Deeper Dive—TiVo’s advertising strategy is accelerating, for better or for worse

TiVo is in the process of splitting apart its product and IP licensing businesses, a process the company expects to complete in the first half of 2020. (TiVo)

TiVo is not new to advertising, but recent developments show the DVR pioneer moving further into the world of ad-supported video on demand, with mixed reactions so far.

Last month, TiVo confirmed to Light Reading that skippable pre-roll ads on DVR recordings will become a permanent part of the business, and will roll out to all eligible retail devices within 90 days.

Dave Zatz of Zatz Not Funny, which has closely followed TiVo developments for years, said the company runs the risk of alienating many of its retail customers as it pushes further into advertising.

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Indeed, TiVo charges a premium price for its devices and services combined. Case in point: the newly announced TiVo Edge. The 4K, Dolby Vision HDR-supporting DVR comes in two flavors that integrate either cable service or broadcast signals from an antenna. Both come with 2TB of storage for recordings and both carry hefty price tags.

TiVo Edge for antenna costs $349.99, and requires a service plan of $6.99 monthly, $69.99 annually or a one-time All-In-Plan for $249.99. TiVo Edge costs $399.99, and requires a service plan of $14.99 monthly, $149.99 annually or a one-time All-In-Plan for $549.99.

That’s a tall order for an ad-supported service, but TiVo’s new DVRs do include SkipMode, which lets users automatically advance to the end of a commercial break.

Then, there’s TiVo+, the company’s bid to take on other ad-supported streamers like the Roku Channel. The upcoming service, which is only available to TiVo customers, will offer free, ad-supported channels like channels like TMZ, Outside TV+, PowerNation, FailArmy, Unsolved Mysteries, Hell's Kitchen | Kitchen Nightmares, Food52 and Ameba. The service will also integrate live television, DVR recordings and third-party streaming apps like Netflix.

TiVo+ will include in-stream video advertising that’s delivered programmatically from TiVo’s advertising network. The company said that ad loads are dynamic depending on the channel and content, and TiVo has imposed strict limits that are generally less than half of what the viewer experiences on broadcast television.  The company also confirmed that TiVo+ ads will be skippable.

TiVo+ is the culmination of ideas to grow advertising revenues that the company put forth last year.

“…This unified discovery experience and content network will enable multiple high CPM targeted advertising opportunities for TiVo. These include sponsored discovery, content merchandising, display promotions, in-stream advertising, DVR ad replacement et cetera,” TiVo said during an earnings call.

TiVo is in the process of splitting apart its product and IP licensing businesses, a process the company expects to complete in the first half of 2020. “Operating independently, these two businesses will have increased flexibility to pursue new and growing market opportunities,” said Raghu Rau, who was interim president and CEO at the time.

Clearly one of the market opportunities TiVo’s product business wants to pursue is AVOD. It’s likely the company has seen the success that Roku and others have had in the still emerging space, and decided it wants a bigger piece of the action. It’s a strategy that could ultimately pay off for TiVo so long as it can pull it off without chasing away its customers.

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