How Channel Seven ownership created and eliminated TiVo in Australia

“You gotta get your TiVo, you gotta get your TiVo” screamed a breathless David Koch on Channel Seven’s Sunrise program in early 2008. The incredibly popular American PVR had just launched locally and the breakfast TV host was doing his best to drum up sales.

There was also a TVC campaign running only on Channel Seven, inviting Home and Away and rugby union fans to “join the revolution” by enjoying TV their way with TiVo. At the time, Channel Seven had the rights to the rugby union (see TVC below).

Channel Seven’s intimate involvement with TiVo was the reason for its entrance. A wholly-owned subsidiary of Seven Media Group (Australia), Hybrid TV, had secured the exclusive licence to market and distribute TiVo set top boxes and accessories, from its American owner TiVo Incorporated.

Hybrid TV officially launched TiVo, exclusively through Harvey Norman stores, on 1 July 2008 — five weeks before the Beijing Olympics would start airing on Channel Seven – a timing chosen to maximise publicity opportunities and early adopter sales.

Even before this date, however, behind the scenes wrangling had commenced. Hybrid TV had originally wanted to charge a monthly subscription fee, believed to be around $10, but Harvey Norman was sceptical: it didn’t believe people would pay a high upfront cost — around $500 to $600 — if there was also a monthly charge. Hybrid TV eventually relented, ditching the fee and charging more upfront: RRP $699.

TiVo has been a phenomenally popular hardware and service in the United States, so much so that it has entered the vernacular as a verb — ‘to TiVo’ means to record a program, no matter what device is used.

In Australia, however, two practical difficulties stemming from Channel Seven’s ownership of Hybrid TV would compromise its functionality: TiVo would not have automatic ad skipping and it would not work with Foxtel.

As a broadcaster reliant on advertising for its revenue, Channel Seven could not countenance a TiVo box that would automatically jump recorded programs forward 30 seconds. Furthermore, as a proponent of Freeview, then a newly-formed lobby group for the free to air networks, TiVo would not be able to record shows on Foxtel.

While the lack of ad-skipping chagrined some of the more tech-savvy potential consumers, it wouldn’t necessarily have hurt sales. Not being compatible with pay TV, however, essentially meant that for the 2.3 million Foxtel-subscribing households there was no point in purchasing a TiVo device.

Despite these two handicaps, the most expensive price tag of any comparable PVR and limited distribution, TiVo launched to immediate success, selling “five to six times” the volume of any other PVR, 14,000 units in total, according to Hybrid TV’s inaugural CEO Robbee Minicola, in its first five months.

With almost $9.8 million in revenue to be shared between stakeholders, Hybrid TV was ready to expand. Minicola had aggressive targets to meet, saying in December 2008 that “We want 50,000 activated units in houses by the end of June 2009”.

To achieve this, Hybrid TV needed to widen its distribution net. Harvey Norman lost its exclusivity in late 2008 when JB Hi-Fi and Clive Anthony’s (now ‘JB Home’) began selling TiVo. David Jones followed soon after, and then The Good Guys were added in early 2009.

Hybrid TV also began selling its devices direct-to-consumers on its website and TiVo was added to various credit card and frequent flyer rewards programs. It was now very much a widely-accessible product, yet despite the prevailing attitude in retail consumer electronics, it was not suffering the price erosion witnessed in other categories.

Expansion was clearly part of Minicola’s remit. In March 2009, TiVo launched in New Zealand, after public broadcaster TVNZ purchased a 33 per cent stake in Hybrid TV. To keep up with the extra demand being placed by retailers and customers in two countries, Hybrid TV appointed three new general managers, to oversee marketing and sales, New Zealand, and content and services.

By the time Minicola arrived in Tasmania to showcase the nascent NBN at the Hybrid SmartStreet Project (see Sunrise video below), staff levels had swelled to around 50, including teams of reps travelling the country to meet with retailers.

Hybrid TV was an early and passionate supporter of the NBN. Whereas the broad sentiment among traditional media owners is that the NBN is a threat to its business, Hybrid TV saw the NBN as an opportunity to provide more content over the internet to the TiVo box.

At Hybrid TV’s media Christmas party at its lavish offices on Jones Bay Wharf in Pyrmont, Robbee Minicola finally unveiled a subscription service for TiVo: CASPA On-Demand.

All new TiVo purchases — and prices were still holding up, somewhat remarkably, at $699 — would come with a free network adaptor kit, providing users with access to downloadable content on a pay-as-you-go basis.

In a show of how ahead of its time it was, Minicola signed up three internet service providers — Internode, Primus and iiNet — to offer unmetered downloads. Hybrid TV believed consumers would eventually want to watch TV without ads, having paid a small fee for the privilege — prices on CASPA were set to mirror new release and weekly DVD rentals.

“Taking this one step further into our future NBN-world, where we will have ubiquitous high speed broadband connections over fibre-optics achieving speeds starting at 100Mbps,” said the always bullish Minicola in late 2009. “This makes our existing copper connections look like a dripping tap with its meagre 512Kbps to 8Mbps.”

Christmas sales were clearly strong that year; by March 2010, Hybrid TV was expanding again. In an attempt to reflect a new corporate structure, titles were changed from ‘general manager of [responsibility] to chief [responsibility] officer. Peter Sharp, the former business development manager for Harvey Norman’s franchisee network, was appointed chief sales officer and Rebecca Blasina, daughter of “Gadget Guy” Peter, was brought in as head of corporate affairs.

[By the time Rebecca Blasina was appointed, Hybrid TV had appointed and parted ways with three PR companies in 18 months. Blasina had been working at the third of these companies.]

The swift growth and enviable price maintenance, however, was not unnoticed. Rivals began benchmarking their product offerings against TiVo. Jai Kemp, GM of Beyonwiz, said his PVRs, “out-featured TiVo by a long way”, citing their ability to record Foxtel. The pay TV provider also responded to the challenge, rolling out its best-in-market IQ2 decoder/recorder.

Because Foxtel was intent on securing as many IQ2 subscribers as possible, it had no interest in working with Hybrid TV to make the TiVo compatible. As Channel Seven was the licensee selling the TiVo boxes, none of the other free to air networks had any interest in embracing TiVo.

“One of the issues with the Australian TV industry is that everyone wants to ‘own’ the infrastructure,” said respected Fairfax Media television reporter Michael Idato. “No one seems willing to be open source and contribute to a collective good, they all want to own it to hurt the competition.

Idato cited another Channel Seven owned initiative, Fango, to demonstrate his point. Because it is limited to only Channel Seven, it doesn’t have the same critical mass as network agnostic social media platforms.

Despite these limitations and criticisms, over the course of 2010, Hybrid TV appeared at the forefront of technology. It signed content distribution agreements with leading studios, broadcasted 3D TV directly into homes ahead of its rivals and began trials on the then very new 4G spectrums. By the end of 2010, CASPA was offering films on the same day they were made available on DVD and Blu-ray.

But while Hybrid TV was successfully transitioning into a content provider, it was still relying on TiVo device sales for the vast majority of its revenue. And sales had not been good.

In November 2010, for the first time since its launch, Hybrid TV adjusted the price of a new TiVo set top box — down $200 to RRP $499.

One month later, Hybrid TV started downsizing.

“We have restructured the business,” Minicola admitted. “The industry has suffered with sales in the last four months, especially August and September [2010].”

Although Minicola insisted Hybrid TV was not “running on a shoestring”, gadget site Gizmodo reported there were only five staff members remaining, while The Register said the customer call centre had been closed and only emails were now being accepted.

One of those to depart was Rebecca Blasina, meaning Channel Seven itself took over public relations for Hybrid TV. Its first press release claimed the TiVo price reduction had worked, delivering the highest market share in TiVo’s history — 29 per cent — according to GfK Retail & Technology.

The second press release, sent nine months later on 9 November 2011, was the last official communication between Channel Seven or Hybrid TV with the media. In a case of the circle completing, a new TiVo device was being released exclusively through Harvey Norman for RRP $699.

This was the first TiVo press release not to include quotes from Robbee Minicola. She had quietly resigned to move back to her native United States. She currently holds a senior management position at Microsoft.

The TiVo website is now a ghost town. The only products left on sale are accessories and Digital Retailer could not find any retailer selling a TiVo set top box. Digital Retailer understands that Hybrid TV is ceasing its after sale services, such as firmware upgrades, on existing TiVo boxes.

Hybrid TV lists a PO Box in Pyrmont as its preferred contact method.

That PO Box is number 777.

TiVo’s original TVC, aired on Channel Seven in the lead-up to the 2008 Beijing Olympics:

Hybrid SmartStreet and TiVo being promoted on Sunrise on Channel Seven:

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