NBCU's TiVo Deal Opens Universe To Advertisers

by Laurie Sullivan, Nov 28, 2007, 5:00 AM

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NBC Universal (NBCU) has signed a deal to sell TiVo's services to its network advertisers along with traditional TV slots for commercials. The service allows companies to reach into consumers' homes and deliver more information on products and services through an icon that appears on the television screen.

TiVo's interactive technology and opt-in process lets consumers request more information as promos air. Tags embedded in commercials give advertisers the means to grab the viewer watching live, time-shifted or fast-forwarding content.

Consumers watching TV through a TiVo box see an icon that appears in the right-hand corner of the screen during commercials. They hit select on the remote, and the TV show pauses, allowing them to get more information on products and services.

TiVo has sold the opt-in service designed to reach fast-forward viewers for four years. This deal with NBC Universal opens the services to its network of advertisers, wrapped in a nice bowed package in time for the holidays. "The tags can help drive sales for NBC Universal and their clients," says Davina Kent, TiVo's vice president of advertising sales. "Bundling the tags with a traditional TV spot buys makes it easier for the advertiser to purchase advertising."

The agreement means that NBC Universal's 14 television networks and 10 NBC owned-and-operated TV stations will have access to sell TiVo Interactive Tags in combination with other NBC products, and will subscribe to TiVo's Stop||Watch second-by-second commercial ratings service.

NBC Universal also will begin using TiVo Record Tags in its on-air promotions that enable one-click recordings of NBC programming on any of its broadcast or cable networks when a promotional spot appears for the relevant show. NBC plans to use the Record Tags to help viewers discover NBC programming to drive additional viewing.

TiVo created a successful model that companies like AT&T and Verizon have penetrated, eroding the tech-company's lead and putting it in a peculiar position of playing catch-up in an industry it pioneered, according to analysts. Minimizing the losses from skipped ads is a major priority for networks and their advertisers. Industry insiders are waiting to see whether TiVo's non-exclusive deal with NBCU catches on with ABC, CBS and Fox, too.

"The deal deepens the relationship between TiVo and NBCU, but also creates a great learning experience because it has advertisers paying to learn how consumers will interact with ads in the future," says James McQuivey, vice president/principal analyst at Forrester Research. "I think the service has a chance to catch on faster, and I'll be surprised if we don't see a similar service from AT&T and Verizon soon."

McQuivey says once AT&T and Verizon turn on this function through U-verse and FiOs, respectively, they will offer the service to a few million subscribers immediately. About 1.2 million households this year are expected to use the service, reaching about 7 million households by 2011. That will force cable companies Comcast, Cox, Charter and Time Warner to step up plans to take the service beyond interactive test markets.

The partnership appears to create a boost not only for TiVo, but NBC Universal and its advertisers as well. All three have suffered from TiVo's pioneering technology that shifted power from the networks and their advertisers to consumers, who now control both the timing and the ad content, says Paul Verna, senior analyst at research firm eMarketer.

"This type of partnership opens a new revenue stream for TiVo, which must be critical given [that] its subscription-based business model is under constant threat from bundled DVR solutions from cable operators and time-shifting services like network Web sites that allow viewers to access content on-demand and for free," Verna says.

"By licensing its viewer data to a network, TiVo is diversifying its business and going head-to-head with ratings specialists like Nielsen."

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