Thursday, May 05, 2005

Speaking of TiVo…

For the most part, Canada is a card-carrying member of the 21st century – except when it comes to TiVo. Digital video services are being offered by the cable companies, but we don’t have an active consumer marketplace for effortlessly timeshifting our favorite TV shows (though why more people can’t program a VCR, I don’t know).

What most people don’t know is that TiVo started out like any other underfunded startup, just six years ago. How did it get so popular, so fast that their very name is now a verb among diehard US TV viewers?

Well, they worked hard to make TiVo easy enough for anyone to use. When TiVo CFO David Courtney saw his three-year-old programming the family set, he knew this product was ready for market – even in all those homes where the VCR still flashes 12:00. Of course, raising US$750 million in capital also helped, even though they haven’t yet made a dime in profit.

This is a success story few Canadians understand. You can get the full story on how TiVo changed U.S. television from the savvy folks at the Wharton School of Business.

(If you like this article, consider signing up for their free e-newsletter, which has lots of insightful stuff every few weeks. And no, they don’t pay me to say these things.)

I was intrigued with how TiVo is turning TV advertising on its head.

Known by many consumers as a way to skip commercials, TiVo ironically has begun making money by selling advertising. Instead of traditional commercials, TiVo sells spots that appear when movies or TV are paused. Each time the "pause" button is pressed, a new advertisement appears on the bottom third of the screen, usually announcing contests or special deals. … Courtney noted that audiences are responding very well to these innovative ads. "We're not limited to the typical 30-second or 60-second spot," he said. "Advertisers are free to be creative."

One gripe: while the article notes that TiVo faces increasing competition, I think it understates TiVo’s problems. Aside from other hardware makers and cable companies, TiVo is being outflanked by Internet services such as BitTorrent, which allow people to download almost any recent program they like. Not quite legal, but a technology that isn’t going away.

The everything-on-demand world is coming faster than anyone thought. The day of the whole family sitting around watching TV together is as dead as Sunday dinner.

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