TiVo created the DVR business, which is in the process of destroying TV. But TiVo itself is struggling as generic DVRs displace it. How can it survive? CEO Tom Rogers lays out a carrot and stick strategy at the D conference: We’ll offer TV networks a way to survive “dark days” by creating ads people want to watch, and accurate ways to measure those ads. And we’ll sue the heck out of Echostar — and scare other copycats into coming around.
TiVo boss Tom Rogers drops by D a day after announcing a decent quarter (by his standards).
Tom enters to J Geils’ “Freeze Frame”.
K: Business hasn’t gone as well as concept. Explain where things were at TiVo when you showed up.
R: My last act at NBC was to put company into TiVo as an investor, in 1999. So I’ve liked concept for a long time. And no, business has not gone as well as the phenom. Lots of DVR users using not-TiVo devices who think they have TiVo. When I came in, there was cultural view w/in company that it was a great device: Build it and they will come. They were trying to improve the box. My view was we can’t do this simply by being an island divorced from the media industry and being viewed as a pariah in the media industry. We needed how to figure out how to weave TiVo into media industry.
K: But fundamentally, the commercial skipping function is disruptive, gives viewers control.
T: Yes, it’s about skipping commercials, but it’s about more than skipping commericals. It’s about having control over what you see. Everyone’s paying a lot of money for TV, and the most common experience is turning on the TV and not having anything good to see. Now problem is there’s lots of DVRs out there, but “being a DVR alone won’t be basis for this company to distinguish itself.”
K: Why didn’t TiVo technology make its way in to TVs itself?
T: Because TV manufacturers in tiny margin business. Building hard drives into sets makes that really tough. What we are finding is that TV set world getting even more commoditized than DVR biz. So things like search, UI are bringing us back front and centre.
K: So how do you get away from image as being a content thief?
T: We got around it by going to ad world, TV world and telling them that ad-skpping here to stay. Like it or not, it’s “game over in terms of forcing people to watch commercials.” We said way to deal with this is to create an ad model that works, so we created solutions built into DVR. Ads built in menus, ads built into other parts of the experience.
K: So what’s effective? I’ve never clicked through ads.
T: Gold stars on Tivo main menu, catches people’s eye. Longer-form video, not 30 second ads. Also very effective – at end of show, when you say do you want to save or delete? Because you’re not interrupting experience at that point. We always knew that people weren’t watching the ads. “It was a huge… lie”. Now getting away from Nielsen view that everyone watching the show watched the ads. We can give you real commercial ratings – we can tell you exactly how many people watched the ads. What we’re finding is there’s an increasing science as to how you grab eyeballs. That data is very valuable. Now NBC and CBS subscribing to that data.
K: Sample size?
T: Not everyone. But much broader than cable DVR data, because that’s only the highest-end consumers. We have much broader reach — analogue, satellite, etc…. “Television world can’t go the way of the music world. You can’t be a disruptor and take no responsiblity” for creating new ways to help industry survive.
K: Who’s in your top 10, 20 list of most-recorded, most-watched.
T: Depends. Correlates pretty well with top broadcast shows. But top commercial viewing does not tend to correlate with top shows. So you can find ad in much-lower rated show that is highest rated ad of the week. These two being disaggregated.
K: So are there any new ad models, besides these menu ads, that work?
T: What tends to work is whatever grabs somebody’s attention. A movie studio knows that there’s far greater likelihood of people seeing movie if they have 3-minute trailer instead of 30 second ads. So they use us a lot. You can watch clip, click through to see where playing on Fandango, buy ticket. That’s a big deal.
K: Talk about Echostar lawsuit. Suing more people?
T: We’re kind of pursuing few tracks: “Join’em strategy”, “Independent strategy”, and the “Fight’em strategy”. Singled out Echostar, have had a lot of succcess. Won at trial, won at court of appeals, not re-hearing that. Damages at important, but injunctive relief is a bigger deal. We’re rounding the corner on this. This is far more far-reaching than the BlackBerry patent fight from a couple of years ago.
K: This gives you leverage, right?
T: Your word.
K: Comcast deal, pls explain
T: Cable guys knew they didn’t have good tech. So we’re providing them software to turn their lousy boxes into excellent TiVo boxes.
K: How many so far?
T: Just starting to roll out. Slow process but will speed up as they can automatically transform boxes from home without having to get new box.
K: How many subs?
T: Not a direct answer, which is weird, since just disclosed. Sub biz only one stream. Also liscensing, ad rev, etc. But TiVo box still very important for us. Talks directly to consumer. Also we’re not only a digital video recorder, but a digital video receiver. Broadband connection will shortly allow us turn to turn into an on-demand box for any movie, any show, any song you want.
K: Cable companies like owning the box. You have some leverage but not all the leverage you need.
T: We can’t force it. Two years ago, letting Tivo be central screen that somebody sees when they turn on TV would never have happend. But now it is, in New England, with Comcast. And once we’re in there, we’ll be hard to displace: Removing a channel from cable lineup hard to do, and removing a viewing experience really hard.
K: How do you view broadcast TV in general? Hulu, Joost, all sorts of things going on.
T: Broadcast industry has it within its power ability to avoid very dark days. Whether they will move quickly enough to prevent it, I’m not sure. Magazine and newspaper biz already blew it, and I watched that. TV industry sees the future in front of them: Consumer control, infinite choice. They have to figure out new model that will continue to allow them to be major players there. CBS and NBC now working with us. Big ad agencies working with us. Movie studios working with us. Yesterday we got Disney on board.
K: So what’s a dark day look like?
T: Networks greatest value is promoting shows, connecting advertisers and viewers. All of that still important in the future. “There’s a major role there for people to play”.
K: But nothing changing yet. When will it?
T: Before we get to 40% DVR penetration, they have to come to terms with this, avoid music business’ fate. All the body language about wanting to get there is right.
K: Would you go back to network TV? Would you run NBC?
T: This is the most interesting perch. I wouldn’t want to go back to where I was. Right now speed of adaption to new reality doesn’t look a lot different than newspapers and magazines, and it has to get a lot better.
Q: Installation process with cable guys sucks. How can that improve?
T: FCC helping by giving third parties like us get access to your cable card improving, so we can help you instead of the cable guy coming out. But not fixed yet.