Can ABC Compete With Tivo By Making a Worse Product?

Posted Wednesday February 27, 2008 in Business

Bloggers like Marc Andreessen, John Gruber, and TechDirt have heaped scorn upon ABC’s decidedly feature-retro on-demand service. With ads you can’t skip, ABC’s offering gets rid of what everybody seems to agree is the most wonderful feature of the DVR. Is ABC stupid or brilliant? I’m almost tempted to argue the former — this could be a clever business move.

It’s tempting to think of the Tivo as the greatest thing ever to happen to TV — in fact, if you own one, it most assuredly is — but the fact is that most consumers don’t seem to think so. Even now, DVRs are only in 20% of households and Tivo is only one of many DVR vendors (all of the major cable companies, for example, sell their own DVR). Whatever this statistic says about Tivo, it certainly tells us that the ability to skip commercials isn’t a killer app for most consumers.

And that makes sense, when you think about it. I love my Tivo, and I skip commercials when watching my very favorite shows — but, when I’m not paying full attention to the TV, I rarely go to the effort of stopping whatever else I’m doing and skipping commercials. With, according to some studies, 78% of adults often surf the Web while watching TV, there are a lot of people out there who just aren’t paying enough attention to skip all the commercials!

So why would those people pay for a fancy commercial-skipping DVR? In The Innovator’s Dilemma, Clayton Christensen suggests that most disruptive products — those that break up existing ways of doing things and take over the world — are cheap products that give overserved consumers less than they’d gotten before. Less of the things they didn’t value, anyway.

Suppose Tivo is just too much for many consumers? ABC’s offering could then be the lower-cost, feature-right offering that these people who don’t care about skipping commercials could want. Of course, the catch is that these people aren’t watching the commercials anyway, so preventing commercial skip will make no difference in the end. However, that prevention will satisfy ABC’s existing business model, so at least nobody in a corner office will feel uncomfortable with it. That’s good business, at least until the advertisers catch on!

Comments

TiVo’s big problem is that most people are not sufficiently aware of the difference in quality and user-friendliness between their device, and the crap that’s leased by Comcast along with the service. People do the lazy thing and take the leased device (which is free upfront, but within a year or two costs more, even if you discount over time). The TiVo remote, and its interface, are both extraordinarily well-designed, whereas the Comcast and DirecTV devices? Crap. It’s very much like the difference between Windows and Mac — which suggests that TiVo will continue to hold only a niche market.

As for commercial skipping, even TiVo has never actually done that. My ReplayTV does that — they have an automatic algorithm that uses the black frames at the boundary between program and ads, and the fact that ads are noticably louder than programs, to automatically mark the beginning and ending of ads and jump over them. Sometimes the algorithm is wrong, and you have to press a button to deactivate commercial skip and use the standard jump buttons to find the right place. But about 90% of the time, you can watch a recorded show all the way through, without picking up the remote, and have it skip all the commercials seamlessly.

Of course, they took that feature back out of the next version of the hardware, and now they’re not selling hardware at all. I’m guessing that the content provider and delivery companies went apeshit over that feature, and found ways to bully them out of the market, and that this is why TiVo hasn’t introduced a similar feature.

The commercial skip feature was the reason I opted for ReplayTV over TiVo. Sadly, with ReplayTV now off the market, and not available in an HD version, I will probably be buyin a TiVo 3 in the near future, so I can watch BSG Season 4 in HD when it airs.

Posted by: Auros [TypeKey Profile Page] | March 1, 2008 12:42 PM