TiVo, Inc. started in 1997 and became a public company two years later. The idea behind digital video recorders had existed previously; TiVo decided to try to develop a DVR as a separate company, not a subsidiary of an existing set top box company.
TiVo and their partner Philips shipped the first hardware on March 31, 1999 - a day which has become a holiday for TiVo employees in subsequent years. The first unit sold was the Philips HDR110, and worked with almost every variety of programming including cable, antenna, and satellite broadcasting. This unit was later joined by the Sony SVR-2000 - and almost-identical sibling.
Beginning in 2000, TiVo, again with partner Philips, released their first integrated DirecTV/TiVo receiver/DVR - often called a DirecTiVo. The first unit from this three-way alliance was the Philips DSR6000. DirecTV concurrently created a competing DVR with intergrated DirecTV hardware with Microsoft: the UltimateTV units produced by RCA and Sony. DirecTiVos would go on to far outsell the UltimateTV boxes.
Due to the popularity of the combination TiVo/DirecTV units (more of these were produced than any other flavor) many people have mistakenly assumed that TiVo was a unit of DirecTV, or that TiVo only made equipment compatible with DirecTV service. In fact. currently three fourths of TiVos in use are this type of combination unit.
TiVo has partnered with many other hardware manufacturers over the years, starting with Philips and Sony, and later including Pioneer, Toshiba, RCA, Samsung and Humax - a South Korean company that was largely unknown in the US at the time of its brand debut with TiVo DVRs. TiVos have come with a wide variety of features including networking, DVD players, DVD burners, bundled service, and HD.
TiVo has four primary sources of revenue.
Hardware - Although TiVo initially tried to stay at arm's length from the hardware end of the business, eventually they did become the original equipment manufacturer of most of their products. Probably this was due to their combination of becoming a strong, well-known brand, and to the fact that they generally didn't intend to make money on hardware, so there wasn't a lot of profit available to potential partners. Largely, TiVo doesn't make much profit on hardware, preferring to keep the cost of hardware low in order to get the units (under contract) into customers' houses.
Service - In the original business model, this was where TiVo planned to turn a profit. With customers out in the field largely addicted to the TiVo service, the company reasoned that a monthly fee of $9.95 or so would appeal to those who caught the TiVo bug. Then, partly because many people are resistant to ongoing monthly fees, and partly to frontload revenue, TiVo also offered a lifetime service package, where customers pay one price to ensure service for the lifetime of that particular unit.
Advertising - The TiVo platform is a great area for targeted advertising. Since TiVo knows exactly which programs its customers watch, they can extrapolate demographic data with very good accuracy, then pinpoint advertising in the TiVo interface to specific TiVo customers. In addition, TiVo can integrate advertising into running shows as an overlay.
Data Reporting - On the backend, the data that TiVo collects on consumer behavior is very valuable to advertisers and marketers. TiVo only sells this data in the aggregate - that is, no specific customer information is sold, only information lumped together exhibiting trends.
During the ten year history of TiVo thus far, they've progressed from a company originally intent on selling service, to a company that also sees the last two additional sources of revenue.