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Fast Forward with TiVo's CEO: Business Model and More

by: Eric Savitz posted on: May 29, 2008 | about stocks: TIVO

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At D: All Things Digital earlier today, TiVo CEO Tom Rogers was interviewed on stage by the Wall Street Journal’s Kara Swisher.

Here are some of the highlights:

Rogers says the commoditization of the TV market raised the issue of user interface and navigation.
On not being a content thief: Rogers says they told the ad world that fast-forwarding of commercials is here to stay; the fact is, it is game over in terms of forcing people to watch commercials. There is one thing they know about people who get DVRs - they fast-forward the vast majority of ads. They have to figure out an ad model that works.' We created a bunch of ad solutions built into the DVR, that is intended to catch users one way or another. There are many ways we do it. You have to catch them and have them click on an ad.'
Rogers says the most effective thing are gold starts on the TiVo menu, longer form video, that has more value as a user experience. Might be a movie trailer, or a car ad. Also ads at the end of recorded programs, which you can watch if you want; maybe a movie trailer. 'One thing we have done is getting away from Nielsen notion that whoever watches the show is watching the ads. We can measure second to second who is actually watching what ads. Floors you what the commercial ratings are relative to the program ratings. We’re finding there is an increasing science of how to grab eyeballs when the consumer is in control. The networks were resisting us right and left for years. But now both CBS and NBC subscribe to our audience research. NBC sells our advertising inventory to advertisers.'
DVR owners watch more broadcast television than anyone else. About 70% of all DVR programming that is watched is broadcast network television…the top commercial viewing does not correlate with the top shows. There are viewing patterns related to commercials that have nothing to do with what people watch in the way of a program.
On the lawsuit against EchoStar (DISH): Pursuing several tracks at once. The join strategy, the independent strategy, the fight ‘em strategy. Had lot of success in the litigation against DISH; the court of appeals upheld the damages and injunction. The appeals court sent it back to the trial judge for enforcement. 'We’re rounding the corner on the final stage of this. Our view has been we want commercial deals and we sue as a last resort, but when we are through with enforcement of all this, perception of our intellectual property in DVRs will be way up there.'
On working with cable: Comcast (CMCSA) said you have a better DVR, better UI, great search. The idea of switching out boxes is very expensive. Instead, a software solution. Incredibly complicated process; we don’t need to do a truck roll. Can be done remotely.
The business model going forward: TiVo has three-part model: royalties for the patents, subscription fees, and advertising. On the DVR itself, the differentiator is we are a digital video recorder, but also broadband connection to the TV. Connect to broadband for guide information; we’re going to be able to say any song, any movie, any video you want, direct to television, via broadband connection to the TV.
Tivo’s view: make it totally irrelevant to the consumer; the UI as you move to infinite choice, you will literally have millions of choices.
Can you make it easier to install HD boxes that require cable cards? That is a real issue; Kevin Martin and the FCC have been terrific here to open up the cable industry. Cable cards now work; the question is how hard a cable company makes it to install one. That part of the process has not been dealt with from a regulatory point of view.