Why TiVo Won: Innovation Needs Restraint

A note to young leaders.

A tale of two tech companies.

In the late 1990s, two ambitious startups – TiVo and ReplayTV – were locked in a fierce battle to dominate a brand new category: Personal Video Recorders (PVR’s).

PVRs were next-generation VCRs that could read the TV guide, and allowed viewers to record multiple shows simultaneously, fast-forward through commercials, and even pause live TV.

Consumers loved the idea – but media giants such as Disney, HBO, NBC, Viacom – felt threatened. If users could skip ads, their businesss model would collapse. They threatened both TiVo and ReplayTV with lawsuits.

ReplayTV doubled down. They launched new devices that could automatically detect and delete ads, so users didn’t even need to fast forward through them. Worse still, they enabled users to upload ad-free episodes online.

TiVo by contrast recognised that their entire model depended on the content generated by media companies. They needed to find a way to work with them, not against them. They met with all the major networks, reassured them that users rarely had the time to skip through the ads, offered detailed viewership data and invited them in as shareholders.

In October 2001, a group of major studios sued ReplayTV for copyright infringement. Two years later, ReplayTV filed for bankruptcy protection and soon went out of business.

Meanwhile, media giants poured $50 million into TiVo, saving it from the aftermath of the 2000 dot-com crash. TiVo was later acquired for $1.1 billion in 2019.

TiVo had grasped what ReplayTV didn’t:

If you’re hitching a ride on the shoulders of giants, at least have the courtesy not to bite their ear.

Innovation demands boldness. Success requires self-restraint.