April 1, 2008

Why spending $700 on a HD TIVO is a good idea

I have owned a Tivo for over 5 years now and greatly enjoy the convenience of a DVR and I also like the extra features that Tivo brand has. But recently I switched over to HD cable service and got the Comcast HD DVR box. I chose to get the Comcast DVR because it supports HD and my Tivo is a standard Tivo series 2 with no HDTV support. But now I'm having to pay Comcast $13 a month for the HD DVR box.

With my Tivo I had originally purchased the lifetime subscription they offered for around $250 and I think I spent $200-250 for the Tivo box itself. So I had spent about $500 on my Tivo2 and had no monthly fee. So I've had Tivo service for about 5 years and avoided the Tivo monthly fees all that time. By spending that $250 five years ago for the lifetime subscription option I've saved myself $750 in monthly fees. I could sell the Tivo2 box with lifetime subscription for $150+ on eBay now . That puts me about $600 ahead versus not having bought the lifetime subscription. SO I made out very well with the lifetime subscription on my Tivo2.

Today I received an email from Tivo offering a Tivo HD model with lifetime subscription for $700. So I looked at what it would cost me to keep renting the Comcast HD DVR versus buying the TivoHD box. If I simply depreciated the value of the TivoHD 100% over its life of use then I'd break even on the purchase of the TivoHD in about 4 years 10 months versus paying $12 a month to Comcast. But the TivoHD box will retain some of its value so I could resell it in future years. In a period of 3 years I'd pay $432 in fees to Comcast. Or if I bought the TivoHD it would cost me $700 and I should be able to resell it for $250-350 giving me a total cost of $350-450. Comcast monthly fees for 4 years would run me $576. If I bought the TivoHD now for $700 I could sell it in 4 years for $150-250 and my total cost for that option would be $450-550. If I used the Tivo for 5 or more years it would gradually depreciate but not as fast as Comcast fees would cost. (I should note that I'm ignoring inflation or opportunity cost of my money just for simplicity sake)

Bottom line: I figure if you addin resale value of the TivoHD then the break even point of buying a TivoHD at $700 versus renting a Comcat DVR for $12/month is around 3.5 years.

I have high confidence that I'll be using a DVR of some sort for that 3.5 years. The monthly fee might fluctuate over time or I might switch to another provider but its also highly likely that I'll be paying $12 a month fees for a rented DVR. So buying the TivoHD with lifetime subscription would be financially better choice than renting a DVR.

I fully realize that doing without a DVR and canceling my subscription to cable would save me even more money. But cable TV and a DVR is one of my pleasures that I consider very much worth the cost.

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