quality thanks to digital technology.• Ability to pause live TV and replay it instantly without missing subsequent programs. This is the possibility of distractions while watching favorite programs.