TiVo testing pre-roll advertisements before DVR recordings

At the height of its popularity, TiVo was seen as the antidote to lengthy commercial advertisements, allowing customers to breeze past them with the touch of a button.

Now, it may force customers to watch even more of them.

Earlier this month, TiVo users reported seeing pre-roll advertisements appear before recorded programs. The move comes ahead of an expected announcement where new hardware and a new service called TiVo Plus are slated to be unveiled.

Little details are known about TiVo Plus, though some have speculated it will be an advertisement-supported streaming TV service similar to Tubi TV, IMDB TV or the Roku Channel. It could also offer a hybrid linear and on-demand service similar to Pluto TV or Xumo, according to reports.

TiVo Plus is apparently not the only way the company is looking to make more money: Earlier this month, customers reported seeing low-resolution ads for Amazon, Toyota and others pop up before their DVR boxes played recorded shows, according to a report by The Verge on Friday.

Some have speculated TiVo Plus and the pre-roll advertisements could signal a shift away from the company’s legacy business model of selling hardware, imposing DVR fees and licensing patents to third parties. That shift comes at a time when TiVo’s market share of DVR service continues to erode as cable and satellite companies offer similar, and sometimes better, ways to record and stream programming and more consumers cut the cable cord for over-the-air and digital streaming services like YouTube TV and Sling TV, which offer basic “cloud DVRs” that don’t require additional hardware or subscription fees.

That increase competition may force TiVo to lower the price of its hardware — DVR boxes currently retail for around $200 on the lower end and $600 on the higher end — and reduce or eliminate its monthly subscription fee, which hovers around $15 a month. TiVo Plus and pre-roll ads could be one way to generate income if the company decides to reduce hardware and service costs, the weblog Zatz Not Funny said:

Keep in mind, TiVo has been a pioneer in this noxious space — they just haven’t executed as well as Roku and YouTube. But, before we collectively lose our minds, we’re likely missing some critical context here. As I previously suggested, in regards to TiVo [Plus], more heavy handed advertising might be an effective way to lower the cost of entry — think reducing or dropping monthly fees, for those that choose. Also, pre-roll ads and commercial replacement are exactly the sort of the thing the [cable companies] wants to offer, so us retail customers may not even be the ultimate target audience.

That speculation is not unfounded; TiVo began offering its platform on hardware running Android TV to at least two cable companies this year, according to a company executive. But it will be some time before TiVo signs on a Goliath like Comcast — the company is currently suing Comcast over alleged patent infringement regarding the Xfinity X1 platform.

“While I would always prefer to get to a fair business deal without litigation, if the other party is not reasonable, then we have no choice, but to litigate,” TiVo CEO Dave Shull said on a conference call in July. “We have a portfolio of more than 5,000 patents and applications, hundreds of which cover technology innovations related to Comcast X1 platform user experience. While Comcast may be able to design around any single patent, if we are able to demonstrate that they have violated even a small percentage of these hundreds of patents, the Comcast service will likely continue to lose features that are important to their customers.”

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