Meet the New Boss, NOT the Same as the Old Boss — CEO Tom Rogers on the Future of TiVo

TiVo CEO Tom Rogers gave an exclusive interview to Bloomberg News earlier this week on Bloomberg’s broadcast “Corner Office.” He talked about his own life personally as well as what TiVo has accomplished under his recent stewardship and the challenges that they face going forward.

Some interesting things came out of the interview. Today TiVo’s marketing strategy involves users buying TiVo boxes and then subscribing to their service. According to Rogers we may see a possible subscription only model similar to what the cable company and satellite providers offer for TiVo in the near future. Recently, TiVo has been testing a subscription only model and is considering making TiVo available without a large up front purchase.

“We’ve done a considerable amount of research on different approaches which might involve having an all in monthly fee that doesn’t necessarily involve any up front charge for the box — and that’s one of the potential approaches to changing our pricing strategy or at least making available additional options,” said Rogers. “We will look further at this early this year.”

This would be a smart move on TiVo’s part. Once subscribers have an opportunity to try TiVo, they truly become hooked. TiVo has been able to show churn numbers that many businesses would kill for, but convincing consumers to spend a fair amount of money just to try the service has been an obstacle to greater growth.

Rogers mentioned that TiVo’s boxes are currently built in Mexico and China and talked a bit about the upcoming standalone Series 3 offering that they are expecting to roll out later this year. As in my meeting on Monday with TiVo’s Director of Service Operations E. Stephen Mack, Rogers did not give any kind of actual shipping estimates or talk about the status of the product being tested presently in outside beta. It was interesting to note that while extolling the virtues of being able to record HDTV with the new Series 3 unit, Rogers did not once mention CableCARD or that that HDTV recording on the Series 3 would be limited to CableCARD. Although earlier this week Stephen had said that he did not know of any plans for TiVo to offer satellite support beyond the announced CableCARD support.

It will be interesting to see how TiVo handles satellite high def with the Series 3 unit. One scenario (based on what DirecTV will be doing with Vista HD CableCARD Media Center machines per Microsoft’s Sean Alexander) is that DirecTV also will offer some kind of after market support for the TiVo Series 3. On the other hand, the relationship with DirecTV has not been an entirely warm one with TiVo the past few years — and they are currently involved in litagation with Echostar, so who knows. Hopefully at some point in the future we can get better clarification from the company on this.

Rogers also talked about the fact that the Series 3 would have broadband support which would be consisent with what Stephen talked about with regards to the HME options being available on the Series 3 unit. Rogers seemed excited about the idea of moving other broadband based video beyond traditional cable and satellite broadcasts in your living room. Already TiVo has Rocket Boom and podcasts available via the Series 2 unit as well as recent experimenting with CNET downloads. I’d expect to see a lot more non traditional video available on your TiVo in the future. “Video via the web is begging to redefine the frontiers of television,” said Rogers. “Our view is that its not real television until you can get it on your TV.”

In terms of TiVo’s future growth Rogers was optimistic. “The estimates are today that roughly about 8 to 9 million homes have TiVo or other forms of DVR in them today,” said Rogers. “My view is that is going to grow to be a much, much, larger number. The estimates range anywhere from 40 to 70 percent of households in the next five or six years will have TiVo and other forms of DVR.”

Although Rogers’ translation for future DVR growth in general might seem to bode well for TiVo, when asked about future growth in the DVR space, JupiterMedia analyst Michael Gartenberg was not so sure that TiVo would necessarily be the beneficiary. “While Rogers may be correct about DVR growth, if given trends continue it will be generic cable or satellite DVRs that take the lion’s share of the market, not TiVo,” said Gartenberg.

When asked about how TiVo will position themselves vs. cable and satellite generic DVRs Rogers said, “I think the era of viewer control is here to stay and I think what’s clear is that while there are a number of generic competitors to TiVo, none have really captured the enthusiasm that exisits in the TiVo user base.”

I would have to agree with Roger’s comments about the enthusiasm for TiVo users over generic DVR users. Still I do think that figuring out how to market this enthusiasm is the big challenge for the company going forward. When you talk to TiVo users they are powerful evangelists for the technology. I think they also tend to be very brand loyal and talk up their TiVo and it’s technology to everyone they know. The problem is a chicken and an egg problem though in that in order to know how truly great TiVo is vs. the generic competitors you have to actually try it first. Keeping the buzz alive and fueling the fire will be critical to their marketing strategy going forward.

One of the more interesting parts of the interview revolved around how TiVo has really changed in the eyes of the advertising industry. It has been ironic for me to watch over the past year how TiVo, whose name has become synonymous with ad zapping (and even according to Rogers is now listed in a major dictionary) has turned themselves around to become a tool for advertisers.

“About a year or so ago TiVo was a real pariah in the view of the advertising industry,” said Rogers. “Today we find that has totally changed. Yes, TiVo does allow people to fast forward through ads and yes that’s an important feature of TiVo, but the advertising industry has come to understand that that’s going to happen no matter what. And the issue now is how do you create a new relationship with the viewer so that advertising messages get there and they are looking at TiVo as that platform increasingly as potentially the way to do that.”

“Now we find ourselves embraced rather than a pariah and consequently my old friends in the advertising industry are still my friends.”

Rogers added that recently over 60 major advertisers have done business with TiVo.

On Monday I had also asked Stephen about TiVo’s expanding New York presence and with their increased role in advertising this would especially seem to make sense. Madison Avenue will likely become a more and more significant partner for TiVo as they look to derive revenue from both couch commerce, special advertising content on TiVo and previously reported display advertisements over fast forward skipping going forward. Particularly as the number of TiVo users expand dramatically through their upcoming relationshp with Comcast, I’d expect to see advertising revenue move from a minor and insignificant portion of company revenue to a more important metric.

Even as Rogers has increasingly turned TiVo into a bicoastal company he still said he flies commercially (no fancy private jet for TiVo yet).
< br />Speaking of the Comcast relationship, Rogers also said that recently, resources at the company have shifted to the Comcast deal and to advertising efforts.

Bloomberg talked alot with Rogers about his personal background. They discussed how he had started CNBC and his career with NBC. They talked about his educational background (Wesleyan University in Conneticut and Columbia Law School). They talked about his first job out of college being that of a legislative aide to Congress and that later in his career he went on to author the Cable Act of 1984. And they even talked about the fact that as a kid he had stacks of TV Guide next to his bed and rather than dreaming of being an actor or movie star instead he would think, “wow, it must be pretty cool to be one of those people leading those media companies.”

Overall, the interview was pretty interesting and definitely informative, especially with regards to how TiVo’s relationship with advertisers has changed. I wish I could link to the interview itself but unfortunately it is only available to Bloomberg subscribers.

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