• by Paul Gough , May 23, 2003

TiVo now expects this year to bear fruit in the company's efforts to build advertising and other revenues beyond subscription fees.

Executives of the San Jose, CA company said last week that the balance of thye year will be all about growth - driving subscribers and advertisers and licensing a basic level of service that will help put a TiVo up and over the coveted million-DVR mark soon. Nearly 80,000 subscriptions were tallied in the first quarter, almost double what it was in the first quarter last year, in what the company said is regarded as a slow part of the year after the holidays. At the end of April, TiVo had 703,000 subscribers between the standalone product and its deal with DirecTV.

"We really are in a year of growth for TiVo," said CEO Michael Ramsay. He said the growth is driving the company toward new initiatives that will take TiVo beyond being considered solely a DVR maker. Those initiatives are moving on two tracks, in advertising/audience measurement and the technology to offer home networking and licensing a basic TiVo service to other consumer electronics manufacturers.

The new service, announced earlier this month, will allow manufacturers to marry TiVo technology at a basic level inside other products like a dual DVR and DVD player. Toshiba has already announced such a product and more are expected in the near future. TiVo expects that the basic service, which will be offered at no charge, will be upgraded to the $12.95 a month full service once viewers realize its power.

The company is also putting its advertising efforts into gear and pushing its service to Madison Avenue. Two weeks ago, NBC executive Martin J. Yudkovitz joined the company as president with the mission of increasing its visibility and use among advertisers and programmers. TiVo is touting its upscale demographics - 70% of its customers have broadband at home and many have in-home networking, according to the company - and to think of it as a way to reach viewers not to help turn them away.

"TiVo is not a DVR in the way we generally think of as a DVR but a completely different animal," Yudkovitz said. He said TiVo was the only DVR service that can provide advertisers an upscale, technical and business model for the advertiser and has the back-end network to do measurement, feedback loop and direct marketing. He said the message needed to be carried to programmers, advertisers and cable/satellite distributors. Among those stories:

That in the long-form advertising offered on the service, many viewers opt to see more and provide the opportunity to drill down into the demographics.

Yudkovitz said that TiVo's audience measurement capabilities can provide programmers a minute-by-minute look at how viewers feel about shows. Drawing on his experience at NBC, Yudkovitz said the networks go to great lengths to have focus groups of a two dozen people to test shows.

"We've got a focus group of 700,000 [subscribers], so the reliability of our measurement is unprecedented and the quality of the audience is dead center of what they're looking for," Yudkovitz said. "It's good for the programmer, it's great for the advertiser. The more granularity of your feedback information, the better, and they don't have any other source for this granularity. It's a major upside."

Ramsay said the company was seeing more and more interest in advertising on TiVo and had always felt that one million subscribers was the critical point. "Obviously, we're approaching that pretty quickly," he said.