The decline and fall of TiVo and Media Center

The decline and fall of TiVo and Media Center

Summary: The DVR is an endangered species. TiVo, the company that defined the category a decade ago, is on the ropes, and Microsoft has all but declared Media Center a legacy app. A comparison of the two technologies explains why.

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When you think of DVRs, what’s the first name that comes to mind? TiVo, probably.

TiVo defined the DVR category around the turn of the century, and today the product name has been turned into a verb. If you’re going to record a TV program on your cable company’s DVR, you probably just say you’ll “TiVo it.”*

But name recognition doesn’t pay the bills. The TiVo product line is in a steep decline, a victim of fundamental shifts in digital media technology today. Those same trends explain why Microsoft has shifted Windows Media Center into legacy mode beginning with Windows 8.

Yesterday, Microsoft’s Steven Sinofsky announced that the company was “completely committed to delivering Media Center in Windows 8.” But he also delivered some bracing numbers to Media Center enthusiasts. Based on Microsoft’s telemetry data, roughly 6% of Windows 7 users in July launched Media Center. “However,” he added, “most people are just looking around; only one quarter (25% of 6%) of these people used it for more than 10 minutes per session…”

By my back-of-the-envelope calculations, that 25% of 6% adds up to about 6 million people. Add in Windows Vista users and those still using Windows XP Media Center Edition 2005, assume a wide margin of error, and I think you can safely estimate that 4-8 million people worldwide use some version of Windows Media Center with regularity.

So how does that compare to TiVo? In its most recent SEC filing, TiVo said “As of April 30, 2011, there were approximately 2.0 million subscriptions to the TiVo service.”

In other words, the user base for Media Center is at least twice that of TiVo: 4 million or so versus 2 million. (I assume Google TV usage is measured in the low hundreds of thousands or less, even if you include the Sage TV user base they acquired earlier this year.)

Those numbers are small, and they’re heading in the wrong direction. TiVo’s subscriber base in October 2010 was 2.3 million. It dropped 13% in the six months ending April 2011. And a survey of TiVo’s annual reports suggests that subscriptions peaked in 2007 at 4.4 million and have been declining steadily ever since.

A side-by-side look at the terms TiVo and Media Center in Google Trends shows the rise and fall of both technologies over the past decade:

Indeed, there's a big spike at the end of 2007, followed by a steady and steep decline.

What happened? If you add the term Netflix to that list, you get a completely different Google Trends chart that explains everything:

You could not ask for a clearer trend line: The streaming media era began in 2008, and the DVR is an endangered species.

Update: A few more details to drive the point home:

Both TiVo and Netflix were founded in 1997. At the end of 2004, Netflix had 2.6 million subscribers, roughly the same number as TiVo. At the end of 2007, when TiVo hit its peak of 4.4 million, Netflix had approximately 7.5 million subscribers. As of mid 2011, Netflix has approximately 25 million paid subscribers while TiVo has dropped to 2 million.

In other words, TiVo in 2011 has fewer subscribers than it did in 2004. Netflix over the same period has increased its paying user base by tenfold.

Given those factors, Microsoft has correctly declared Media Center a legacy application. Yes, enthusiasts will be able to use Media Center on Windows 8, but I don’t expect any significant new features, nor do I expect the interface to change from what is currently in Windows 7. Microsoft disbanded the Media Center team after the release of Windows 7 and dispersed those engineers and designers and testers into the teams working on Windows Phone 7, the Zune/Xbox marketplaces, and new digital media experiences in Windows 8.

In Windows 7, Media Center was listed as one of the main feature teams. For Windows 8, that team is gone, and a new Apps and Media Experience team is in place.

With the tremendous success of the Xbox 360, Microsoft actually has a tremendous opportunity to succeed with a digital media marketplace that works in similar fashion with its installed base of Xbox consoles and Windows PCs—especially the next generation of tablet devices running Windows 8.

Microsoft is fortunate that it can pivot away from its DVR-centric Media Center technology to a more inclusive media platform. TiVo doesn’t have that luxury.

In fact, if you want to know where TiVo is likely to end up, consider the $300 million they collected as part of a successful patent-infringement lawsuit against EchoStar for its Dish satellite technology. EchoStar will pay TiVo another $200 million in installments over the next six years.

TiVo intends to step up its patent litigation, based on this statement from its most recent annual filing with the SEC.

In fiscal year ending January 31, 2012, we will continue our efforts to protect our technological innovations and intellectual property. As a result, we expect our litigation expenses for our ongoing patent infringement lawsuits, which include our ongoing litigation with Dish (EchoStar) as well as our lawsuits involving AT&T, Verizon, and Microsoft, to increase significantly from our most recent fiscal year ended January 31, 2011.

Given the current inflated market in patents, I wouldn’t be surprised to see Google or Microsoft pay a hefty premium to acquire TiVo—if only for its solid gold brand name and its market-tested patent portfolio.

* Note to TiVo lawyers: I do not condone or recommend the use of TiVo as a verb.

Topics: Mobility, Hardware, Microsoft, Operating Systems, Software, Windows

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  • RE: The decline and fall of TiVo and Media Center

    I think media center is great and have been using it for 4 or 5 years with a TV tuner card... with XP, and now Win 7. However, as hulu has more shows available and high quality, i will use media center less. Netflix is great, but takes too long to have TV shows on.
    jrumor
    • RE: The decline and fall of TiVo and Media Center

      @jrumor <br><br>I use Windows Media Center to complement Netflix and Hulu. I don't have cable TV, just high speed cable modem service, and with an HDTV tuner card in my PC, I record HDTV shows over the air that aren't part of Hulu, e.g., CBS and PBS.<br><br>The other nice thing is using the XBox360 as a media extender to watch all the content I've recorded. Friends are often "blown away" by my setup. What I've found is there's still a hefty amount of ignorance when it comes to these choices. More than once I've talked to people who pay for DVR functionality (cable provider, TiVo) when they don't need to.<br><br>-M
      betelgeuse68
      • RE: The decline and fall of TiVo and Media Center

        @betelgeuse68 <br><br>I use media center as my television tuner and have a main media center PC in my lounge which has 3 digital tuners this is where I have all my scheduled programs recorded, i also rip all cds and dvds and Blurays to this PC (it has about 8tb storage). on top of this I have a media center PC in each of my bedrooms with one tuner each. they are connected back to the main media center which allows me to watch the programs recorded on the main media center.<br><br>my wife was very cynical about the setup but now loves it<br><br>Friends come and stay at my place and they are amazed by my setup<br><br>they are amazed by the fact that all my music, films, tv programs and documentaries are available from each room. <br>and they are amazed that I get all of this without a cable subscription. a friend of mine has a sky multiroom subscription and pays over 2000 gbp a year (though in fairness he does get all the movie and sports channels
        rrorge
      • RE: The decline and fall of TiVo and Media Center

        @betelgeuse68

        I would truly appreciate it if you could give me some guidance to applying a similar set up as you had stated ?? the mess between the apple tv .. the outdated before it was indated cable cards ... and the hdmi,, vga and all the other connections ,, rights and technoligy is killing me !! lol
        coleman33zz@...
    • RE: The decline and fall of TiVo and Media Center

      @jrumor

      Give XBMC a spin.
      Alan Smithie
    • RE: The decline and fall of TiVo and Media Center

      @jrumor The decline of TiVo is another prediction of mine besides the bleak outlook I predicted for WebOS even before HP purchased it. The fact that it requires you to first invest an upfront cost in the hundreds of dollars to acquire a set top device before you can use the service is a huge problem especially when others let you use what you already have to stream and record shows. The same will happen to GoogleTV because they require you to dump your current TV and buy one with GoogleTV inbuilt. Its just not going anywhere. What will actually take off is Xbox, especially now with Kinect that brings you into the space age with voice and body gestures/controls of all your entertainment in your living room. 30 million people already have it and counting and it is already right next to everyone's set top boxes in the living room. Delivering IPTV to it just makes sense especially with all of that cloud storage that has been rumored. I will not be surprised to see a decline in cable TV subscriptions or at least a price drop as they will struggle to retain customers fleeing to Xbox TV service. Mark my words.
      techiegz@...
  • RE: The decline and fall of TiVo and Media Center

    This is a long time coming. Even in Windows 7, Media Center is depreciated. I am no longer able to set it as a default app.
    Galactica Actual
    • RE: The decline and fall of TiVo and Media Center

      @Galactica Actual, you must be doing something wrong. I have had no trouble with Media Center in Windows 7. It works fine as the "default app".
      gomigomijunk
  • RE: The decline and fall of TiVo and Media Center

    "When you think of DVRs, what?s the first name that comes to mind? TiVo, probably."
    Motorola comes to mind also

    Motorola and TiVo both hold patents
    Steveo12345
    • RE: The decline and fall of TiVo and Media Center

      @Steveo12345, DVRs are a bit old school. I use Netflix and other streaming channels inside my Media Center. Works great. I especially love all the "Internet TV" channels in Media Center on Windows 7. I don't use a Tuner...mostly because the cable companies killed that feature by dragging their heels on the OCUR protocol.
      gomigomijunk
  • RE: The decline and fall of TiVo and Media Center

    It would be nice if once Microsoft developed a product, it would support it - everywhere. Check the percentages on that factor. Probably less than your # of DVR users. I would love to use the full functionality of MC, but since I'm outside of the US, things like the built in Internet TV suddenly become non-available. How long has Win7 been out with this feature fully enabled/supported? <sigh>
    MongoMe
    • RE: The decline and fall of TiVo and Media Center

      @MongoMe Yes, so true. They are wondering why the Zune failed. Maybe because no one could actually buy it! I would gladly have bought a Zune, but living in Europe, that is not an option. It high time that Microsoft and others realize that there actually is a world outside the US. Even now, Zune Marketplace is not available in Europe (except a few countries). Let's just hope that the Windows 8 App Store will be available here...
      arknu
      • RE: The decline and fall of TiVo and Media Center

        @arknu You couldn't be more right. Zune failed for two reasons. One, Microsoft never marketed the damn thing. I never once saw a TV or print ad for Zune, ever. Two, Zune software and Zune Pass were available in much of the world outside the U.S. and the U.K. Who is going to buy a Zune if they can't buy or stream media on it. Nobody.
        jhammackHTH
  • Message has been deleted.

    SpOoNeRR
  • RE: The decline and fall of TiVo and Media Center

    What killed Media Center is digital TV, not streaming. With analog TV, you just plugged in the cable. With digital TV, you needed CableCards and a secure datapath, and card activation, and this just wasn't/isn't clear to the consumer.

    I didn't even know that multi-tuner CableCards existed until recently, and that cable vendors are required to provide them. Most TV's don't have CableCard slots.

    There is now a PC card that accepts a multi-tuner CableCard and lets Media Center record 4 channels at once. It's a plug in card that can be bought for less than $250. Media Center lives again. But I fear it's too little, too late. No one knows about it, and I don't know how the word gets out, really.
    hickum
    • You are correct. With HD and digital signals standard now

      @hickum
      to add a digital video card with the Cable Card slot to a system alone costs about 300 dollars, yet with cable subscription, many of the shows one may wish to record are available "On Demand".

      The cable compaies like Comcast do not want consumers to be able to record content without the use of a rented device from the cable companies.
      :|
      Tim Cook
    • RE: The decline and fall of TiVo and Media Center

      @hickum
      +1. I used a system called Sage TV in conjunction with Expanded basic cable via Cox Cable. But when, I changed to Fios, it became harder to use the system.

      If course Google purchased and subsequently killed it so it is no longer an option. I used it from 2003 to 2010 and it was an awesome setup. Even the wife misses it.
      dhmccoy
    • RE: The decline and fall of TiVo and Media Center

      @hickum I agree with you, the lack of any affordable way to view content from digital TV networks has dropped adoption of MC way down. I am eagerly waiting on my first cable card tuner to come in. For the price of $4 a month (plus hardware) I can get rid of my two Verizon DVRs that until recently were in the dark ages as far as the UI and at least $20 a piece. Hopefully they will at least keep the functionality, but not the full application.
      xds9mm
    • RE: The decline and fall of TiVo and Media Center

      @hickum

      The problem is not digital, it's that the cable companies took the opportunity to encrypt the signal. All the DVRs died because they tried to play nice with the cable companies. Cablecard was ten years in coming, making it eight years too late. Now that it's finally here, you have to pay the cable company an extra monthly fee and wait for them to ship it to you separately. Cable card should be a textbook case going forward for what happens when you you try to cooperate with a monopolistic establishment. Disruptive change NEVER comes from within.
      tkejlboom
    • RE: The decline and fall of TiVo and Media Center

      @hickum Yup - This is what killed MC for me. My local cableco went digital, and suddenly my tuner card would only get a handful of channels.
      ParrotHead_FL