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TV in
Wonderland
PVRs - personal video recorders - give viewers the latest in options, including pausing live shows 05/04/99 By Doug Bedell / The Dallas Morning News
Imagine pausing live television at your convenience and eliminating commercials with the click of the remote. Think about a lifestyle unfettered by network time slots, where all your favorite programs are stored for retrieval whenever you want to watch. Now, just for grins, conjure up a controller button that allows instantaneous replays of that last drive by the Dallas Cowboys - or anything else that just passed across your living room screen. It's all yours right now - for a price. TiVo and ReplayTV - two new set-top boxes being marketed as "personal video recorders" - are threatening to turn television viewing on its ear as they begin shipping this month for as little as $499. They're part of the steady convergence of digital technology with entertainment. Driven by consumer desire for highly personalized options, devices such as these are seen as a mighty new force because they store selected music, movies and television programming to hard disks for fast sorting and retrieval. "Suddenly, consumers are becoming the controllers," says digital visionary Jim Griffin, former head of the Geffen Records technology division and now leader of a new media consulting firm called OneHouse. Forrester Research, the Cambridge, Mass.-based technology research group, is among industry analysts predicting big things for personal video recorders, or PVRs. A recently released Forrester report predicts machines such as TiVo and ReplayTV will cut television ad viewing time in half. Forrester estimates that by 2004, more than 14 million Americans will watch TV on sets with PVRs as prices gradually drop. The company also predicts that 10 years from now, personal TV will be in four out of five U.S. homes, making it one of the fastest-growing consumer electronics categories in history. Richard V. Ducey, senior vice president for research and information at the National Association of Broadcasters, says that the PVR may change the way viewers watch television and advertising but that it's too early to tell. However, Mr. Ducey says the likelihood that many viewers will skip through television ads is not necessarily a bad thing for the broadcast industry. "If you look at newspapers - where you can ignore the ads if you want, just flipping through them - that may be more of the kind of model we're moving to with these devices," says Mr. Ducey, noting that advertisers generally don't want to waste time or money contacting consumers who aren't interested in their products. Currently, PVRs can be ordered from company Web sites only. In fact, home theater store owners such as Tom Bonjour of Arlington's Sound Idea say they've heard little about marketing either product. "Right now, it's not a ripple in the ocean," he says. "But it's one of the next features you're going to see in televisions. Eventually, all these things will be put right into sets."
Tussling for your set-top
Backed by mega-bucks and alliances with various cable services and channels, TiVo and ReplayTV squared off in a gaudy battle at the International Consumer Electronics Show earlier this year in Las Vegas. ReplayTV won the Best of Show award for its sports-oriented pitch on a huge stage, complete with baseball-uniformed hostesses and barkers. Nearby, TiVo personnel trotted out a friendly-looking TV mascot and bright orange colors to promote its user options. Both products are made of essentially the same components - hard disk drives equipped with the latest MPEG-2 real-time compression technology. Mr. Griffin calls these devices intelligent buffers because they hook up between a television screen and its input devices - cable, satellite or antenna. Using a telephone line, they dial out to servers that feed them programming data, which are then displayed for viewers on the TiVo and Replay custom menu screens. The ReplayTV 10-hour recorder is being sold for $699 and includes a subscription to its service. TiVo carries a base price of $499 for its 14-hour digital recorder, and users pay $9.95 per month for the nightly upload of subscriptions from the channel guide service. For additional storage space, you pay more. TiVo's top, 30-hour model sells for $999; the largest drive for ReplayTV holds 28 hours for $1,499. Both companies have scrambled to form strategic alliances with companies such as HBO and ShowTime and plan to offer differing levels of customized programming and, eventually, interactive advertising content. "But you can have any kind of video feed," says Steve Shannon, vice president of ReplayTV marketing. "It's technology-agnostic. There's nothing about digital cable or television that's required. It's very much an every man/every woman technology." Users are presented a menu of programs coming into their televisions. With simple clicks of the remote, programs can be selected to record while you're working or watching other programming. PVRs feature advantages of VCRs, but with a simpler scheduling interface and massive storage capacities (see chart above). Run TiVo and ReplayTV through a VCR, and you can off-load movies or other hard disk recordings onto videotape for storage. Select high-, medium- or low-quality recording to best use disk space. Record over yesterday's Guiding Light on a daily basis to keep only the latest episode. While viewing a live program, users can "pause" it, leave the room, then come back and pick up where they left off, skipping the intervening commercials until they catch up with the live feed again. And, with keyword searches of program descriptions, users can easily set TiVo and ReplayTV to develop their own channels of compiled "hits." Enter the keyword "World War II," for example, and the PVR will scan the information on all channels available to your set, then record anything on that subject as it is broadcast. Users can call up their channels just like any other on the menu, then watch, review and delete segments as they wish. Says Mr. Shannon: "You can easily see a day when a ReplayTV-like product is incorporated into every set. This stuff is not necessarily linked to high-definition television or anything else like that. It's simply that the whole digital revolution gives us a lot of freedom we never had before." Ed MacBeth, TiVo's vice president of marketing and business development, sees even more opportunity in customizable interfaces with his machines. That's a big reason why TiVo has chosen to market a cheaper unit, then charge for monthly subscriptions. "It's more than a box that simply records what you want," says Mr. MacBeth. "There are some really great things that the world has learned from the World Wide Web - the personalization, e-commerce, the notion of a portal." TiVo is angling, he says, to become a sort of portal - one that brings Weblike options to television viewers "in a television way." TiVo's programmers are working to develop an on-air shopping mall where all sorts of goods and services can be bought and sold. In some ways, the TiVo model parallels visions of Time-Warner's early interactive cable boxes. Mr. MacBeth's company has hired legions of programmers from cable and traditional networks to create options for its menus. For example, as you input programs for recording, TiVo begins building a database of preferences. It then uses that data - which is retained and guarded on the unit's hard drive - to find similar programs that you might like to watch. Both PVR makers are bent on creating interactive advertising capabilities that will allow ordering products and information using a remote control. When alliances form and advertisers join up, TiVo and ReplayTV will let viewers select an ad or service as it comes onto the screen, call up its Web page or pricing information, then input credit card data for purchasing from the couch. "We can expect that in three or four years, all television will be watched by hard disk when you want," Mr. Shannon says.
Privacy, ad concerns
Online orders for TiVo and ReplayTV apparently have shown the companies that they have a ready audience. Both companies say they are geared to keep up with the demand just from their Web site sales. And if these devices live up to projections, they could bring new challenges for advertisers and concerns for consumers. The practice of recording user profiles has prompted warnings from some privacy groups. Those watchdogs are leery that these set-top creations may provide too much targeting data to retailers seeking to maximize their advertising punch. TiVo's Mr. MacBeth counters that the technology will not permit uploading of profile information for any reason. ReplayTV has no plans to monitor viewing habits, Mr. Shannon says. "That's just not acceptable." Beyond that, traditional TV advertisers may be forced to change tactics if skipping ads becomes widespread. Forrester analyst Josh Bernoff predicts that easy fast-forwarding through ads will heighten competition for the most-watched shows, while overall ad revenues will decline because fewer people will view the ads. "I think the broadcasters we're working with have realized this is going to happen," Mr. MacBeth says. "They had better figure out how to evolve and take advantage of what this creates for them, or it's going to happen without them." Adds ReplayTV's Mr. Shannon: "From an industry standpoint, there's already the ad-skipping capabilities with regular old VCRs. But you're going to record more with this technology, so more commercials will be skipped, no doubt about it. However, there are a lot of ways to actually make ads more effective. We expect ad revenue to go up, not down." PVRs could be a boon to broadcast advertising, says Mr. Ducey of the National Association of Broadcasters. "If you do have an audience that does decide to expose themselves to a particular ad, you know they're interested to start," he says. "Then you have the half of the audience the advertiser really wants." Mix in the ability to click on short ads to get more detailed information, and suddenly the PVR becomes an advertising ally. "If a viewer interested in buying a refrigerator can click on an ad and get a five-minute infomercial on the product, that's a tremendous advantage for advertisers," Mr. Ducey says. "I think the technology allows a more efficient connection between customer and the business."
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