Month: March 2004

I enjoyed my conversation with Mike, since this interview, TiVo has announced new advertising products along the lines of what we discussed.

TITANS OF TECH
When the Network Meets the Net
TiVo’s Mike Ramsay wants to plug viewers into more than cable and satellite — and bets his digital video recorder can make the connection.

By John Battelle, April 2004 Issue

TiVo (TIVO) is under siege. From Hollywood to Madison Avenue, the word itself is almost a curse. And those who aren’t muttering it are copying it. In the latter camp are most of the cable and satellite companies, which are mimicking TiVo’s groundbreaking digital video recorder — the Internet-era successor to the VCR that finds the TV programming you want, when you want it. Some 830,000 Time Warner (TWX), Comcast (CMCSK), and other cable subscribers now use cheap DVRs from Scientific-Atlanta (SFA), which has orders for hundreds of thousands more.

You’d think all of this would spook CEO Mike Ramsay. But Ramsay, a veteran of Silicon Graphics, is ready for the fight; he cheerfully mentions that TiVo has already battled Microsoft (MSFT) and won (Microsoft canceled UltimateTV, a competing DVR, in 2002). He’s bolstered TiVo’s subscriber ranks to 1.3 million with the help of DirecTV; half of them now come through the satellite-TV company. And he’s suing EchoStar, the other major satellite provider, for patent infringement.

Ramsay’s offensive plan is even more interesting. He’s trying to make friends on Madison Avenue by putting tiny video commercials, similar to movie trailers, in TiVo’s programming guide. (Fox and BMW are among the advertisers that have tried the new format.) Nielsen is adding TiVo viewers to its ratings panels. Despite the common wisdom that TiVo was toast, the little company based in Alviso, Calif., has thrived: Its stock has soared from a low of $4.50 a year ago to nearly $12 today.

In January, TiVo raised $74 million from big investors, and in February it cut prices on its entire DVR line. But Ramsay can’t outspend his cable competitors; he knows he’ll have to out-innovate them. In February he purchased secretive networking startups Strangeberry, whose engineers are working to take the DVR a step beyond, making its user-friendly interface the window into content downloaded over any wire, whether coaxial cable or high-speed Internet. Can Ramsay hook up broadcast and broadband? Expect TiVo to generate new business models, new forms of video content, new regulation, and a lot more controversy in the coming years. However it ends, we’ll be replaying this episode for years to come.

Janet Jackson’s wardrobe malfunction was the latest in a string of high-profile “TiVo moments.” So why aren’t there more TiVos in the world? Are you the next Macintosh, with Comcast as Windows?

We have been conditioned over the last five years with the Internet that if something’s hot, it gets into millions of homes overnight. But until recently TiVo’s been expensive. It’s also a brand-new idea — and history tells us it takes time for the average consumer to get used to a new idea. It’s sort of like when the PC first came out.

TiVo is a hard-to-explain thing. When you first describe TiVo, people say, “Well, all right, that’s great, but isn’t that just like a VCR?” And you go, “Well, no, actually it’s not.” Then there’s a five-minute conversation. You can’t describe TiVo in 30 seconds. You need TiVo to describe TiVo. In the past we’ve gotten a lot of mileage and effectiveness out of PR and product placement, generating word of mouth. Today there’s a whole lot more elasticity. Bring the price down, sales go up. Get the word out, do more promotions, sales go up. In February we unveiled a $50 rebate. And you’ll see more of that going forward.

To protect their advertising and pay-per-view business, won’t cable companies create “TiVo lite” — DVRs that they control, in essence?

Yes, but they are motivated by satellite — they are scared that satellite is taking business away from them. And to the extent that satellite has embraced DVRs, they have to respond.

Is the 30-second spot dead, and is TiVo responsible?
(more via link below)

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