Personalized TV service TiVo got a thumbs-up from NBC today with a cash investment and equity stake. The two companies refused to name the amount, but Stacy Jolna, TiVo's VP of programming and network relations, says it's "in the multimillion dollars." As part of the deal, Tom Rogers (ROG), president of NBC Cable and executive VP of NBC, has joined TiVo's board.
NBC's investment is the product's first endorsement by a TV network, but TiVo has received money from Philips, DirecTV and Showtime. Philips manufactures the TiVo receiver box, which works like a digital VCR with personalization capabilities. If a viewer highlights a certain show on the TiVo menu, TiVo will record the episodes. After increased usage, the TiVo smart-agent technology will begin to gather similar programming based on a consumer's interests. The box costs either $499 or $999, depending on how much memory is desired, and the TiVo service itself costs around $10 a month.
As a partner, NBC will help create special promotional packages for the TiVo service.
"NBC is going to help us propel the whole concept of personalized TV forward," says Jolna. What this means is that NBC will work with TiVo to datatag certain previews for upcoming shows, so that a user can simply click the remote control during a preview to indicate a desire to record that show.
For NBC, TiVo represents both an opportunity and a risk. Because of TiVo's personalization capabilities, NBC can promote new shows to specific viewers who might be interested in them, as well as allow viewers to watch every single episode of their favorite show. On the other hand, NBC runs the risk of alienating advertisers, because TiVo allows viewers to skip the ads in recorded shows.
Peg Murphy, NBC's VP of programming and network relations, plays that risk down. "As long as the programming community is working with new technologies, we can help shape how they will benefit advertisers," she says.
Because TiVo asks users for demographic info and makes this information available to advertisers, Murphy says, marketers have the opportunity to tailor ads to reflect a viewer's tastes. For example, a household above a certain income level could be fed a spot for a luxury car.
TiVo is the latest example of NBC's aggressive investment-and-acquisition strategy in Silicon Valley. The network recently purchased San Francisco-based community site Xoom.com, and plans to incorporate it into the Snap property as a separate Internet venture called NBC Internet.
Besides helping NBC expand its audience, the buzz-propelled TiVo also represents a potential IPO windfall for investors, in the event it goes public.
"For us there was an element of, 'Let's get in with TiVo now,'" says Murphy. "Just because financially, we think they'll be a good company to be invested in."
