TiVo Still Doesn't Get It

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Can somebody tell TiVo (Nasdaq: TIVO  ) that this isn't an arms race anymore?

The DVR pioneer introduced the TiVo Premiere Elite yesterday, and the specs are juicy. The new $499 box has four tuners, allowing owners to record four different shows while they watch a fifth. Storage has been bumped up to a beefy two terabytes, which is essentially enough space to save 300 hours of high-def television.

This all sounds great until you remember that it's not 2001 anymore. It's 2011, and couch potatoes just don't think that way.

Who needs to records four shows at once? We live in streaming times, where content is available on demand. What are the chances that there will be four things on live that you will ultimately want to watch anyway?

Storage? I get it. Data keeps getting cheaper. Seagate (NYSE: STX  ) just introduced a four-terabyte external drive at an attractive $250 price point.

Still, this is a DVR, and we're living in the era of cloud computing. Who needs to save shows when Hulu or Netflix (Nasdaq: NFLX  ) or the broadcaster itself will gladly serve it up for you later? If you can fill your TiVo with 300 hours of high-def content then you don't need a Premiere Elite: You need a vacation.

Obviously TiVo isn't dumb. Its boxes also do a lot of the streaming extracurricular work that set-top boxes have to do these days. However, when you pair an expensive DVR with a costly subscription plan, TiVo's value proposition is just out of touch.

This isn't some anecdotal rant. The numbers prove it. TiVo may have posted better-than-expected quarterly results two weeks ago, but we're still talking about another profitless showing. More importantly, TiVo continues to shed net subscribers. TiVo had 1.93 million cumulative subscriptions at the end of July, 33,000 fewer TV buffs than it watched over just three months earlier and a whopping 456,000 plunge over the past year.

What does it tell you when the specs get bigger but the couch potato count gets smaller? If you're that one person that's breezing through this article because you have four shows recording right now that you want to see later, you need to get out more.

Oh, and while you're there, take TiVo with you.

If you want to track TiVo's hits and misses, add TiVo to My Watchlist.

Motley Fool newsletter services have recommended buying shares of Netflix. Motley Fool newsletter services have recommended buying puts in Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Netflix. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

Read/Post Comments (5) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 08, 2011, at 9:19 PM, lifeguard446 wrote:

    You do know they sell two other smaller dvrs right for more practical folks?

    It's a high end model for higher end customers. Think people who make more in a hour than the cost of Tivo for 6 months.

    Do you think people need ferraris and porsches?

    For the ones with the money, who want to record 4 prime time HD shows at the same time, they can.

    I think you'd be surprised how many ferraris and

    porsches are sold a year.

  • Report this Comment On September 08, 2011, at 10:32 PM, mhy729 wrote:

    I was under the impression that wealthy folks don't watch as much TV, relatively speaking. So this high-end version has a "quad" tuner to record four different shows simultaneously? Wow, now TV enthusiasts are going to have an even larger backlog of shows to keep up with.

  • Report this Comment On September 09, 2011, at 2:33 AM, liot07 wrote:

    I own both a TIVO DVR and Netlix stock. IMHO, I'm gonna drop my TIVO for Direct TV (because the NFL advantage) and keep Netflix because it is so cheap.

  • Report this Comment On September 09, 2011, at 7:57 AM, UPYooper wrote:

    Your assuming a high speed, unlimited bandwidth service provider for streaming content. Many rural "folks" only have wireless (think verizon, AT&T, etc) which is limited in speed and contains severe usage penalties if you exceed their bandwidth.

  • Report this Comment On September 15, 2011, at 8:29 PM, LightningRR wrote:

    I have one word for the Fool. Teenagers!

    They watch the darndest stuff and are expert at comedeering the DVR and overriding my stuff usually live sports.

    2 Channels are not enough. While 3 might be enough, the semi suppliers sell two to a pacakge so not really much additonal cost. Now adding a whole other DVR would probably cost much more.

    Combined with the new built in internet capabilites, the box is actually quite nice. If only the cable company in my area provided as an option would be ideal.

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