Reflections on 25 years of Tivo and the limits of convergence

A little more than 25 years ago, I found myself crowded into cramped hotel suite with Mike Ramsay and Tim Barton, the founders of a startup called TiVo. I was the media-industry analyst at Forrester, and they were eager to demonstrate a new TV set-top box and get me to talk about it.

That demo was a revelation. Before that, the only way people could record and rewatch television programs was with the clunky, confusing interface and bulky analog tape cartridges of a VCR. Here was a box that understood the TV schedule and allowed you to navigate an intuitive program grid and just tap a button to record a show, or a whole series. It also stored dozens of hours of digital recording for easy retrieval.

On top of that, it had a sexy interface. Remember, in 1999, if you saw anything interactive on your TV screen, it was the fuzzy, clunky, poorly-designed electronic program guide delivered by your cable or satellite box. TiVo’s interface wasn’t just beautifully designed, it was fun. The distinctive and comfortable peanut-shaped remote set the standard for intuitive navigation, and the machine made lively beeps and boops as you navigated the interface. You really felt like you were stepping into the next generation of TV viewing.

And you could skip the commercials, too.

In that moment, I realized that consumers were about to be liberated from the prison of the television schedule. I published a Forrester report called “TV Viewers Take Charge” and predicted the end of scheduled viewing (correct) and a huge threat to TV advertising (not so much). TiVo was sexy; it appeared (and I did too) on “60 Minutes.” Everyone was talking about it. It also propelled me to be the most quoted analyst in the country for a while.

Twenty-five years later, TiVo is not a significant player in the would of television. It kicked off the revolution that changed everything. But other people got the leading role in that transition, and the profit.

Why TiVo isn’t on all our TV sets

I’ve left out a few things about TiVo that made a huge amount of difference in what eventually happened.

There were competitors — ReplayTV, founded by Anthony Wood, who later started Roku, was one — but TiVo was clearly the best designed product. The problem wasn’t the competition. It was the millions of TVs already hooked up to cable and satellite set-top boxes.

TiVo was hellish to install. To get those program listings into the box, it needed to make a nightly phone call on your landline (this was before Wi-Fi was in everybody’s house), and not everyone had a phone jack near the TV set. Worse, you had to hook it up between your cable or satellite box and your TV set, with a kludgy workaround to allow it to change the channel. Installation took hours of troubleshooting.

Eventually, TiVo solved some of those problems, for example, with a feature that downloaded TV schedules over Wi-Fi. But of course, the established players wouldn’t stand still. Cable and satellite companies started integrating digital video recording into their own top-of-the-line set-top boxes. A few licensed TiVo. TiVo sued others for patent infringement, and after a long legal battle, won hundreds of millions of dollars.

That may have been a financial win, but when you sit down at your TV, you’re almost certainly not looking at TiVo’s elegant interface, and the boxes connected to your TV most likely don’t say TiVo on them.

As the old joke goes, “How did the Lord create the world in only six days? He didn’t have an installed base.” Change is hard when everyone has impediments to that change in the form of clunky, but difficult to displace, TV set-top hardware.

Leaders are rarely winners

It’s classic disruption theory: a slow-moving, entrenched market leader faces an upstart that does things better. We’re supposed to believe that the upstart has the advantage. But the upstart also has to displace customers firmly established habits. That’s hugely difficult and expensive.

TiVo forever changed the world of TV. By freeing people from the schedule, it was the gateway drug to today’s streaming services, but it didn’t reap the benefits in market share. And that’s hardly unique.

AOL got many of us online, but is now a minor player in online content.

Creative Labs pioneered MP3 players, but got shoved aside by Apple’s iPod.

Yahoo! got us searching, but got squashed by Google.

MySpace got us used to social media. It’s pretty lonely in there now.

Blackberry got businesspeople addicted to mobile email, but they were a lot happier with iPhones.

To make money with new hardware or services, you need more than an amazing product. You need it to work in the infrastructure that’s already set up.

That was the true genius of the iPhone. Apple didn’t just create a fantastic product, its CEO Steve Jobs sweet-talked AT&T into a completely new model for adopting phones and selling data service. iPhone leveraged mobile phone carriers instead of fighting them, and built the value of its services directly on access to the millions of existing websites. (Most of the apps came later; mobile internet and well-designed mobile email are what made the first iPhones useful.)

Gmail crushed Hotmail and everybody else because it leveraged Google’s user base and logins.

Netflix made streaming popular because the TV makers had added internet access to their TV sets, so hooking it up was easy. (It also helped that they started with millions of DVD-by-mail subscribers).

It’s not enough to be the best. It’s not enough to be cool and offer incredible experiences. You also need to “go with the flow” by building on existing installed bases, services, content, habits, and hardware.

Or you can wait for some pioneer like TiVo to debut the idea and intrigue people, then swoop in and do what they did better, more easily, more simply, or more cheaply.

Thanks, TiVo, for changing television. And to whatever startup is ready to change everything in an entrenched market next: we’ll be happy to thank you, too, but those who fight uphill battles rarely emerge victorious