Interactive guides vie for dominance

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Forget about replaytv-or even TiVo, for that matter. If you are a prospective interactive advertiser, perhaps it's the software you should be thinking about instead of the hardware. Think Yahoo! for the TV, sort of a browser to find that one special program in a sea of 1,000 channels.

That's where Gemstar-TV Guide International and other TV program guides come in.

"TiVo and Replay are only one piece of the pie," says Tim Hanlon, director of emerging contacts for Bcom3 Group's Starcom MediaVest. "You overlay the program guide-that's what makes it more powerful, and who controls it is the issue."

TV Guide, the longtime magazine heavyweight, is the basis for the TV Guide Interactive brand, in which program listings are put into digital set-top boxes, now in 5 million homes. Additionally, another Gemstar service, called Guide Plus and Guide Plus Gold, has been installed directly onto 4 million new TV sets. Gemstar has deals with virtually all the major TV manufacturers.

Gemstar's interactive-rich programming services sprung from the TV Guide Channel, a 53 million-home analog cable channel that slowly scrolls through program listings on the bottom half of the screen while content and advertising runs on the top half.

Advertising executives and, naturally, Gemstar executives, believe TV Guide's interactive services could be the base to build a media format for advertisers. This technology, they say, could usurp TiVo and ReplayTV's personal video recorders, which have caused controversy among advertisers because of their capability of recording TV programs and eliminating TV commercials.

"You need a guide; a browser. TV Guide Interactive is the search engine for the TV," says Dick Porter, exec VP-general manager of TV Guide media sales. "All of these functions of a [personal video recorder] are going to be integrated into a [cable digital] box, with a guide. And I have the guide."

Why are TV Guide executives so optimistic? Mr. Porter says TV Guide Interactive and Guide Plus' combined 9 million homes are more entrenched than the 100,000 or so units that both TiVo and Replay have distributed so far to consumers nationwide. And there's more to come.

The premise for their optimism is this: If TV Guide Interactive is the first page consumers see after turning on their TV sets to navigate through channels or even record programs-like Internet users already use a Yahoo!, AOL.com or other portals-then TV Guide Interactive becomes a hot property, according to industry executives.

"It is very valuable if that model is the one that emerges," says Jamie Korsen, president of True North Communications' KSL Media, New York. "If when we turn on our TV, that's the browser that comes up, that real estate would be of paramount importance."

Research backs up TV Guide as an intriguing play for advertisers. Currently, 80% of users who have either TV Guide Interactive or Guide Plus regularly use it an average of four times an hour. Each time consumers go to the guide, they go four pages deep into it. Factoring in Nielsen Media Research's average TV usage of seven hours a day, Mr. Porter says, and the numbers are outstanding.

"At that rate, you can get to 84 page views a day," he says. "And if you multiply that out over a course of a month, or over a year, you get to some pretty amazing impression levels-sometimes more than Yahoo!."

Gemstar seems to have a jump on other companies, such as Tribune Media Services, which offers program listings under its Zap2It Interactive brand. (Tribune Media provides program listings to DirecTV, TiVo, Replay and Echostar Communications' Dish Network, among others). Gemstar has more than 100 technology patents in the area of program listings-which is why interactive executives highly tout Gemstar's chances of succeeding in this arena.

Gemstar already licenses its technology to companies such as Microsoft Corp.'s UltimateTV and America Online's AOLTV. Additionally, because of its analog service base of 53 million consumers, it already has strong ties with cable operators-who, some experts believe, will be key to offering a broader array of TV and Internet possibilities.

Currently, TV Guide Interactive and Guide Plus only offers graphic, print-like still advertising panels, in which a user can click onto another page of information from an advertiser. Next to the graphics are the program listings, which have a number of search options. For instance, consumers can pull up a list of upcoming action movies or all upcoming broadcasts of "Friends."

Starting this year, cable operators will install digital set-top boxes capable of offering full-motion video. By then, TV Guide Interactive and Guide Plus plan to be in approximately 20 million homes. Additionally, Joe Kiener, co-president and co-chief operating officer of Gemstar-TV Guide International, says TV Guide Interactive and Guide Plus might incorporate software functions of the PVRs into its system-building additional value and taking away the possible advertising value of systems like TiVo and Replay.

TV Guide Interactive and Guide Plus initial advertisers have been TV programming companies such as broadcast networks, cable networks and TV syndication companies. Now, mainstream consumer-product advertisers such as Toyota Motor Sales USA and Sears, Roebuck & Co. have signed up. DaimlerChrysler AG's Chrysler Group has done a major deal with TV Guide Interactive and TV Guide's other services, Guide Plus, TV Guide Channel and the magazine, for Chrysler's sponsorship of the Golden Globes awards in February.

Both TiVo and Replay had struck major sponsorship deals that included the likes of Coca-Cola Co., Ford Motor Co. and Universal Pictures. But some of these ad efforts could be short-lived. Replay has pulled back its business, preferring to license its PVR technology to cable operators. In cojunction with that announcement, it abandoned deals with advertisers.

TiVo also is looking to work with cable operators and continue its deals with advertisers, advertising agencies and broadcasters. TiVo may be looking to establish itself as an Intel Corp.-type of brand, say advertising executives, taking on a "Intel Inside"-styled moniker.

Gemstar wants to keep its dominant position and continues to fight for it, sometimes in the courts. The company currently is pursuing lawsuits against satellite TV programming service Echostar and TiVo. Gemstar says both companies are illegally using some of its technology. Gemstar has settled another lawsuit with Motorola, which included some of Gemstar's technology into its cable set-top boxes.

Media executives worry that the battle over program guides could be a confusing situation for consumers if there are too many interactive program guides in the marketplace looking to grab a piece of the advertising pie.

"Let's say you are using a TiVo through a TV set, through a cable set-top box-and each has a guide," says Mr. Hanlon. "What one worries about as a media buyer is having a guide on top of a guide on top of a guide [with separate advertising on each]. How does this mess sort out? Everybody wants to be the guide. Everyone wants to be starting point for TV."

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