February 2, 2004 11:46 AM PST

TiVo cuts prices on flagship recorders

TiVo cut the price of its digital video recorders on Monday in the face of increased competition from big-name cable and software rivals.

The San Jose, Calif.-based DVR pioneer and its distribution partners are knocking $50 off the price of the recorders, so that the 40-hour Series 2 box costs $199 and the 80-hour version, $299. The service fee remains $12.95 per month, or $299 for a lifetime subscription.

"Our goal has always been to make TiVo more affordable for consumers, so that more people can have access to the original features unique to the TiVo service and be in control of their television experience," said a statement from Joe Miller, a vice president of sales at the device maker.

The devices use a hard drive to store live television shows, so that people can pause these broadcasts as they're watching. In addition, the TiVo service allows consumers to preprogram recorders to record future shows, among other features.

Late last year, TiVo passed the one million-user threshold, the point when a product becomes a mass-market device, in the view of the consumer electronics industry. This often leads to a price drop for products, as higher demand allows companies to take advantage of economies of scale and negotiate lower rates with manufacturers, then pass that cost saving on to consumers.

Typically, price cuts translate to improved fortunes for a company, but challenges are looming for TiVo: Cable giant Comcast recently announced that it plans to offer DVR service to its subscribers, and software giant Microsoft is offering DVR service to users of its Media Center PC operating system.

Still, TiVo is pushing on with new features and sending warning shots to rivals.

Earlier this year, the DVR company filed a patent-infringement lawsuit against EchoStar Communications, alleging that the satellite TV service provider had violated its "multimedia time warping system" patent, which it received in May 2001 from the U.S. Patent and Trademark Office. Some set-top boxes used with EchoStar's satellite service come with DVR capabilities.

In addition, the company unveiled TiVo-to-Go, a feature that allows subscribers to transfer shows recorded on a recorder to a home computer. Shows are protected by memory key that, when plugged into a PC, unlocks the content.

 

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