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In many advertising offices, TiVo is indeed a four-letter word. That's because TiVo users can "zap" TV commercials. A button on the remote control lets viewers skip commercials by fast-forwarding, in three different speeds, over real-time events and then rejoin the show in near real time. TiVo has found that most users don't mind this timeshift, and data on viewer likes and dislikes supports this claim. A random sampling of viewer timeshift habits for popular TV programs bears this out (see the table).
The ability doesn't thrill advertisers or TV networks. The day after the 2002 Super Bowl, TiVo released subscriber data that showed which parts of the game were most often replayed. Other than the winning field goal, the Britney Spears Pepsi commercial was replayed more than any other part of the game. TiVo also has released data showing which TV shows are the most popular among its subscribers.
This creates a new audience metric well beyond what the Nielsen ratings provide. In fact, some in the advertising community see DVRs as more of an opportunity than a threat. They say that advertisers in the future should concentrate on getting their message in the program's content, not in separate, annoying, show-stopping commercials.
TiVo certainly agrees. It believes advertisers should look into alternative media to reach consumers and has demonstrated this by teaming up with record and film companies to promote movies such as Austin Powers in Goldmember and The Lord of the Rings: The Two Towers. "Surprisingly, or perhaps not so surprisingly, we have found a very good relationship with a number of advertisers," Look says. "They've realized that this is the future of television and that what we've done is create new ways for them to advertise."
As for the future, the company sees its product as just one part of a larger user-controlled home entertainment system. At last month's Consumer Electronics Show, the firm unveiled a Home Media Option for TiVo that transforms the DVR into an entertainment center for enjoying video, music, and digital photography throughout the home. It will be available to TiVo Series 2 subscribers this spring for a one-time fee of $99. Activating the service on additional TiVo Series 2 units in the home will require a one-time activation fee of $49 per DVR.
"When you look at digital pictures on a large TV screen in a living room, instead of having only one or possibly two people straining to view a photo album, this all of a sudden becomes a more enjoyable family experience that hadn't existed before," Look says. It appears as though TiVo is on its way to even greater success.