TiVo & Amaon team up

In the words of Simon; a future business model for TV. This article is from the NY Times http://www.nytimes.com/2008/07/22/technology/22tivo.html?_r=1&ref=technology&oref=slogin

TiVo and Amazon Team Up

By BRAD STONE

SAN FRANCISCO — TiVo, the Silicon Valley company that introduced millions to the joy of skipping television commercials, is trying to crack a decades-old media dream. It wants to turn the television remote control into a tool for buying the products being advertised and promoted on commercials and talk shows.

The company, based in Alviso, Calif., will introduce a “product purchase” feature on Tuesday in partnership with the Internet retailer Amazon.com. Owners of TiVo video recorders will see, in TiVo’s various onscreen menus, links to buy products like CDs, DVDs and books that guests are promoting on talk shows like “The Oprah Winfrey Show,” “The Late Show With David Letterman” and “The Daily Show.”

In the months ahead, TiVo plans to begin offering this feature to advertisers and programmers, so that the chance to buy products and have them delivered will be presented to viewers during commercials and even alongside product placements during live shows.

The move highlights TiVo’s attempt to shift from being a creator of set-top boxes, competing with copycat devices, to being an advertising innovator that is trying to develop advertising technologies for the television industry.

“Just a few years ago, we were viewed with great paranoia as the disruptor,” said Thomas S. Rogers, chief executive of TiVo. “Our goal now is to work with the media industry to come up with ways to resist the downward pressure of less advertising viewing and create a way for advertising on TV to become more effective, more engaging and closer to the sale.”

“What we are trying to do is to create all the underpinnings of a future business model for television,” he said.

For years, interactive advertising on television has been characterized by risky experiments and high-profile failures. Most famously, Time Warner took a shot at the concept with its pioneering but expensive Qube box trial in Ohio in the late 1970s.

One problem with all previous experiments in this area, Mr. Rogers said, was that buying a product through the television took the viewer out of the experience they had actually settled in for — watching a program.

But on TiVo, if a viewer chooses to buy an advertised item during a broadcast, TiVo records the rest of the program so the viewer can easily return to it after the purchase. TiVo users will also be able to save their intended purchases in their Amazon account and return to the site later to complete the transaction.

TiVo and Amazon, based in Seattle, have an existing relationship. Since last year, owners of broadband-connected TiVos have been able to download movies and televisions shows to their set-top boxes from Amazon’s digital video store, now called Amazon Video on Demand. The two companies have not disclosed the financial details of their newest deal, but in general Amazon’s affiliates get a 15 percent slice of a sale when a customer they referred makes a purchase on the site.

But the media world may not be so quick to jump at TiVo’s new buy-it-now feature. More than a decade after it altered the fundamental experience of watching television, TiVo’s base of users remains relatively small.

TiVo’s purchase feature “is a harbinger of what television ultimately should become,” said Timothy Hanlon, senior vice president for Denuo, the media futures division of the Publicis Groupe. “But TiVo is only in around four million plus homes. From a national advertising perspective, if it doesn’t get beyond that base it remains nothing more than a curiosity.”

TiVo knows that, which is why the company is trying to branch out of the set-top box business and into building software that it can license to much larger media companies. For the last three years, TiVo has been working with the cable operators Comcast and Cox to put its user-friendly software in their set-top boxes. Comcast has introduced its service in Boston, while Cox is still holding trials.

Mr. Rogers also said TiVo’s deal with Comcast includes a provision for TiVo to provide its interactive ad technology for the cable company’s other, non-TiVo digital video recorders. Though Mr. Rogers says “this is not our focus today,” becoming a broker for the next generation of interactive ads may be TiVo’s ultimate goal.

Possible customers for its interactive ad technology include the cable and satellite companies and their consortiums, like Project Canoe, a joint effort by six cable operators to create a technology platform to sell customized and interactive ads.

To publicize TiVo’s efforts at creating this new advertising model for television, Mr. Rogers is not above sowing a little fear about some of the grim trends in the business, which TiVo itself helped to unleash.

As DVRs get more popular, “the majority of commercials in home will be fast-forwarded through,” he said. “It is critical that there be a form of advertising and a transactional solution that underpins the DVR, or the economics of television are going to be substantially undermined.”