At the NATPE conference in Las Vegas yesterday I listened to TiVo CEO Tom Rogers send television executives an unmistakable message: either adopt a sense of urgency to address the two main forces upending the industry or prepare to watch the world as you've known it go away.

Rogers didn't mince words, forecasting for the TV industry a crisis comparable to the ones that have engulfed the financial services and newspaper industries if TV executives are complacent. Why Rogers didn't also cite the even more desperate U.S. auto industry was unclear....Is it possible that no other industry could ever find itself in that much pain?

The two forces underpinning Rogers' potential doomsday scenario are rampant time-shifting/ad-skipping by DVR-enabled households and fragmented viewing due to inevitable widespread broadband-connected TVs. On the DVR front, Rogers cited forecasts of DVR penetration in 60 million U.S. homes in several years, up from 30 million today. He explained that at that penetration level research suggests that brands will suffer major erosion from ad skipping.

I think Rogers is absolutely right. If you live in a DVR-enabled household, consider how different your (and your kids') viewing patterns are vs. in the pre-DVR age. Rogers noted that plenty of industry executives themselves have admitted to him that they too skip the ads.

As for broadband, Rogers said that 85% of TiVo HD buyers now connect their boxes to TiVo's broadband features. And he echoed a point that I'm fond of making: despite all of the broadband consumption on PCs that has occurred in recent years, for most consumers video isn't really "TV' until it is actually consumed on the TV. TiVo has been incredibly aggressive in introducing broadband features (see their site for a listing), and clearly its buyers are getting the message.

Rogers' comments were serving a larger purpose which is to position TiVo's new ad products as a key solution to these problems. For the past couple of years TiVo has begun promoting a slew of new ad units, targeting and measurement capabilities that it believes can make the TV ad model comparable or superior to the online advertising model (I wish you could see more details but oddly, information about TiVo's ad products sits behind a password-protected area of the company's site.) Rogers conceded the irony that the company most responsible for undermining the traditional ad model through ad-skipping adoption is now trying to ride to the industry's rescue.

Be that as it may, the main problem dogging TiVo's ad solution is that TiVo's subscriber base of under 4 million is just a tiny percentage of all U.S. TV households. And that's unlikely to change. The big driver of DVR penetration is service providers including the feature (sometimes from TiVo) in their set-top boxes.

Further, in the cable world at least, TiVo's ad solutions are going to run smack into Canoe, the industry's advanced advertising initiative. TiVo has already learned about how cable companies follow their own agenda; when TiVo is included in cable set-tops none of the broadband features are enabled. I know this first-hand. My old TiVo Series 2 in the basement gets all the broadband goodies, my Comcast TiVo in the family room gets none of them.

Rogers emphasized that his comments should be taken positively, in the context of the massive opportunities being created, rather than as an assertion that the industry is doomed to failure. I applaud Rogers for calling out the massive problems that lie ahead for the TV industry if it doesn't act with urgency to address these issues. TiVo is doing its part, but much more must also be done.

What do you think? Post a comment now.