Prepared by, Ng Eng Chong HT093129M
Questions: 1. Draw a supply chain (or value net) that traces the various stakeholders Involved in the TiVo value chain and their respective exchanges. From this, what insights do you get about the relative value that each stakeholder adds in this process? 2. For TiVo, describe the six factors that affect customers’ purchasedecisions (see Chapter 7, Table 7.1). What are the most salient for Tivo Adapters ? 3. What are TiVo’s core competencies? Is the company effectively leveraging these in its current strategy? 4. To what extent is the TiVo business model affected by network externalities? What are the implications for its business model? 5. Who are the key competitors facing TiVo? Given this competition, what are thepricing implications? 6. Does TiVo’s pricing strategy make sense? Why/why not? 7. Do you believe that TiVo’s business model is sustainable over the long term? If so, why? If not, why not? If not, what recommendations do you have for this company? 8. Why has TiVo apparently not been successful in “crossing the chasm”? What will it take for TiVo to penetrate the mass market?
(1) Traditional ValueChain:
Stakeholders: Film/Movie/video makers, Producers Content Producers Stakeholders: TV stations, Cable TV station Broadcasters Cable OS Platform Application Services Satellite Delivery Stakeholders: DVR manufacturers Software vendors, Retailers Video Recording Hardware
Stakeholders: Broadband service provider
Advertising Stakeholders: Advertisers
In thetraditional value chain where the value delivery component is vertically disintegrated, the values added by the stakeholders is as follows : (i) Film/Movie/video makers, Producers: Create contents in form of video/animation/music which is sold to broadcasters (ii) Broadcasters such as TV stations and Cable TVs: Sell broadcast time to advertisers and package contents into fixed TV schedule. (iii)Advertisers: Buy the TV time slot to market their products or services to the mass viewers. (iv) Broadband service provider: Provide the necessary infrastructure to deliver the broadcasted content in EM or wired signals (v) Display makers: Build display devices such as TV monitor to convert the signal from the service provider into pictures and sounds (vi) DVR manufacturers: Build devices to record live TVin digital format and provide subscriptions to access exclusive broadcasted programs (vii)Software vendors: Provide OS platform and application software for display monitor and video recorders (viii) Retailers: Sell the TVs and DVRs independently to consumers. E.g The company that manufactures video recording hardware do not do any broadcasting.
Tivo’s Value Chain: Broadcasting DeliveryVideo Recording Hardware OS/ Application software
However, Tivo’s business model is vertically integrated, combining several components into a DVR box. Tivo delivers broadcasted content branded as Tivo service, makes recording equipment that houses software and large storage device, and provides software features to skip the advertisement in therecorded media. There are many big players in the traditional business model market and Tivo’s vertical integrated model threatens the value of the stakeholders such as broadcasters, advertisers, and other DVR manufacturers.
6 factors that affect’s customer purchase decisions: (i) Relative advantage: The benefits of adopting Tivo technology compared to the other’s DVR service providers.(ii) Compatibility: The extent of the media format recorded by Tivo whether it is standard and viewable in different devices such as mobile phones, laptops and pcs. (iii) Complexity: The consumer usage model of Tivo DVR technology whether it’s user friendly or difficult to use. (iv) Trialability: The extent where Tivo DVR can be tried on a limited basis or it can be returned if users are not...