In the world of cell phones, your old plan may be better than any new offerings. So it isn’t necesarrily the case that getting a new plan is better.

In the Tivo case, the only difference between the service under contract and the service after it expires is the price, and that’s what makes it a dirty, nasty, dishonest thing to do.

Especially if you take the case of someone who buys 2 Tivos under the contract scheme and then in a year is paying $19.95 x 2 instead of $12.95 + $6.95

It’s only sleazy if you don’t read the fine print. “Buyer beware,” and all that.

For real short-term trials it isn’t so bad to remember the cancel. But when something goes on for a year, or two, or three – then yeah, there really should be a reminder to the user that it is about to expire and they’re about to be billed, because it isn’t fair or reasonable to expect someone to mark their calendars out that far and just remember that’s going to happen.

It is just good customer relations and the difference between doing what’s minimally required and trying to maximize revenue, and being a vendor that treats their customers as their most important asset. A little goes a long way.

Now, I could bend a bit if there was proactive notification when the original contract is expiring. “Your TiVo service contract expires in 30 days. If you take no action you will be billed monthly at the contract rate of $xx.xx. If you wish to sign up for a new service contract, please call 1-xxx-xxx-xxxx or visit us online at http://www.tivo.com/xxxx”

But if the user is just expected to rememember when their year, or two, or three is up – that’s not cool.

Of course, if they prepay for three years, there are good odds their credit card won’t work when they go to start charging monthly anyway.

TiVo loses money on every box they sell. Going from their latest figures, everytime they sell a box it costs them about $160 overall to acquire that customer. And it has been higher than that. It costs them approximately $2.25/month to provide the service. And then there is all the overhead involved in running the company, developing new products and features, etc. Take the 80 hour box and lifetime, total revenue is about $368 for TiVo. The value is amortized over four years. With the cost of acquisition and 4 years of operational expense, that’s $268. TiVo is left with $100 operational profit – minus the shipping costs, since shipping is free. What’s left goes toward the overhead of the company – and that’s just not enough to be financially viable. And if the box lasts more than 4 years, that supposed operational profit shrinks – and my first S2 is still running after 4 years, my second S2 is close to 4 years, and my S1 is well past 4 years – all with lifetime. (All in other homes now, I’ve sold them.)

To *not* have a subscription model the units would have to cost hundreds of dollars more than they do. Consider the Sony standalone DVRs (non-TiVo), they don’t have most of the features of TiVo, have a basic programming guide (when it works), and the lowest MSRP I recall was $500. The old unit+lifetime total value was too low to be viable, even if you rounded it to $400. They’d need to charge at least $500 or $600 to make it worth while.

If you really want just a ‘glorified VCR’, then TiVo isn’t the best option. There are many simple DVRs, and even more DVD Recorders with built-in DVR, which work just like glorified VCRs. You set them to record by time & date, or use VCRPlus+. Some of them use the simple TVGuide/Gemstar programming guide that is carried in broadcast signals – if your provider doesn’t block it – and it goes out 3 days. You can also buy the Toshiba or Pioneer DVD-RW TiVos and use TiVo Basic without paying for any subscription.

TiVo is a premium product where the real value *is* the service – the extended Guide Data, the software features, networking features, HME, TTG, etc. They’re not pursuing the basic DVR market, at least not at this time. That market is too glutted with cheap, basic products – TiVo’s market approach is to differentiate themselves with their features.

Therefore, I am well within my rights to see them as sleazy and ridiculous.

If I sign a 1, 2 or 3 year contract, the contract expires and a new contract is in order. A sleazy company offers me the same pricing I’ve always had, even if they offer the same product at a lower rate if I ask. That is scummy no matter how you look at it. How would you feel if you paid for LJ and then they decided not to charge new members for the same features you get by paying, but they keopt billing you.

That’s what I was wondering. And if we get a second, will it still be only $6.95 for each additional unit?

If this is true then I won’t be buying a new Tivo through their service plan. I don’t sign up for anything that I have to cancel, modify, whatever a year later. Its ridiculous and sleazy. It puts Tivo in the same category as any one of those you get a free whatever if you sign up for our 30 day trial if after 30 days you hate it call and cancel companies.

They need a visit from Google to have their Don’t Be Evil motto beaten into them.

What Tivo does is no different from say a cell phone company or even a video game console maker. They lose money on the device and make it up with services and add-ons