It wasn't all that long ago that when people talked about time shifting, they were one of two things. They were either rabid film buffs that had a lock on MGM's 1960 semi-classic sci-fi flick, "The Time Machine," starring Rod Taylor; or they were rabid "Star Trek" fans that got off on episodes featuring the Federation's time-traveling nemesis, "Q."
Today, while time shifting may not have the stellar panache of those sci-fi classics, it certainly has the potential to push television viewing into a whole new era. Companies like TiVo (www.tivo.com) and Replay TV (www.replaytv.com) have pioneered the concept of "personal" television technology and service over the past 18 to 24 months. Personalizing television viewing by allowing consumers to record and playback at will several hours of programming with personal or digital video recorders (PVRs or DVRs) also promises to have a profound impact on cable operators as they struggle to come to grips with an increasingly competitive environment.
By most accounts, the impact of this highly convenient, user-friendly capability is almost impossible to underestimate. This past spring, TechTrends Inc. (www.techtrends.net) released "The Digital Television Revolution: Success Factors for the Emerging Digital Video Recorder Market," a study that predicts stand-alone DVR sales will rise at a compounded annual growth rate of 173 percent through 2002. The study says that will result in approximately 5 million DVR units being installed across the United States. Laurence Bloom, TechTrend's director of research and consulting, echoed a common refrain from those who've been able to time-shift their viewing habits. "It's a phenomenal technology," says Bloom. "It's something, outside of DVDs, that consumers have never seen before in terms of technology capabilities. Once they test it, they love it."
A hint at the impact time-shifted viewing may have on overall viewing habits was seen in a recent study of TiVo subscribers conducted by Frank N. Magid Associates this past May. Some intriguing results included the fact that nearly two out of three respondents (59 percent) said they now watch programs that were once unavailable because of inconvenient scheduling. The report also noted that channel surfing among respondents had dropped dramatically (down 31 percent), while six out of 10 respondents (62 percent) said they were watching television more often with the PVR service.The big Mo
The popularity of the technology and the service among those who've used it, says Bloom, belies a number of challenges that face both incumbent and potential PVR/DVR providers. "One of the most critical findings is that only nine percent of our consumer sample were aware of companies who offer DVR products," said Bloom. "Even large, well-known market participants like Sony and Philips (which manufacture TiVo boxes), need to focus on cultivating consumers' awareness of this new product category, or they risk getting lost in the crowd."
And it's beginning to become quite a crowd.
Meanwhile, Liberate Technologies and NDS Group plc (a News Corp. subsidiary) will team to make NDS' third-generation PVR technologies a standard component of the Liberate TV Platform software for set-top boxes with hard disks. On another front, Thomson Multimedia and Seagate Technology Inc. formed an independent company, CacheVision, to develop value-added storage-centric systems for home consumer electronics, including a variety of PVR devices. In this regard, the new company will leverage Seagate's partnerships with key technology developers such as EchoStar and Microsoft Web TV.
Never one to wait for others to blaze a trail, EchoStar has already introduced its DISHPlayer 500 system, a four-in-one (DVR, Internet browser, game player and satellite TV receiver) product that sells for approximately $399. Jointly developed with Microsoft WebTV Networks, the box features a 17.2 GB hard drive that can hold up to 12 hours of digital recordings with full PVR functionality for both recorded and live content.
DirecTV will counter that move by introducing its PVR-enabled set-top in October in association with Philips Consumer Electronics North America, says Mike Lang, vice president of marketing for set-top boxes for Philips. Philips currently produces a 30-hour PVR unit for TiVo ($399) and has recently introduced a 20-hour unit ($299), as well as a 60-hour unit ($699). The DirecTV unit, says Lang, will have a 30-hour capacity and AC3 Surround Sound, but will be different in that it will use the variable rate MPEG encoding that DirecTV utilizes with its satellite.What's a cable guy to do?
The idea of putting a relatively high-capacity disk drive in a digital set-top box to provide PVR functionality is getting increasing attention from operators and manufacturers alike. Philips, like many others, is more than willing to assist the effort. "We're happy to work with the operators to support the kind of box they want," says Lang. "Really, in the end, we can show them what our capabilities are and help them understand the market opportunities, but they have to figure out whether that kind of product fits within their strategy. I think that over time it will."
Lang reports Philips has talked to some operators "in a general sense" and that there are a couple of low-scale trials going on that TiVo (whose equity partners include Comcast and Cox Communications) is supporting with stand-alone units so that the operators can "get some familiarity with the customer reaction and understand the technology."
Graham Williams, vice president of engineering/U.S. market for Pace Micro Technology plc, says interest in PVR functionality among North American operators has risen so dramatically this past year, his company believes it will have a long-term impact on its set-top designs. "When it comes to the U.S. operators," says Williams, "over the last six months, their interest has grown rapidly as to what they can do with it, and how they would use it. We suspect now that within 18 months to two years, we probably won't be designing a box without a hard drive. I know that's a radical statement of sorts. But at the moment, we generally feel that most, if not all, of our business will incorporate hard drives within that time frame." To underscore that point, Williams notes that Comcast's recent order for 350,000 Pace interactive digital set-tops includes an option to integrate hard disk technology which could enable "PVR-style" capabilities in those boxes.
Bill Wall, technical director for Scientific-Atlanta's Subscriber Net-works Sector (which has been showing an S-A 3000 with a hard disk drive and will include it as a standard option on its S-A 6000), notes that there are "two or three" operators who are particularly interested in this type of functionality, and are working to understand the economics of the technology. But that interest, says Wall, has a solid bottom-line reasoning behind it. "For every dollar they're willing to invest in a set-top," says Wall, "they've got to see a return on it. So, there's got to be a business model that makes it work for them."
This brings up a critical decision operators may have to make if they decide to deploy PVR service. Who controls the content? Does the consumer decide with his own PVR-enabled set-top box, or does the network operator dictate what gets recorded and dole out that content accordingly? "With TiVo and Replay," says Branko Gerovac, vice president of research at SeaChange International, "it's the consumer in the home that's managing the content. In a cable environment, if you have a disk in the set-top box, you have the opportunity to do PVR management either way. You can simply give it to the subscriber to manage, and the cable operator can ignore the fact that it's there, or you can have the headend equipment manage that as part of the storage environment."
In the consumer-managed model, competitive and time-to-market factors begin to weigh into the equation as well. Digital set-top box manufacturers may look to partner with a TiVo or Replay to shorten product timelines.
Gerovac, like Wall, believes there is still a case to be made for the network-managed scenario. "I don't know what the value to the set-top box manufacturer is in working with a TiVo, for example. We're not talking about terribly complicated functionality here. A large amount of work that's represented by TiVo and Replay is in their servers that do all of the program recording and whatnot. And presumably, the cable operator will want to have some influence over that directly."
Prior to joining SeaChange, Gerovac evaluated storage options for network operators and concluded that current market conditions would lean toward a network-managed solution. "If you look at rotating disk storage right now, it's cheaper for us to buy a 36 GB disk drive and put it in a headend and make sure it's reliable, robust, managed and serviced, than it is to take an 18 GB disk drive and put it on top of a television set and try to achieve anything like the same level of manageability, serviceability, reliability and cost. The 36 GB disk drive has a 50 percent price benefit compared to the 18 GB drive. So two people sharing a 36 GB drive is cheaper than two people having their own dedicated 18 GB drives by at least a factor of two when you include power supplies and all kinds of other stuff in there." However, he notes that over time and with new technologies, the answers may "come out differently."
S-A's Wall believes it's quite possible both types of solutions could be offered, if properly packaged and marketed. "I think there's room for both models (STB-based and network-based) and I think we'll see both existing," says Wall. "My personal view is that as storage media gets cheaper and cheaper, and bandwidth gets cheaper, that you're going to see a big shift from linear, channelized programming that you see today. It's going to shift to much more on-demand programming, much like the Web operates where you go off to a site and get whatever programming you want, when you want it."There's always the Web
That Web approach may come into play sooner than many think. Jovio Inc. (www.jovio.com) is touting its Web-based time-shifting solution, or Personal Video Agent service that works in front of the TV or from any remote location that has Internet access. "What this means," says Derek Minno, chairman and CEO at Jovio, "is that you can go to a URL that has TV listings on it. You click on the show you want, and a signal gets sent from that Web page to a storage device. That signal says that at a certain time, on a certain channel, it will record this particular broadcast video stream on a disk. And then, similarly, when you want to watch that show, you go back to that Web page and you tell it you're ready to watch TV. You click that request and the video gets released from storage" with full PVR functionality.
Minno says the Jovio model employs proprietary, permission-based software that profiles each viewer based on demographic, geographic and psychographic data. That data is used to direct targeted ads to individual viewers, which pays for the service and could be split with operators. The company's Ad Insertion Engine matches the viewer's "affinity profile" and inserts 60 seconds of targeted television commercials for each 30 minutes of recorded programming. To prevent viewers from completely blocking out the ads, Minno says the company has developed technology that gives fast-forward control of the commercial to the advertiser.
With Jovio's patent-pending technology, says Minno, advertisers are given the choice as to whether the viewer can skip or fast forward through the commercial, or see an alternative advertisement when the viewer hits the skip/fast forward button. Alternatives could include picture-in-picture technology where the fast forward sequence is reduced to a smaller image within a larger frame carrying an alternative normal-speed commercial, or text-over-video technology where motionless opaque or translucent brand/logo graphics or text is placed over the fast forward video image. Jovio expects to launch field trials in 2001, followed by commercial deployments during the second half of the year.
As if cable operators didn't have enough to worry about, PVR service is one more service offering to be analyzed to see where it might fit into an operator's digital system. TechTrends' Bloom believes PVR service, instead of being a stand-alone service, may ultimately serve as an attractive "hook" to snare subscribers for a complete interactive package.
"The functionality of personal television may become a subset of the complete interactive marketplace," says Bloom. "It's very compelling and consumers love it when they test it. But, it's an expensive proposition to ask consumers to pay for, when full-fledged interactive television with Internet access, e-mail, VOD, and even gaming is about to be launched and they can have that for a similar cost per month.
"DVR technology, we believe, is really going to be a standard feature or loss leader for premium interactive television services. It can exist as a standalone service, but where the money will be made is through licensing the technology to cable operators, to develop backend solutions and to make it part of an entire service, and to charge consumers perhaps on a per-use basis, rather than a monthly service. And of course, advertising, shopping and e-commerce will be a viable way to make money in this market."
At the same time, SeaChange's Gerovac feels operators are missing the point if they think that by simply dropping a hard disk drive in a set-top box they've devised a PVR solution. If they think they have, he says, "They haven't figured out really what kind of problem they're trying to address.
"Cable operators have a lot of things on their plate right now. And this will be addressed when some of the other things get taken care of. So, it's a matter of timing for the industry as a whole. I think the technology for doing this is pretty much doable, straightforward. It's figuring out how you deploy it in a meaningful way to both the cable operator and the subscriber that has yet to work out.
"What we should be able to do is come home in the evening and watch the latest "Friends" episode, and it shouldn't matter that it was on last night and you weren't home. That means what you're really providing is all of the content available to the viewer at their convenience, which drastically changes the viewing experience. And you see a hint of that when you look at the way people use Replay and TiVo.
"But, ultimately, you want the ability to watch something you forgot to record. And that's really what the long-term impact of PVR style of functionality is going to be."