Tivo - how can they still not be making a profit?

[Jeraden]

From an article on CNN:

Despite the company's loyal following of 3.3 million subscribers, TiVo has labored to increase its subscriber base. In its first-quarter report in May, TiVo reported a loss of $857,000. The company has said it would reach profitability in the fourth quarter.

With 3.3 million subscribers, how can they not turn a profit? Aside from advertising expenses, isn't their only real expense that of maintaining the program guide that gets downloaded? And I have a hard time believing that costs much of anything to run. Where's all their money going?

 

[Phoenix15]

taking a loss on the hardware maybe?

 

[flyingboujanero]

Do they make money on the boxes? Or do they sell em the same as cell-phone companies, where they make a loss on equip.

That could help to explain a lot, with lots of new subscriptions they would take a large hit in the beginning, that they haven't had enough time to make back in subscription revenues.

 

[royaldank]

Hardware, research and development, advertising, etc.

 

[Liviathan]

Loan payments on initial invesments?

 

[Ramma2]

If ReplayTV ever went under, I would die.

 

[torpid]

I'm guessing some of those subscribers are through DirecTV.

They are spending a decent amount of money on future technology like Cable Card support, spent a decent amount on TivoToGo, etc.

In general their position in the market is anything but solid, because cable companies (other than comcast, I guess) with their proprietary DVR hardware/software for much cheaper are are serious threat.

 

[Maverick]

Basically their subscriber costs haven't paid off their R&D/hardware costs yet.

Now they're gonna be doing something new with interactive advertising so I expect in 2006 they'll have much stronger balance sheets.

<---TIVO shareholder

 

[Rock Hydra]

Originally posted by: torpid
I'm guessing some of those subscribers are through DirecTV.

They are spending a decent amount of money on future technology like Cable Card support, spent a decent amount on TivoToGo, etc.

In general their position in the market is anything but solid, because cable companies (other than comcast, I guess) with their proprietary DVR hardware/software for much cheaper are are serious threat.

Also, media center PCs wiht video capture capabilities isn't helping out their situation, much either.