Quiet, Nosy Navic Might Be Watching

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With deployments on Time Warner Cable, Cox Communications Inc. and EchoStar Communications Corp.’s Dish Network, Navic Networks has gained more distribution in the past 18 months than perhaps any other U.S. ITV company.

But Navic — which places interactive overlays in commercials that allow subscribers to buy pizza and other products with the click of a remote, and adds video preview windows and search functionality to interactive program guides — has been running under the radar.

“We’ve been pretty careful,” said CEO Frank Anthony, a veteran of Amos Hostetter’s Continental Cablevision. “We want to make sure when we hook somebody up that things go smoothly.”

One of Navic’s biggest rollouts is on Time Warner Cable’s Oceanic system in Hawaii.

In a company conference room here in suburban Boston, Anthony and his colleagues last month showed a reporter a television screen that listed the top 10 shows Oceanic customers were watching at that very moment.

The rankings came from a panel of 1,000 homes Oceanic selected at the end of last year, in a bold effort to mimic Nielsen Media Research’s ratings system.

While many Nielsen homes in the lower 48 states have meters, Hawaii employs a diary system. Time Warner executives were hoping to use viewing information collected by Navic to pitch advertisers with more detailed ratings information.

Time Warner installed Scientific-Atlanta Inc. digital set-tops in 1,000 homes, including those of nonsubscribers. In exchange for letting the system track their viewing habits, Time Warner offers the panel homes two free video-on-demand movies per month.

But Oceanic president Nate Smith said Time Warner scotched the idea of using ratings information gleaned from the panel to pitch advertisers. The selection of homes ended up not being representative of the system as a whole, partly because Oceanic had trouble convincing nonsubscribers to take a set-top.

“The problem was the non-subs didn’t want to be subs — they didn’t want anything to do with us,” Smith said.

PROMO TOOL

While Oceanic has given up on relying on the panel to pitch media buyers, the system uses the viewing information it collects as a navigation device and a promotional tool for digital-cable subscribers.

Every digital subscriber can track the top 10 shows their neighbors are watching at any given time.

Oceanic has hardwired its own OC 16 regional channel to be listed as the No. 1 channel at all times — a tactic Smith conceded was “possibly naughty.”

Last year, Oceanic used Navic’s polling technology to add interactivity to a program called The Road to Fame, which sort of a local version of Fox’s hot American Idol.

The only way OC 16 viewers could vote for the best singer was with a click of their remote, or by logging onto a Web site.

Oceanic received about 7,000 votes from subscribers, 6,000 of which came through digital set-tops powered by Navic.

Jasmine Trias, who won The Road to Fame, has since become a finalist on American Idol.

“We’ve been running a cross-channel promo of [Trias] singing in the [Road to Fame] finals last year,” Smith said. “It shows you the power of interactivity.”

POLLS BY COX

Cox Communications Inc. has used Navic’s polling technology to make local programming decisions.

In November, Cox’s Arizona system asked subscribers watching a local high-school football game which teams they wanted Cox to televise during the playoffs.

Cox Media vice president of technical operations Guy McCormick said the polling feature was used to demonstrate to customers some of the benefits of subscribing to digital cable.

Navic executives said most of their focus has been on enhancing the inventory of cable operator-controlled local advertising avails.

Oceanic uses Navic to add interactive overlays to commercials from Pizza Hut and other advertisers.

Customers that click on an overlay on the bottom of the screen are switched to channel 999, where they can choose from a variety of pizzas and toppings.

Oceanic — now collecting 500 to 600 pizza orders per week — has found subscribers spend more money on a pizza when they buy it through the television than when they call in an order over the telephone. “There’s an interesting phenomenon,” Smith said.

He said the average Pizza Hut order in Hawaii taken over the phone costs $16, while orders taken through the television run about $24.

A typical phone order might be for a large pizza with one topping. But customers tend to add more toppings when they have a wide menu of options on their television to choose from, Smith said.

“That just shows you the power of visually being able to feel these various options —people order more,” he said.

Oceanic, which collects a fee from Pizza Hut for every order it processes, is looking to expand in the next few months to a full food court that will offer subscribers takeout or home delivery from a wide variety of restaurants, Smith said.

The cable system will also launch a TV-based “shopping mall” later this year that will allow digital customers to order compact discs and other retail products with the click of a remote, according to Smith.

Time Warner recently expanded the channel capacity on its decoders in Hawaii from 999 to 1,999 channels, using many of the new channels to house longform video-on-demand ads.

For example, when it runs local ads for Mercedes-Benz automobiles, customers who want more information can click on an interactive overlay that takes them to a channel where they can take a car out for a “virtual test drive.”

Oceanic’s Channel 912 houses video classifieds. Subscribers can view help wanted ads from employers.

A local real estate company that buys 30-second spots on Oceanic uses another channel on the system to offer listings of available homes and virtual home tours. Subscribers click on interactive overlays that run within the ads.

DISH USES FOR ADS

Dish Network relies on Navic technology for interactive advertising, though it hadn’t before publicly disclosed that fact. It uses Navic in interactive ads from companies such as American Express and Meineke Car Care Centers Inc., EchoStar Communications Corp. spokesman Marc Lumpkin said.

“They [Navic] provide a background template that we can have advertisers utilize,” Lumpkin said.

Dish has used Navic to add interactive to ads for more than a year.

Oceanic also uses Navic’s data-transport system to allow subscribers to upgrade to new programming tiers and check or pay bills with their remote controls.

Time Warner Cable spokesman Mark Harrad said the MSO’s Albany, N.Y., division recently launched a trial with Navic to create a new digital-cable menu for subscribers, and that the system’s Capital News 9 regional channel is using Navic to run interactive polls.

PATENT PORTFOLIO

Navic co-founder, chairman and chief technology officer Chet Kanojia has obtained patents for Navic that involve targeting ads to subscribers based on viewing habits. He has also patented a process in which an operator could switch a subscriber watching an ad on a national cable or broadcast network to another channel where they would see promos for VOD content.

But Kanojia and Anthony said Navic has never commercially deployed any applications that send ads to viewers based on their viewing habits, and that it doesn’t have current plans to pursue the technology.

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