TiVo chief urges changes in TV advertising

Tom Rogers says innovation can alleviate crisis

LAS VEGAS -- TiVo CEO Tom Rogers presented the TV industry with a dire view of the next few years unless something is done to counteract the current advertising crisis, which he predicts is going to get worse.

Rogers, speaking Wednesday morning at NATPE's 2009 Market & Conference, admitted that TiVo has played a big role in the ad crisis by developing the technology that allows viewers to skip commercials but said his company is working on new methods for advertisers to reach consumer and urged others to do the same.

For example, TiVo research has shown that interactive advertising didn't initially catch on because it wasn't allowing for viewers to pause the program while getting more information about the product. TiVo's solution is to incorporate automatic pausing so the viewer doesn't miss any part of the program.

"The consumer remains in control, which is an absolute must in the world of consumption," Rogers said.

He noted the importance of "contextually based" advertising, whereby some real thought is put into what kind of ads would relate more to viewers watching a specific program. He compared this to Google inserting relevant ads into its articles.

Meanwhile, TiVo is in the midst of a patent dispute with Dish-EchoStar in which it has already collected $100 million. More money could be on the way, and the satellite TV company might be forced to either strike a licensing agreement with TiVo or disable many of its DVRs. A judge is set to consider such measures next month.

Rogers told THR after his NATPE address that Dish could be forced to disable 4 million of their DVRs, which would be "enormous." Once that litigation is resolved, TiVo plans to step up its effort to license the TiVo DVR brand to other cable TV providers. TiVo already has licensing and distribution agreements with Comcast, DirecTV and Cox.

"We'll be looking to do other distribution deals after the resolution," he said. Asked why the company is waiting until then, Rogers said, "Right now, we have a lot of development activity (that we're focusing our resources on), and there will be a natural momentum to get the top guys to understand our intellectual property post-litigation."

Asked how long those deals might take, Rogers said it's more about taking the time to ink the right pact rather than rushing into something.

"Speed is not an issue so much as making sure it's right," he said. "Once we strike a deal with a cable operator, their customers will have the opportunity to up grade their more generic DVRs to TiVo. And we want to make sure we deliver the best possible experience."

Rogers noted that there are 30 million DVRs in homes today, with that number expected to increase to 50 million-60 million in the next three years. Despite this, Rogers told THR, the industry has been slow to react to the advertising crisis and come up with new ways to reach consumers through DVRs for a few reasons.

"That's inherent in an industry with challenges," he said. "And too many people think all new media is in one bucket."

In other words, the focus may be put on reaching consumers via the more widely available video-on-demand services rather than TiVo, which is in fewer homes but more widely used, Rogers argued.

Moreover, "the people who buy and sell ad time are a world removed from the people who create advertising today," he added.

In his onstage remarks, Rogers said that traditional commercial advertising will not likely completely disappear as there will be viewers who choose not to sign up for DVR service. In addition, some programming is and will continue to be watched live for the most part, including sporting events. But the pricing will change, he said, and programmers will still have to find other ways to make up for the diminished revenue.

Other programming that seems to be "TiVo-proof," Rogers told THR, includes such major events as the Oscars. But even sports programming isn't completely immune to viewers fast-forwarding through commercials as some tend to start 15-20 minutes late and then catch up, he added.

Onstage, Rogers also touted the company's latest broadband-connected boxes, saying that 85% of TiVo's HD subscribers "immediately hook their TVs up to broadband. This is a whole new way for programmers to relate directly to consumers."
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