In a bold move, TiVo will offer a free TiVo Basic Service that consumer electronics manufacturers will bundle with DVD players. Consumers purchasing devices with the ability to receive the TiVo Basic service will get limited DVR functionality such as pausing live TV, record from guide, manual repeat recording by time and date, and 3 days of program guide data (versus two weeks of program guide data in the full version).

Consumers using TiVo Basic Service can use the full TiVo service on a free trial basis, then choose to pay either $12.95 per month or a $299 one time fee to upgrade to the full version of TiVo. Consumers can also pay an additional $99 to upgrade to the Home Media options, which allows a TiVo device to play MP3s and view digital photos from a networked computer.

The success of this move depends on two factors:

1) Price Point of DVD/TiVo Devices: DVD manufacturers will need to bundle a hard disk drive with their players, so the bundled devices will need to be priced higher that a DVD player. In fact, Toshiba will be offering a DVD/TiVo device which includes the TiVo Basic service. The price point for that device, which will ship this fall, is $549. This price point doesn't do much for TiVo as it would be cheaper to buy the full fledged TiVo and DVD separately. Success for this initiative depends on TiVo getting distribution in much cheaper devices.

2) Consumer Reaction: It may well be that consumers will find that their needs are met by the TiVo Basic service and, as such, find no reason to shell out $12.95 per month to access features such as two week program guides, Season Pass, search by title, etc.

Time will tell. Stay tuned.

-Tim
10:42:03 AM