TiVo Says It Needs 10 Million Subs for Ads to be ‘Meaningful’ Business
TiVo needs to approach 10 million subscribers for its advertising to become a “meaningful” business, Tara Maitra, senior vice president and general manager for content and media sales, told us last week at the Digital Hollywood conference in New York. TiVo had 2.2 million subscribers Dec. 31, up from 2 million a year earlier.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
In the U.S., TiVo sells ads across the DVRs being deployed by Charter Communications, Grande Communications, RCN, Suddenlink and Comcast, which is expected to launch in San Francisco in the next few weeks. Virgin Media in the U.K. and Ono in Spain sell their own advertising, Maitra said. Charter has introduced TiVo Premiere DVR in Fort Worth but postponed plans for having the service across its network by mid-year due to a need for additional testing and integration of TiVo devices and the MSO’s video-on-demand (VoD) service, Charter officials have said.
During each of the last three years, more than 50 percent of TiVo’s advertisers have been repeat customers, Maitra said. TiVo recently signed an agreement with Pace to deploy its interface across the supplier’s cable set-tops with advertising also being part of the mix, Maitra said. In placing ads, TiVo is “leveraging the behavior” found with DVRs, Maitra said. When the DVR paused or a recording comes to an end, ads pop up, she said. The ads also are inserted in TiVo’s main menu. While TiVo’s strategy for inserting ads has proven successful, “the only thing that holds the program back is” the cost per thousand impressions or loads of an advertisement, Maitra said.
"We used to hear all kinds of things from advertisers and agencies about pricing,” Maitra said. “I feel that we have gotten it all right except that they just want more homes. Now we have at least satisfied the trajectory and growth requirements. We have priced the advertising for the number of homes that TiVo is in and it’s working, but none wanted to invest in something that they didn’t have confidence would be a growth platform."
In the case of Comcast in San Francisco, customers will purchase the TiVo Premiere DVR at retail, while the operator handles installation that includes tying the device to its VoD service. Best Buy stores in the San Francisco along with TiVo.com will sell the DVRs to Comcast customers. Best Buy, which has been the top retailer of the DVRs, fields two Insignia brand LCD TVs with TiVo interface. TiVo doesn’t sell ads in Insignia sets and while the components for them “probably exist; we haven’t gotten that far yet,” Maitra said. Meanwhile, Suddenlink is approaching 10,000 subscribers getting the TiVo service, but it’s taking a “conservative” approach to selling it, Chief Operating Officer Thomas McMillin said in an earnings call. Suddenlink has HD DVRs, including TiVo, installed in 47.7 percent of its 1.37 million homes. About 20,000 TiVo DVRs have been installed, said McMillin, saying some homes are getting more than one. It began selling TiVo last year. Suddenlink charges a $15 monthly fee for TiVo and requires that customers have a minimum 10 Mbps Internet service in “order to fully enjoy it,” he said. While Suddenlink has TiVo available in 70 percent of its markets and expects to be near 90 percent by year-end, it doesn’t want to replace all existing non-TiVo DVRs and “be stuck with” inventory, McMillin said.
TiVo Premiere DVRs are being deployed as Suddenlink nears the end of the three-year, $350 million Project Imagine upgrade of its network. Suddenlink spent about 81 percent of the funding allocated for the project, company officials said. Project Imagine costs are in addition to Suddenlink’s annual capital spending, which is expected to be $265-$270 million this year, company officials said. Project Imagine includes VoD, capacity for up to 200 HD channels -- 82 have been deployed so far -- and DOCSIS 3.0 technology that’s driving 20, 50 and 107 Mbps services. The fastest cable modem package has 107 Mbps download/5 Mbps upload speeds. The high speed services were installed in 33.3 percent of homes passed Dec. 31, Suddenlink said. Suddenlink spent $12.3 million on Project Imagine in Q4 and $115.4 million for the year. On Dec. 31, Suddenlink had 1.25 million basic video subscribers, having lost 16,100 in Q4. It gained 13,700 digital video and 14,200 high-speed Internet customers in Q4 to end the year with 767,300 and 951,400, the company said. Digital penetration with basic video customers was 61.3 percent, the company said.
Suddenlink’s Q4 net income improved to $7.2 million from $4 million a year earlier as revenue grew to $489.7 million from $434.7 million. Video sales improved to $226.1 million from $211 million, while those from high speed Internet jumped to $124.2 million from $104.3 million.