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Posted at 6:33 AM ET, 11/15/2010

TiVo's new $99 and 'free' deals are no deal at all

By Rob Pegoraro

You can now buy a TiVo digital video recorder for just $99 and change. Please don't.

The "special holiday offer" headlined on the Alviso, Calif., company's home page looks like a sizable discount at first. Instead of forking over $299.99 upfront, then paying $12.95 a month in service fees, you can spend $99.99 for the DVR from now through Dec. 31 in return for committing to pay $19.99 a month for service for a year. Or ante up an extra $200 for the higher-capacity Premiere XL recorder and sign up for the same monthly rate.

TiVo_logo.jpg

But TiVo's fine print leaves out an unpleasant provision confirmed by company publicist Lacey Haines in a series of e-mails last week: The $19.99 rate remains in effect forever on those discounted TiVo boxes.

So while you'd be doing well after one year, you'd go underwater not long after two.

Let's do the math. TiVo normally sells its Premiere DVR for $299.99 and charges $12.95 a month for service. That yields a total one-year cost of $455.39. After two years, you'll have spent $610.79; after three, $766.19. If you take the $99.99 offer, your expenses hit $339.87 after one year, $579.75 after two and $819.63 after three.

You'll do better under another, non-XL offer that TiVo doesn't mention on its home or product-information pages: Pay nothing for a Premiere in return for committing to two years of $19.99-a-month payments (after which the $19.99 rate remains bolted to the DVR). Under this offer, you'd pay $239.88 after one year, $479.76 after two and $719.64 after three.

But even that cost outstrips the total expense of paying full retail on a Premiere and then $399 for "lifetime service." (That's supposed to mean "life of that one TiVo box," although I've heard from users who talked TiVo into moving their lifetime service to a new DVR.) This caps your total expenses at $698.99. If you keep a TiVo at least as long as the average computer, the lifetime deal is the best one.

I'm sure it's a coincidence that TiVo's online store doesn't mention the lifetime option unless you click through to a small-type listing of payment plans. That page also notes that if you don't buy a full-price Premiere directly from TiVo, you can pay $129 up front for a year of service, a cheaper option than even lifetime until you begin your fourth year with the DVR.

Only if you retire the TiVo after two years can you guarantee that you'll save money on the free offer--and that's assuming that TiVo will offer the same no-money-down deal on a new model in 2012.

As veteran video blogger Dave Zatz noted over the weekend, TiVo has experimented with this kind of promotion before. In September, the company briefly offered the same deals--and it didn't explain the $19.99/month lock-in any better back then.

Maybe this time, TiVo will realize that modeling pricing strategies after the kookier extremes of wireless carriers is no way to build a business.

Have any suggestions for how TiVo could better package its prices--or tips on getting a better deal out of the company? Let me know in the comments.

By Rob Pegoraro  | November 15, 2010; 6:33 AM ET
Categories:  Shopping, TV, Video  
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Comments

Too late for me, I bought one from a retailer before the fine print "appeared" on the product page. Now, it's listed there. I've been a Tivo customer since 2005, so their choices are to lose me or honor the deal I agreed to.

Posted by: MStreet1 | November 15, 2010 7:27 AM | Report abuse

I wonder if the lifetime plan for a particular Tivo box can be transferred if the hard drive has to be replaced. I just pay for a year up front and try to enjoy the Tivo experience.

Posted by: safety-man | November 15, 2010 8:55 AM | Report abuse

Tivo has more risk selling the box at $99, because if the buyer defaults and doesn't complete the 1 year agreement, then Tivo loses money. This option has to be more expensive. There are better deals than this one, but you have to have more upfront cash.

If Tivo ties th $19.99/month rate to the box after the 1 yr commitment without spelling it out in the fine print, that will be very bad.

Posted by: edrebber | November 15, 2010 8:57 AM | Report abuse

I remember when a VCR could record your shows without a monthly fee; and when people had answering machines that took phone messages without a monthly fee. Now we have a monthly Tivo bill and a monthly phone charge for voicemail. Companies are nickel and diming consumers with a monthly service charge for stuff that used to cost nothing.

Posted by: dhebert1 | November 15, 2010 10:01 AM | Report abuse

Responses to safety-man:

TiVo's lifetime plan cannot be transferred from one box to another when/if the hard drive fails. My son-in-law solved that by replacing the hard drive (from an unused TiVo) and continuing to use the same box with the lifetime plan. Since paying the lifetime fee, my daughter and he have used the same box for 5-6 years without paying a monthly fee.

Posted by: bowmansauce | November 15, 2010 10:23 AM | Report abuse

Now, I think your article is MISLEADING. I read the terms at is specifically states "After the end of the commitment associated with your monthly service plan, TiVo will continue to charge you on a monthly basis at the THEN-CURRENT MONTHLY SERVICE PLAN RATE, subject to the terms of the TiVo Service Agreement." It says nothing about $19.99 for life.

Posted by: frabajal | November 15, 2010 11:23 AM | Report abuse

Maybe if Tivo had a more honest approach and didn't lock in the extra high rate forever it would be more appealing.

Posted by: ah___ | November 15, 2010 11:32 AM | Report abuse

@frabajal: That line in TiVo's terms is quite vague, which is why I asked their PR rep to clarify it. Her response surprised me enough that I asked her to confirm it in a second e-mail, which she did.

You're welcome to make your own inquiries; if you hear something different out of the company, I'd like to know.

- RP

Posted by: Rob Pegoraro | November 15, 2010 11:58 AM | Report abuse

What's the difference between a DVR offered through my cable company and a TiVo? My cable co. would charge $5-$10/month for a DVR box, and no up-front fees to buy a box.. seems like a better way to go?

Posted by: Get-Real | November 15, 2010 12:43 PM | Report abuse

@frabajal: You are reading the wrong fine print. The "then-current monthly service plan rate" (currently $12.95, or $9.95 for subsequent units) applies only to those who purchase the TiVo unit at full price. Those who purchase the unit at nothing down or $99 down pay $19.95/mo. forever. So Rob's point is valid: After three years, you are paying much more than if you were to have paid upfront.

Three years seems to be the breakeven point, as Rob points out, for all the plans. A more honest and fair approach is to allow the discounted buyers to come down to normal monthly pricing once some breakeven point has been reached, plus interest perhaps because of the less money down. My personal take is that perhaps TiVo wants to bring itself to somewhat of a pricing scheme similar to (far inferior) DVRs provided by cable companies, which are eating into its bottom line, but this strategy is a bit sleazy at best. But speaking of cable DVRs....

@Get-Real: Are you serious? Rob may back me up on this, but comparing a cable DVR to a TiVo is like comparing a Yugo to a Lexus: There is no comparison. You get the former for free with a nominal rental fee, while the latter is cash plus a higher fee; there's a reason for that: The TiVo experience is intuitive, varied, flexible, expansive, and downright pleasant. Cable DVRs are essentially pulling one's teeth out without novocaine. Try out a friend's TiVo one day. You'll never go back (much to the detriment of our wallets).

Posted by: TishTash | November 15, 2010 12:56 PM | Report abuse

Spend a $100 and buy an antenna. Click through your 10 channels, see nothing on, go do something productive like play with your children!

Posted by: jeffreid2 | November 15, 2010 1:11 PM | Report abuse

And, to add to TishTash, often that $10 is on top of the cable box fee (often $10).

With a Tivo, a cable card (often less than $5/month) takes care of you.

Posted by: ah___ | November 15, 2010 1:13 PM | Report abuse

@TishTash: Yes, I was being serious. Not having seen either in action I thought it was a valid question. If I just need to record a few shows once in awhile, similar to if I still owned a VCR, then the comparison of a Yugo to a Lexus isn't quite right - they both record shows. Perhaps a Yugo vs. a Kia.

If the TiVo takes 20 seconds to set up a recording, and a cable DVR takes 40 seconds, the cost to purchase/maintain a TiVo is still money wasted. I will compare the two, but don't plan to spend money on features I won't use.

Posted by: Get-Real | November 15, 2010 1:27 PM | Report abuse

@bowmansauce - are you certain of this? It was my understanding 3+ years ago, when I purchased one, that a 'lifetime' subscription can be transfered to a new machine for $75. Do you have a link that supports your statement?

Posted by: cvogt1 | November 15, 2010 2:43 PM | Report abuse

Try weaknees.com for good deals on TiVo boxes AND replacement drives that you can install yourself or have them do the work.
I agree that if you can find the Lifetime Plan, take it.

Posted by: johnny11 | November 15, 2010 2:48 PM | Report abuse

@Get-Real: Gonna agree with @TishTash on this. There is a noticable difference between Tivo & your local provider's DVR. I used to buy older DirecTV boxes when they used the Tivo software in order to keep my machine running instead of switching to their box, remote, and software. The intuitiveness of Tivo's software and comfort of their remote sets them apart.

Posted by: cvogt1 | November 15, 2010 2:55 PM | Report abuse

@Get-Real: Well, in re-reading my comment, I apologize for my somewhat snarky attitude. You are right of course, TiVo isn't for everybody. But in your comparison, I think you'll find a marked improvement in the user experience with TiVo. Maybe the car analogy wasn't apt; a more appropriate one would be would you pay more for the Mac experience vs Windows. (Uh-oh, watch the fur fly now!)

@ah___: Yes, it's usually $10 or so for the DVR plus $5-10 for the cable box/remote. Cablevision actually charges just $2/mo. for CableCards, and tuning adapters (for switched digital video channels) are FREE, so TiVo makes even more sense in that respect.

@jeff: More and more people are unplugging cable and satellite in general and purchasing everything on-demand a la carte, whether it's via Netflix, iTunes, or Hulu, and getting the rest by Roku or YouTube for free. This is the fantasy envisioned by those who chafe at paying for huge packages just to frequent a smattering of frequently watched channels, but you know a la carte cable will never happen, at least soon.

But I do tend to agree with you regarding using just over-the-air (OTA) channels via antenna, and using the extra time to go outside and actually do something physical. :-D

Posted by: TishTash | November 15, 2010 3:12 PM | Report abuse

One of my all time favorite gizmos is my Panasonic DMR-EH55 standalone DVR/DVD Recorder. It's an amazing type of device that Panasonic no longer makes, nor do any other manufacturers make anything like it. It makes the TIVO (or any subscription) service utterly irrelevant while providing the same utilities and a tremendous amount of flexibility.

It's actually one of two such devices I own - the other being an older model of the same thing. I'm baffled as to why these never caught on in the mass market. Consequently, I will pamper the ones I have and try to repair them when they break. Meanwhile, I hope some savvy manufacturer notices this vacant niche and decides to fill it.

~Mike Rau

Posted by: asoundidea | November 15, 2010 3:16 PM | Report abuse

@asoundidea: The reason those didn't catch on is the same reason VCRs are gone, and why VCR+ became so prevalent back then: People don't like manually scheduling things. Without a listings service, you have to punch in the time, date, and duration of your recordings from a third-party source, like TV Guide (remember that?). People hated that so much that when VCR+ came with a kludge to make it easier by punching in a long number, it actually took off!

Now, compare that to looking up a show by time or name, hitting a button to record it, and getting other episodes of that show and suggestions you might like automatically recorded, even across other channels. That's what one is paying for with TiVo.

Posted by: TishTash | November 15, 2010 3:26 PM | Report abuse

After the 1 year or 2 year commitment period has ended, you essentially own your TiVo and, yet, it does continue on a month-to-month contract at $19.99 per month. But, it is a month-to-month contract, and, this is worth repeating, you OWN the TiVo, so now you can be smart about it and Cancel your TiVo and then re-activate at the new lower montly rate for an owned TiVo. All the reporters are trashing TiVo this morning saying this is a bad deal but it is NOT A BAD DEAL. I don't why so many reporters hate TiVo . . . and TiVo PR doesn't help either because they aren't telling you how you can get around paying the $19.99 monthly AFTER you the commitment 1 or 2 year commitment period has ended and you own the TiVo box.

Posted by: frabajal | November 15, 2010 4:16 PM | Report abuse

Rob's math is very sound. The seemingly low entry cost, turns into a long-term annuity for Tivo. This is all assuming they're even around for 3 years. There are better alternatives.

Posted by: meganbrod | November 15, 2010 6:06 PM | Report abuse

@frabajal: You know, you're right about that: Once the contract is over (one to two years, depending), you may ASK for the lower pricing scheme, usually in exchange for locking in a year or more. However, as you imply, if TiVo did this automatically after some breakeven point--perhaps delayed a bit for "interest" on the less money upfront--it would make for far less bad PR.

Posted by: TishTash | November 15, 2010 8:34 PM | Report abuse

I don't own TiVo and I am amazed that anyone does. (I also don't have cable, although I can easily afford both.)

Apparently, the only thing TiVo has to offer is the ability to download a TV program automatically, at the time it is broadcast, for later viewing.

What no one has mentioned is the free alternative to both services: Bittorrent.

While I do not advocate piracy, it is a fact of life. There are TV series no longer broadcast that I either had no time to watch or was unaware of...and I download entire seasons at a clip, to watch as much as I want, whenever I want.

Anyone with a computer can do the same thing.

Posted by: TheBabu | November 16, 2010 8:34 AM | Report abuse

I have had lifetime service on my Tivo since 2004 or 2005. Definitely was a good deal to buy it upfront versus fees. And I believe I did it under special when at the time it was far less...more like $299 or less. I have a version that records to DVD which has been great. I am interested in the new Premeire box but will not get it if they will not transfer my lifetime service. To the person that does not understand why anyone pays for Tivo they obviously have never been a significant user. It is far better than the standard DVR via cable. I also download movies to it via Amazon.com and Blockbuster (even with my old series 2 it works). Cable DVR also charges you a monthly fee...check the fee on the DVR box and any other DVR fee they may be charging you....it aint free. Tivo has superior software and interface and search capabilities. I am sticking with Tivo.

Posted by: GoogleMe | November 16, 2010 3:32 PM | Report abuse

Posted by: GoogleMe | November 16, 2010 3:41 PM | Report abuse

@TheBabu: You are quite the tool. Just replace what you wrote with "stealing":

"I don't advocate stealing, but it is a face of life."

You are essentially downloading media illegally. Taking the analogy further, you might as well as why anyone should get a job, since money is there for the taking illegally: "I can't believe anyone would earn their paycheck. I'm perfectly capable of working, but since I can steal from someone, I choose not to."

So let me get this straight: You're very proud to announce to the world that you are rich enough to legally purchase both cable and a TiVo, but choose not to because you are able to essentially steal everything you could pay for.

Your parents must be very proud they raised a chronic felon. I hope you never have children.

Posted by: TishTash | November 16, 2010 3:56 PM | Report abuse

I live in the Indianapolis area, and went to my local Best Buy yesterday. And, sure enough, they had a big display pushing this offer. But they were marketing is as a "big sale," a $200 discount. The store display did not indicate that the monthly fee had increased to compensate for the decrease in the up-front purchase price. In fact, the store display showed a monthly fee of $12.95/month, (the previous fee on full price Tivo units) and two store salesman "confirmed," incorrectly, that the monthly fee of the "on sale" $99 unit was $12.95/month.

This whole thing is awful. TiVo is allowed, I suppose, to charge what they will. But they and many of their retail partners have marketed this change in fee structure as a great deal and fantastic sale, which it is not. The details are either hidden in the fine print, or not revealed at all.

That's no way to treat a customer, or potential customer.

And, for the record, I am already a happy TiVo customer. I like their system. It is worth what I paid for it. but this whole marketing episode certainly leaves a very bad taste in the mouth.

Posted by: alexofindy | November 21, 2010 4:59 PM | Report abuse

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