Talk to me about TiVo not as a company, but as an idea. TiVo owners are passionate about their TiVos. Why does the cult of TiVo command such power?
The insider language around this is, Oh my God, we've created a monster. It's apparent we've got this compelling consumer proposition. At the end of the day, it has to do with fact that people are discovering they can be in control of television and, more broadly, can be in control of their home entertainment. It's not until you discover what you can do that you realize how much a slave you were to the old way.
Television has a bad rep, it's kind of broken. When you have 500 channels and there's nothing on, television is definitely broken. I think what TiVo has done is put people back in charge. And that's a primal, important thing that people like as far as a social trend that's far broader than television. And when you give them that empowerment, they get very excited and love it. And so you get a statement like, 'It's changed my life. I can never go back.' That's a huge motivator for us as a company.
Do you have any favorite stories or testimonials from people about their TiVos?
We hear all sorts of stories, mostly around kids. The fact you can manage kids' television viewing much more
effectively. It doesn't get in the way of the family being able to sit down and have a meal together. That's where the
lifestyle thing begins to build. When you're a slave to television it screws up your life.
My car has a TiVo license plate, so I get messages under my windshield wipers, people saying, I love TiVo. We get mail from people who send us the TiVo remote because their dog chewed it and they want a replacement. And we take these and put them in a trophy case. You get this cross-section of humanity and how they interact with their TiVos.
Do you think TiVo is part of a bigger cultural wave of consumer empowerment?
I know people who react that way. The PC revolution empowered people, it gave them a tool to do things on their own creatively. They didn't have to go ask permission of anyone. The Internet gave us access to infinite amounts of customized information. Google is an incredible personalization engine for all the information in the world, essentially. TiVo has been about empowering people to be in charge of their own entertainment choices.
We've taken that idea developing over the past 10 or 20 years, and I do think it's caused a social change where people expect if they want to do something or change something, they just go and do it. They don't have to wait in line or ask permission. We're extending that idea into the television world. And we're extending it beyond television because of the work we're doing with music and pictures. Our software lets you stream music from your PC to your TiVo to play it on your stereo system, and also the ability to show digital photographs.
What's your vision for Internet television?
For us, it's a natural idea to consider that the DVR idea would be extended beyond broadcast onto broadband. We're in this space today where the availability of content over the Internet is starting to explode, starting with audio content and increasingly going to video content. But there's no real good technology for delivering that to the most ubiquitous UI there is, which is television. We see our role as providing that delivery because we have a television-based platform. It's not a PC, it's not a Web browser, it's a true set-top device. The opportunity we like is the marriage of what TiVo does from a UI standpoint with the availability of content that can be delivered over broadband. Realistically, five years down the road, when you sit down to watch television, a good chunk of it will come over broadband.
Is that why you bought Strangeberry?
We haven't really disclosed the underlying technology that we bought from them, but there are certainly elements of what they're doing that are very important to this. They have a unique technology that marries the Internet world to the television world, and we saw that as extremely valuable. We're integrating that into our core products today.
A high-definition TiVo recently came to market. How is that selling?
It's a DirecTV product with a high-def version of TiVo. I have one at home, it works great. We're believers in high def, and I think we'll see increasing demand for high-def standalone products. So far, they cannot make enough of them. It's an incredibly popular product.
Will we see TiVo on other kinds of consumer devices in the future?
Well, today one of the exciting things is the marriage of DVD recorders and TiVo. Pioneer already has one on the market. Both Toshiba and Humax are going to be delivering DVD recorders within the next 30 to 60 days. You can do everything with one remote control: You can play back DVDs, CDs, you can do your TiVo thing or change channels on your television. You can record anything from television onto the DVD. So it's very useful, and we'll see a much more rapid proliferation of DVD recorders than we've seen to date because the user interface and the TiVo nature of them will be more appealing.
I've got two TiVos and a DVD recorder already. What will TiVo on a DVD recorder add to the mix?
Oh, it's a whole new cool thing. TiVo's got Now Playing listing all your programs, and you say, I'm traveling to New York by plane, so I'll check the ones I want to watch and it'll record those to DVD automatically. You get the DVD, put it in your laptop, and it's got the TiVo UI on it. So it's a trivially simple and powerful way to create a portable version of TiVo.
Tell me about TiVoToGo, the service that allows TiVo users to send programs to as many as 10 TiVo units with the same customer account in a secure fashion.
Right. We've established a technology that will allow people to share programs, albeit in a limited sphere like iTunes, among a community on the same network. We think that will largely be used for people to transfer TV programs onto a laptop so you can take them with you. Getting it out there onto these portable devices like laptops and video players is something consumers really want to do.
We developed a security mechanism around that, submitted it to the FCC under the broadcast flag initiative, and the Motion Picture Association and the NFL went ballistic and lobbied incredibly hard. But guess what? It got approved. The FCC supported our technology.
Should the FCC be in the business of regulating new technologies like this one?
Definitely not. It's scary when you feel that you have to go to the FCC for permission to do something. So we're not very comfortable with that. I think the broadcast flag stuff is less onerous than some other things, like the INDUCE Act. That we're much more concerned with because that could lead to prosecution of individuals who induce copyright infringement. That just opens up a whole can of worms. If you upset consumers enough, they'll become pirates, and that law has the potential to do that.
You'll notice that everything on the table in Washington being pushed by the media companies doesn't target regular television. It's targeted at things like ripping DVDs, how long you can keep movies pay-per-view movies, and so on.
Tell me about the new deal with Netflix.
It's about video rental. Most people these days, at least in this community, are buying music electronically. They're not buying physical media. And I think the same thing will happen with video. Instead of going to the video store or getting your Netflix in the mail, it's going to show up in your TiVo. It's a natural. It doesn't matter if it takes a day to get there, because Netflix takes a day anyway. People will get used to having a pipeline where content drips through. The transition to electronic distribution will be complete and we won't be dealing with physical media.
So you'll be competing with services like Movielink and CinemaNow?
Not really. Netflix will be a download, and those other services are streaming. All broadband Internet distribution will be a download for the foreseeable future. Streaming offers less than television quality. We believe that everything you deliver to the television has to be TV quality or better—you can't compromise on that. The only way you can do that in the U.S. today is by download.
How do you navigate the tricky path of pleasing the cable companies, the content companies and your customers?
There's a lot we'd like to do. It's hard to stop innovation, and you could argue that a lot of the restrictive practices to inhibit innovation have actually stirred innovation. File sharing and the DVR may not have occurred were it not for the fact people were frustrated about getting access to music or their favorite TV program.
Looking ahead, we have a big interest in broadband and the distribution of television broadcast by satellite or cable. What happens when you can make broadband work with that? The implications for the industry are immense.
But the cable companies would oppose losing their stranglehold over the pipes into the living room, wouldn't they?
Nobody can stop us. You do the deals and you get distribution. You don't have to get carriage in the traditional sense. Anyone can buy bandwidth and deliver their content, and that will have a large impact on the cable and satellite industry over the next 10 years.
How are you negotiating your relationship with Hollywood after they essentially put your main competitor out of business?
Our role is to create a great experience for people who want to watch television. ReplayTV crossed a line, and they kind of asked for it, and they were put out of business. There is a business objective we have as a company to have a certain level of support from the industry because that's good for our business. If you get stupid and you go out of business, that isn't doing the consumer any good.
Where do you see the television landscape five or ten years down the road?
High definition will become more commonplace. Five years from now, you'll be able to get television content over broadband, whether it's over satellite or cable, and it will be the start of some new and interesting sources of content which has not been available to people to date. And five years from now, the idea of electronic delivery of video rentals will be real. Blockbuster will still be in business, but the idea of getting your video rental over broadband will have started to happen.
J.D. Lasica is the author of the upcoming book Darknet: Remixing the Future of Entertainment.