Originally Posted by MScottC
The benefit of the ads is quite simple, it subsidizes the cost of the the device and the service to keep the device working.
But if you look at their financials this is simply not true. TiVo has very likely spent more money engineering, support and sales related to supporting advertising than they receive with advertising(*). At most it's a very small fraction of a dollar subsidy every month. TiVo is pricing themselves vs cable company boxes and has nothing to do with advertising revenue.
The most interesting possibility someone else mentioned is that they feel it gives them 'cover' ... Companies aren't as likely to out and out try and destroy their platform (with CableCard's issues that's a hard pill to swallow though) because it ALSO supports advertising.
edit: (*) Made it a bit more clear that the engineering, support and sales were related to engineering costs for advertising, supporting advertising related functions and overhead associated with selling spot sales to advertisers.