Can TiVo Compete With “Free”?

One of the recurring arguments that the music industry makes about its legal campaign against file sharers is that they can’t compete with free. This is, of course, crap, because you can compete with free with a superior product, service, convenience, etc. Now in the arena of DVR’s, TiVo must compete with free against Dish Network:

Dish Network will turn up the heat on TiVo today when it is expected to announce a promotion to give away digital video recorders to new subscribers.

The deal will last through January 2004. Existing customers can upgrade to the DVR receiver for $199, a Dish Network representative said.

Digital video recorders work like VCRs without a tape, allowing viewers to record programs to a hard drive for viewing later. DVRs also enable users to pause and rewind live television programming.

Despite building a brand name that has become synonymous with digital video recording, San Jose-based TiVo has trailed Dish Network in subscriptions largely because of price. A TiVo recorder still costs about $250 plus a $13 monthly service charge. Monthly fees range from $5 for DirecTV to $13 for other DVR service providers.

Dish Network’s DVR service is included in its subscription fee.

“We want to take advantage of what TiVo has done out there with brand awareness,” Soraya Cartwright, Dish Network’s executive vice president, said. “No one has really been out there as much as TiVo when it comes to DVR. It’s time for us to differentiate ourselves.”

The free box — valued at $300 — contains a hard drive that can store about 100 hours of recorded television programming. It and the lack of an additional service fee is expected to put pressure on TiVo as it seeks to attain 1 million subscriptions. [Mercury News]

Not only is Dish’s box free, but the monthly charge feels like free because it is bundled into the service charge. Could the music industry learn something from this?