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As reported last month, TiVo has announced a new pricing plan for their DVR units. Under the new plan, there will no longer be a lifetime subscription fee available. But, buyers will not have to buy a TiVo anymore - they only have to sign up for an annual contract and pay a monthly fee. TiVo contracts will be available in lengths of one, two, or three years with the monthly fee being $19.95 a month for a one year contract, $18.95 a month for a two year contract, and $16.95 a month for a three year contract. Initially, the new pricing plans will be available only to customers who sign up on TiVo.com with retail store customers still getting the old pricing. Eventually, TiVo plans to also change retail stores over to the new plans.

Switching to these “no money up front” pricing plans is something TiVo had to do. Since Cable companies offer their DVRs for free — the monthly service charge is the only cost — most people saw no reason to pay for a TiVo unit and then still have to pay a monthly service fee when they could get the same thing for free from their cable company. While Cable Company DVRs and TiVo DVRs are definitely not the same thing, most people don’t understand this and see absolutely no value in getting a TiVo over any other DVR.

Even though TiVo may be trying to win the battle by differentiating themselves from the Cable Company DVR boxes, in the meantime they are losing subscribers to the Cable Companies. TiVo needs to get their boxes into more homes now and this is one good way to do it.

Technorati Tags: TiVo, DVR, Cable

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