TiVo experiments with offering DVRs on two-year contract

By Geoff Duncan September 14, 2010

DVR pioneer TiVo has been working to develop new revenue models and boost the profile of its DVR set-top box solutions in the face of stiff competition from cable and satellite providers that off their own DVRs. (Although TiVo has had some success partnering with other PVR and set-top box makers.) Now TiVo is trying something new: instead of requiring customers to pay up front for a TiVo and then pay monthly fees for TV listings services, they’re offering DVRs on contract: $19.99 a month gets you a TiVo and service…so long as customers are willing to make a two-year commitment.

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The offering includes the TiVo Premiere set-top box (introduced this past spring), which enables users to record up to 45 hours of HD programming, and also lets users tap into Netflix (if they’re subscribers), Amazon Video-on-Demand, Blockbuster, YouTube, and (soon) Pandora. Users will get the full range of TiVo features, including the ability to schedule recording from the Web or via their mobile phones, access personal media libraries on home PCs, as well as tap into social networking services like Twitter and Facebook.

The offer makes the TiVo Premiere (normally $299) available for $19.99 per month, so long as customers are willing to commit to a two-year contract. TiVo service itself normally runs $12.95 per month, with one-year and three-year plans offering a discount (and a $399 lifetime plan taking care of all future service fees). Over 24 months, TiVo’s contract offer works out to about $480 (plus taxes and fees); in comparison, buying a TiVo Premiere and paying for month-to-month service would run over $600. To sweeten the deal even more, TiVo is throwing in a complimentary six-month Netflix subscription (equivalent to the low-end $8-per-month option). However, if users cancel before the end of their two-year contract, they’re on the hook for $300 to cover the cost of the TiVo Premiere, less $7 for each month of service used. Once the contract expires, users will automatically be continued at a $20/month rate, which is considerably higher than any of TiVo’s existing service plans. After two years, contract customers might look at switching to a less expensive service plan.

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