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Report: Recommendations go mainstream as TiVo splurges on DigitalSmiths

Peter Docherty,  Founder and CTO, ThinkAnalytics

Peter Docherty,
Founder and CTO, ThinkAnalytics

Guest post by Peter Docherty, Founder and CTO, ThinkAnalytics

The news that TiVo has forked out $135 million on the Digitalsmiths content discovery engine is interesting from a number of perspectives. Of course it validates the importance of intelligent search and recommendations to the pay-TV market, but it also signals something else – a step change in the way industry insiders view this technology. Recommendations are mainstream.

TiVo’s move is understandable as it seeks to strengthen its current position and enhances its search and discovery recommendations functionality. This acquisition delivers a neat way to improve that all-important viewing experience, which is so essential for pay-TV providers trying to fend off the threat from OTT players and the like and present viewers with a greatly enhanced viewing experience.

Recommendations are now an integral part of any middleware vendor’s armoury as the adoption of this type of technology gains increasing momentum and becomes a must-have.

While most reports and blogs about the Digitalsmiths acquisition have focused on the benefits to anyone owning equity in TiVo and Digitalsmiths, an overlooked element is the impact on operators and consumers. There are many unanswered questions. Where does this deal leave operators who are looking to buy a recommendations engine – and does it impact those US operators who have committed to using Digitalsmiths technology but don’t want to use TiVo?

Granted, TiVo has recently turned a corner and increased its brand value since its challenges a few years ago, but its future is unclear with competition from a raft of entertainment platforms such as Apple TV, Xbox and the major middleware vendors such as Cisco, SeaChange, Arris, Ericsson, Nagra, Pace etc. We still see very limited take up of TiVo compared to such vendors.

As a result, our take is that the outlook for other players, such as ourselves, in the white-hot recommendations space is rosy.

Forward-looking operators such as Cox Communications, Rogers and Liberty Global are already reaping the benefits of putting ThinkAnalytics’ recommendations engine at the heart of their UIs, and many more are on the verge of adopting this approach. Intelligent search and recommendations are no longer a nice-to-have sidebar on the EPG, they are being built into the core of the UI where they can be used to greatly enhance the overall user experience.

One operator that knows full well the importance of the user experience is Liberty Global. At the World Economic Forum in Davos last month, Mike Fries, CEO of Liberty Global, talked in an interview with Fox News about the importance of bridging the functionality gap.

Fries noted that the average cable home today still has a relatively antiquated guide. Yet those cable operators that have delivered new generation EPGs – including Liberty Global’s Horizon – are in a strong position. Fries cited user interfaces with 3D graphics and recommendations as the key functions for the user experience.

One of the few operators to have revealed the tangible value of recommendations is US cable operator Cox. The Cox Trio EPG analyses individual viewing patterns and preferences, providing personalised recommendations based on viewing habits.  Since subscribers starting using the Trio guide and recommendations, Cox has measured increased viewing and reduced churn as a result.

As such results become common knowledge and other video service providers realise the contribution that recommendations make to the user experience and subscriber loyalty, this market space will be the one to watch.

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