Much of the thinking here is actually Bill's. Though we've bashed TiVo (and from TiVo's perspective, probably incessantly) a lot since our launch, we honestly don't disagree with its current strategy. TiVo to its credit did spend less money, cut marketing out almost entirely all while growing the amount of cash on hand it has to weather the storm.
Being in the intellectual property business can be a good business to be in. It's not at all clear TiVo will receive the full amount the court has decided in its favor (Echostar/Dish will likely tie this up for years if it can), any of it at all, or merely a fraction of the ~$100 million via licensing agreements. The stock price is seemingly being held up on the belief that somehow, some way, TiVo will cash in on its intellectual property.
Based on this, we can't really fault TiVo's current strategy which seems to be:
- Cut back on all marketing spending for the product
- Hope like hell that the patent lawsuits will result in big payouts
- Have enough cash to weather the storm (TiVo has more cash on hand this quarter than last)
Even TiVo, based on its marketing spend, seems to have gotten the religion that it's a bad business model to try to attempt to compete with the "free" DVRs cable companies are giving away. I know some TiVo purists do believe that TiVo is so vastly superior to the "free" DVRs, but what those people think doesn't matter to the market, even if it is true. Our data indicates that about a million new DVR subscribers per month have come on over the last year or so via cable offerings and this while TiVo is losing roughly 50,000 subscribers a month.
TiVo has enough cash on hand to weather many more quarters of subscriber losses like these. But, to the degree it has pulled back marketing, it also won't add new subscribers so the net losses in subscribers could grow even further. TiVo's model seems, for now, to be to have enough cash on hand to wait it out and hope for the best as well as licensing royalties from all DVR providers. Despite some bashing on our part, all things considered it seems a sound strategy.