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TiVo to up lifetime-service fee

The seller of digital video recorder services plans to boost its lifetime subscription fee from $249 to $299 starting March 3, says a note on its Web site.

TiVo, which sells digital video recorder services, plans to boost its lifetime subscription fee from $249 to $299 starting March 3, according to a note on its Web site.

The price increase comes about one year after TiVo increased its fee from $199 to $249. The move will not affect DirecTV subscribers with TiVo service.

The company did not immediately return calls for comment. TiVo's Web site did not indicate a change in the monthly $12.95 subscription fee.

TiVo estimates that the service life of a digital video recorder is four years and the company will incur costs without corresponding revenue if a DVR is used beyond four years, according to an SEC filing from Dec. 16, 2002.

During a conference call for its third-quarter earnings results in November, the company said it had surpassed the 500,000-subscriber mark and had its eye on reaching one million by the end of its fiscal year 2004, or Jan. 31, 2004.

News of the price increase first appeared on the Web site TVPredictions.

TiVo is making the pricing change to move more subscribers to monthly plans, according to Peter Ausnit, an analyst with investment bank Deutsche Bank Securities. Deutsche Bank has banking business with TiVo.

"TiVo is trying to reduce lifetime subscriptions to favor more lucrative monthly pricing. As the mix (of subscribers) shifts toward monthly subscribers, the aggregate value of the installed base increases," Ausnit wrote in a note Friday.

Ausnit added the company has been successful with previous pricing increases and that although the mix between monthly and lifetime subscribers is about half and half, he expected the split to move toward two-thirds monthly and one-third lifetime.

TiVo has also been trying to improve its licensing business to bring in more revenue. The company has signed deals with consumer-electronics giants Sony and Toshiba. However, Ausnit said that licensing will only be a small fraction of the subscriber business.