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TiVo enters ad arena

Although many TiVo customers may use the system to skip commercials, the personal-television supplier is betting they won't and preloading promotional material into new TiVo boxes slated to hit stores this fall.

In doing so, San Jose, Calif.-based TiVo is keeping pace with rival ReplayTV, which has announced advertising deals with Universal Pictures and Coca-Cola.

The new program, called TiVo Direct, allows advertisers to load up to 30 minutes of original content, promotional material or merchandise offerings onto the TiVo hard drive. The first to do so will be PGA Tour, cable programmers Starz Encore and Showtime Networks, independent film producer iFilm and infomercial producer Guthy-Renker.

Every six to eight weeks, TiVo will load the promotional content from the five TiVo Direct "partners" onto a fresh group of 100,000 TiVo boxes, which are manufactured by Philips and Sony. "Each one receives a half-hour of content for their own creative use or promotion," says TiVo Manager of Media Partnerships Karl Meyer. "It puts a lot of control in their hands."

Viewers, however, can delete the content when they set up the TiVo device. So TiVo is encouraging TiVo Direct advertisers to create a slate of content that lets users quickly find what they're interested in, such as a segment on the Senior PGA Tour, a particular Guthy-Renker infomercial or an iFilm short. The preloaded content will also promote merchandise through toll-free telephone numbers and Web addresses.

PGA Tour, for example, is creating a dedicated Web site (with special pricing) for the golf merchandise featured on TiVo Direct. It will share with TiVo a portion of the revenue generated by purchases from its TiVo Direct toll-free number.

TiVo Direct also extends to TiVo Takes, a half-hour show that is produced by TiVo and which highlights upcoming programming in a newsmagazine format. The show, designed to be recorded on TiVo boxes for viewer reference, is currently broadcast on Pax TV during the early-morning hours. In addition to a billboard mention at the beginning of TiVo Takes, TiVo will offer advertisers 30-second spots and four two-minute vignettes, says Meyer. Both can be customized with TiVo's Ipreview technology to trigger recording of future programming, such as a Showtime movie or Guthy-Renker infomercial.

Starz Encore will use TiVo Direct to show its Hollywood One on One program, which features interviews with stars and movie clips. Each movie preview in the show is tagged with Ipreview triggers. "We thought it was a perfect opportunity to showcase a very prominent show on our network as well as to utilize some of the Ipreview functionality," says Starz Encore Director, Business Development, Tom Wenzel.

Starz Encore-like Showtime, an equity investor in TiVo-is the first network to use Ipreview 24 hours a day, seven days a week, says Wenzel. The network also is trying to set up a subscription video-on-demand service with both TiVo and ReplayTV.

TiVo is still working to create advertising solutions within the TiVo service, which consists of graphics that can be updated via phone line. The company plans to create branded areas, or "walled gardens," under the name of TiVo Network. The areas, which should debut by the fourth quarter, will be product-specific and surrounded by advertisers' content, says Meyer.

TiVo continues to work with charter advertisers General Motors and Proctor & Gamble on custom solutions, says Meyer. In the future, for example, viewers may be able to click an Ipreview button to record a virtual test drive of a GM car.

Competitor ReplayTV already offers advertisers sponsorship of a ReplayZone, a dedicated area that can be used to display promotional content. The Mountain View, Calif.-based company is also preloading Universal Pictures promos onto its hard drives.

Interactive-TV analyst Josh Bernoff of Forrester Research believes it is about time that PVR firms started to bring in advertising revenues. "It would be insane not to do this. If you're shipping an empty hard drive to people who are going to fill it up with stuff, you might as well take advantage of what's there."

He expects the impact of such PVR advertising campaigns to be negligible for the near future. The benefit to initial TiVo and ReplayTV advertisers is that they'll get into the PVR medium ahead of the curve. "It's sort of like the people who were doing Web sites in 1995."