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TiVo a threat to ad industry

14-June-2001
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TiVo a threat to ad industry

A potential nightmare for the TV, ad and marketing industries may be closer to reality than commonly believed, and it's called TiVo. A top TiVo executive speaking at National Cable & Telecommunications Association convention in Chicago said, users of the personal video recorders are opting to zap out half of the commercials they could watch.

A saving grace for the TV and marketing industries so far has been the relatively limited distribution of the devices, but TiVo users tend to be the high-income consumers advertisers want to reach, making the figures a cause for concern.

TiVo says it has a subscriber base of near 200,000 -- a figure that has more than doubled since January -- although the company still posts losses and has yet to catch fire on Wall Street, considering there are more than 100 million U.S. households with TV.

But Procter & Gamble interactive TV strategist, Sekhar Krishnamoorthy said that though TiVo has raised serious concerns at the package goods giant, he doesn't think marketers need to be concerned. You have to be scared when the penetration gets high, Mr. Krishnamoorthy said. You don’t have to be scared today.

Mr. Guenther said he still doesn’t believe wide distribution of TiVo will suffocate the 30-second spot. Instead, as with any content, a form of creative Darwinism may develop whereby consumers choose to watch only the commercials that appeal or connect with them.

We don’t think that the $60 billion spent on TV advertising today is going away, he said. But we think bad advertising, irrelevant advertising that’s not interesting to me, is dead.

TiVo is also in the ad business itself -- and has received investments from large ad-dependent media companies -- and says it is working to boost ad-generated revenue to go with its subscriber fees. A deal announced last month with Lexus allows the carmaker to essentially meld content into its ads. Lexus ads employ an interactive icon in which TiVo users can immediately choose to record future shows sponsored by the luxury car company.

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