ReplayTV: Ads are here to stay

CEO Kim LeMasters says advertisers are getting smart about how to persuade you to watch ads on your digital video recorder.

NEW YORK -- "TV now has a brain," according to the latest slogan embraced by digital video recorder maker ReplayTV Inc.

It seems, however, that TV viewers won't be doing a lot of thinking -- at least in the perfect convergence world outlined by ReplayTV's CEO Kim LeMasters during his Wednesday morning keynote at the eTV World conference.

ReplayTV, like archrival TiVo Inc. (TiVo), makes a box that allows users to selectively record and reorder their TV programming using a hard drive instead of tape.

LeMasters said that digital video recorders are poised to outpace VCRs, DVDs and other consumer devices in terms of shipments and breakthroughs in price and performance. Replay claims that consumers bought 18,000 digital video recorders in 1999, but that they will buy 500,000 units this year.

LeMasters portrayed the evolution of the digital video recorder, or, as it is more euphemistically known, "personal television," as inevitable, but positive.

"We let you have full control over the TV," in much the same way Internet users have grown accustomed to controlling their individual Web experiences, LeMasters told the audience.

The most controversial feature of the Replay and TiVo systems is their ability to allow viewers to skip over commercials. How have advertisers reacted?

"They approach it (commercial elimination) with trepidation, as they should," LeMasters said. "But personal TV is here to stay. Analog TV is stepping aside to allow the higher life form of digital."

And because the ad agencies are characterized by creativity and nimbleness, LeMasters added, they will be quick to find new ways to adapt to the evolving medium. He pointed to Johnson & Johnson's recent announcement that it will try running commercials only at the beginning and end of an upcoming ABC show that will otherwise be uninterrupted by commercials.

"Companies like Coca Cola and Procter & Gamble already are on board," LeMasters claimed. "Our research shows people will watch recorded commercials multiple times if they appeal to them. This creates new opportunities for linking and branding, as well as for new kinds of advertising."

Going forward, added LeMasters, "advertising is going to be elevated to near public-service status."

He had little to say, however, about how Replay will be helping advertisers access user data to target commercials at demographic segments. He said Replay is "putting the finishing touches on what we think will be the toughest privacy policy in the industry," but didn't elaborate.

"The living room is the second most private place in the home. Personal TV can't create the impression that it's invading the home. We need a new stricter code for personalized ads," he said, which always will require viewers to opt in, rather than have their personal information collected without their permission.

If LeMaster sounded almost religious in his belief about the power of TV, it might just be because the ReplayTV CEO formerly held top positions with CBS Entertainment, Walt Disney Studios, Warner Bros. Television and ABC Television.

"Every company is touched by television," he told the eTV World attendees. "TV is inseparable from how we think and perceive. By changing it (TV), we're changing our lives."

He rattled off statistics: The typical American household currently watches TV seven hours per day. Three-fourths of all Americans claim they get all their news via TV. There are currently more TVs per U.S. home than telephones per home.

He also talked up a ReplayTV user survey of 984 respondents in December 1999, which found a positive correlation between opinions about TV and digital video recorder ownership. Before buying their digital video recorders, only 10 percent of customers rated TV as "very appealing." Afterward, 74 percent rated it so, LeMasters said. In addition, after purchasing digital video recorders, 67 percent of those surveyed said they had watched shows they wouldn't have without them.

"The sense of convergence is growing about what Hollywood and The Valley can do together," LeMasters said.

But instead of talking up the convergence of the Web and TV, as many of the other eTV World speakers have done, LeMasters seemed completely focused on the convergence of content and advertising.

"When you go through the Web, there's no emotional connection," LeMasters added. "That's why TV's been the single most successful medium for consumers."