Tivo Upgrade
TiVo Upgrade Allows Instant Response to TV AdsFranklin Paul, Reuters
NEW YORK (Reuters)—Digital video recorder maker TiVo Inc. on Monday upgraded its television recording service to let about 1 million of its subscribers instantly respond to specially coded advertising, the company said.
For years, TiVo has offered long-form commercials that are downloaded discretely to TiVo set-top boxes for viewers to view once they click over to a special area, or "opt-in."
The new system creates an option for viewers who want to know more about a product to tell TiVo to release their contact information to an advertiser. For example, after watching an ad for an automobile or family vacation, users can ask to have a brochure sent to their home.
"We have seen the need to provide greater entry point to this advertising space ... to support enough advertisers concurrently," said Kimber Sterling, director of advertising and research sales. "And consumers who are interested in those products will invest several minutes of their time."
In addition, ads embedded with special "tags" will pop up as small pictures, sporting branded logos, even when users are fast-forwarding thought those commercials. However, TiVo says the changes will not affect the way users normally view shows, and will not force them to watch any ads they choose to ignore.
The upgraded system will be launched with advertising campaigns from General Motors Corp. and Time Warner Inc.'s WB Television Network.
The upgraded system will, for now, only be available to TiVo's Series 2 users, who primarily get their boxes from retail stores or TiVo's Web site. Consumers who get their boxes via satellite TV service DirecTV Group Inc., TiVo's biggest source of new subscribers, will not receive the enhanced service.
NEW REVENUE STREAMS
TiVo derives almost all of its revenue from fees—as much as $13 a month. or a one-time payment of around $300—paid by its more than 3 million subscribers. It is trying develop new ways to make money and differentiate its devices from generic digital video recorders (DVRs) given to consumers, often at lower cost, by cable and satellite TV operators.
"Advertising is a substantial growth area," Sterling said. "It is not a material revenue for us yet relative to our overall revenue picture."
TiVo says TV advertisers, facing dwindling TV audiences, are anxious for new ways to reach TV watchers and insists that viewers like to watch its special ads—despite the fact that the ability to skip commercials is one of the chief reasons that consumers buy DVRs.
Sterling said that for a typical long-form commercial on TiVo's service, between 5 percent and 15 percent of users choose to view the ad. While that number may seem small, its big enough for TiVo to guarantee hundreds of thousands of viewers for ads that may be bypassed on network TV or radio.
"They (viewers) are spending two to four minutes engaged in the brand and that is what makes that so valuable," he said. "We see between 5-and-30 percent of people who enter the (enhanced) showcases will release their names to that company."
Comcast Corp., the nation's largest cable television provider, announced earlier this year that it would deploy TiVo's advertising platform on Comcast's existing DVRs beginning next year.
In addition, TiVo announced the signing of a new advertising services agreement with DirecTV extending the companies' prior services agreement—despite uncertainty that, according to analysts, suggests their existing distribution agreement might end in 2007.
Copyright © 2005 Ziff Davis Media Inc. All Rights Reserved. Originally appearing in PC Magazine.