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TiVo Curbs Spending on Brand Awareness

Confident of its role as the leader in the personal video recording industry-and under pressure from investors to show a profit sooner rather than later-TiVo Inc. said last week it would cut spending on overall brand building.

Instead, the company plans to put more marketing funds towards joint promotions with partners such as DirecTV Inc., which markets a combination DirecTV/TiVo receiver, TiVo president Mike Ramsay said in an earnings call last week.

"We are very focused on consumer demand generation and growth, but less focused on building the brand," Ramsay said.

In a tentative marketing partnership announced during the call, AOL Time Warner will also invest millions in advertising dollars to help promote the TiVo service.

TiVo sold about 80,000 stand-alone or combination DirecTV boxes during the final quarter of 2001, the company reported last week. However, only about 63,000 new subscribers had activated the service by year-end.

Ramsay attributed that trend to the "holiday gift effect," whereby some people received TiVo recorders in December but did not activate the service until after the New Year.

Another 17,000 subscribers activated new TiVo accounts during January, Ramsay noted. TiVo's subscriber count totaled 153,000 by the end of January. The company projects that number will grow to 350,000 by the end of next January.

Today, TiVo's strongest revenue source is from subscription fees, TiVo chief programming officer Stacy Jolna said in an interview two weeks ago. But as the company's subscriber base grows, advertising and other revenue generators, such as "couch commerce," will become more important, Jolna added.

On the advertising front, TiVo last week said it signed Miller Brewing Co. to a one-year advertising agreement. As a charter ad sponsor, Miller will have priority access to TiVo research and a seat on TiVo's advertising advisory board, as well as interactive advertising and sponsorship opportunities.

TiVo also late last month announced a deal that will bring short films and animation from AtomFilms to its subscribers. AtomFilms typically shows its films online through its Web site, www.atomfilms.com, but also recently signed a distribution deal with pay-per-view movie service InDemand that brings the shorts to digital cable.

TiVo plans to introduce the first of its AtomFilms titles on its TiVo Takes interactive channel within the next week or so, Jolna said. New offerings will be introduced each month; AtomFilms shorts will also be preloaded in TiVo set-top boxes as they leave the factory as part of the service's TiVo Direct program.

"It's a way to give our consumer audience programming before they start downloading," Jolna said.

The content deals could help keep TiVo competitive in the changing digital video recording marketplace. Although the company holds the category's most-recognized brand, competing technology is here or on the way.

EchoStar Communications Corp., for example, has marketed a "DishPlayer" direct-broadcast satellite receiver with a built-in DVR and WebTV Inc. system from Microsoft Corp. for more than a year. Later this spring, it plans to introduce a DBS receiver with a DVR it created in-house.

EchoStar chairman Charlie Ergen told reporters at the recent Consumer Electronics Show that although consumers appreciate digital recording features, they have been less responsive to television-based Internet access. Because of that experience with its DishPlayer customers, EchoStar has decided not to include WebTV or a similar service in its next DVR device.

To help promote sales of the new set-top boxes, EchoStar plans to market its personal- television service for no monthly service charge to customers that commit to certain programming packages. Those packages have yet to be disclosed, an EchoStar spokesman said.

DirecTV Inc. equipment manufacturers late last year began selling the first combination DirecTV/TiVo set-top boxes.

"Our plan from the inception of the company was to integrate this into cable boxes and satellite boxes and even televisions themselves," Jolna said.

In the DirecTV space, TiVo will see a DVR competitor from Microsoft-backed UltimateTV, which combines a dual-tuner DirecTV receiver with Internet access, DVR and additional interactive services.

A spokesman for DirecTV said a software download later this year would give DirecTV/TiVo combination boxes dual-tuner capabilities.

EchoStar's new set-top with built-in DVR will not have a dual-tuner, so Dish Network customers will not be able to record one show onto the hard drive while watching another live. In a recent on-air Charlie Chat with subscribers, Ergen said the company would likely add a dual-tuner model later this year.

Although TiVo competitor ReplayTV Inc. opted to stop marketing its product directly to consumers late last year, its hardware partner, Panasonic Consumer Electronics, introduced at CES a large-screen television with Replay technology built in.

The service subscription is included in the cost of the television, and consumers would not need to pay an additional monthly charge.