TiVo will seek to cut subscriber acquisition costs (SAC) to ‘$75 or ...

a program offering a $100 rebate that reduced the price of the standalone PVR with a 40 GB hard drive to $99, CEO Michael Ramsay said at Roth Capital investor conference this week. Based on monthly average revenue per subscriber of $8, TiVo recoups the cost of acquiring the customer in “a year or less,” he said. While TiVo charges $12.95 monthly for its service, it recognizes over 4 years revenue from customers paying a one-time $299 fee for a “lifetime subscription.” Those subscribers produce average monthly revenue of $6.19. Subscriber acquisition costs will decline in 2005 because TiVo will get “more cost out of the hardware which means the cost of the subsidy goes down,” Ramsay said. TiVo’s recent agreement with Macrovision on a new licensing pact will have “little near-term impact” on the company. The contract, signed in Aug., places limits on how much content may be recorded and stored on high-capacity PVRs. TiVo and rival ReplayTV agreed to impose changes in the “trigger bits” built into Macrovision analog copy protection in a PVR to activate one of 4 new copy-control settings to be determined by the content owner. Macrovision brokered the deal between the major film studios and the PVR suppliers. “It does give studios a little more control” over the content being recorded on PVR hard drives with capacities of 400 hours or more, Ramsay said. While TiVo has attracted 15-20 advertisers to its platform, including a heavy sampling of car manufacturers, the company’s ad revenue “has been constrained” by the size of its installed base. TiVo has about 1.9 million subscribers. Ad sales represent less than 10% of TiVo’s total revenue, but the company plans to increase sales by expanding the space dedicated to ads on the service, Ramsay said.