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You can call them DVRs (digital video recorders). Or you can call them PVRs (personal video recorders). Either way, they pose serious threats for some business plans, and create great opportunities for others.
You can turn your computer into a DVR. All you need is a big hard drive and a video capture card with a digital tuner on it, and some good software. Depending on your signal source, you might need either a cable tuner (QAM) or a broadcast tuner (8-VSB). Or for satellite, maybe all you need is a 1394 connector instead of a tuner. Instead of building a DVR, you could just go out and buy one.
Either way, you want software that is able to analyze the content of a recorded program and pick out the commercials, so that you can skip them when you watch the program. Some software does this by looking for many quick scene changes, which is more typical of commercials than normal programming.
Of course, this behavior creates a threat to broadcasters and to some cable programming. My friend Gary Arlen reports that advertisers spend $42 billion a year on broadcast TV ads and $16 billion on cable ads.
But some advertisers are looking at this as an opportunity. By preloading commercials into your DVR that are tailored to your demographics, they can show you targeted commercials while you're watching specific programs. Well, no, you can't do this yet, because there is no way to link pre-recorded material on a DVR to the program you are watching. But it's an opportunity.
And because people do want to watch some commercials, they can give you an index to all the commercials on your DVR so you can watch them whenever you want.
Wait a second. You're going to let them fill up your DVR with their commercials? Sure, you're going to let them do it, because you're going to buy your DVR with an $80-off coupon from Procter & Gamble. And having DVR space reserved for commercials is part of the bargain. You can't do this yet, but there are few technical barriers, and it's an opportunity.
Next, you can send copies of the best commercials to all your friends over the Internet, right? Well, you can do it with today's DVR, if you have a fat enough pipe, but the FCC's Broadcast Flag decision will prevent future DVRs from doing this. Products like DVRs, video capture cards and (maybe) cable modems that are sold after July 2005 will have to contain circuitry that looks for the Broadcast Flag in TV programs and stops the retransmission of such programs into the Internet. Unless you pay extra. The broadcasters have not proposed this, but it's an opportunity for someone.
And you can record the last day or two of programming on a home shopping channel. Then the software that Google supplies will analyze the programming and products, and create an index, so that you can jump immediately to the offering of (say) multimedia terminal adapters, rather than having to search through 48 hours of programming. Well, no, you can't do this yet. But it's an opportunity for Google and for the home shopping channels.
TV and cable programs don't come divided into chapters the way movies on DVD come with chapters. But they could.
It's possible to conceive of many new business opportunities that were never feasible with analog television, but now become possible with powerful digital signal processing and digitized video programming. Some might work just fine with the existing digital TV standards; some might require extensions to some of the standards that are in use; while others can use proprietary techniques. Many of these will require the cooperation of the program suppliers (broadcast or cable or satellite) and the consumer electronics manufacturers, because they rely on optional extensions to the basic digital TV standards. So there's a chicken and egg problem–program suppliers won't market a new service if the hardware can't support it, and the hardware makers won't add the support unless there is proven customer demand.
The opportunities that have succeeded up to now, like DVRs, have been centered in the consumer electronics arena, because CE manufacturers have developed devices that don't require joint business ventures with broadcasters or cable operators.
But cable operators can create opportunities by influencing the features that are built into set-top boxes and cable-ready receivers made by the CE folks. They do this by means of CableLabs specs and face-to-face negotiations with the CE industry.
Broadcasters don't have this ability to influence the features that are built into digital TV receivers. They don't have an organization like CableLabs to write specifications. They don't have any means of industry-to-industry negotiations. They don't even have a trade association that represents the entire broadcast industry–the commercial networks pulled out of the NAB.
DVRs are a threat to the cable industry, partly because DVRs compete with video-on-demand, partly because of commercial skipping, and partly because the satellite operators got their DVRs out in the market first. But the cable industry has the means to create new DVR-based business opportunities if it can conceive of them. The broadcast industry, at least for now, doesn't.
Have a comment? Contact Jeff via e-mail at: jkrauss@cpcug.org
