The Box Revisited!

By Jody A. Baram

jb@jab.com

 

Sooner than you think, the computer will slide unannounced into your living room. With names like UlimateTV, TiVo and Replay, these companies are harbingers of the digital age in television. Disguised initially as yet another box on top of your TV set, these services bring advances in the way we will interact with our TVs.

What these companies provide is ease of use, convenience, and customizability–just the things you would expect in the digital age. But more importantly, they bring a degree of control over television viewing that we deserve but haven't had. Kurt Scherf, analyst with Parks Associates reiterates, "These products come across as easy to understand, demonstrate well, and put the consumer in charge of his or her TV-viewing."

Benefits and Features

UltimateTV, TiVo and Replay will enable us to take advantage of the renaissance in television programming right around the corner. Just as broadcasters are rethinking how they will fill 4-6 new channels of standard definition digital programming, so too, are we consumers going to have to figure our how to get the most out of our time in front of the tube. This category of technology represents a paradigm shift in the way we manage our television watching.

This new crop of hard disk video recorders enable us to watch "what we want when we want it".Network program scheduling and viewing live broadcasts in a linear fashion may become a thing of the past.

You can pause a live broadcast, and pick up exactly where you left off, create your own slow motion replays, and fast forward through commercials. TiVo’s service will even figure out what you should watch, based on your likes and dislikes. Sophisticated electronic program guides feature easy to find programs with one step recording. Storage options will be easy to upgrade, and software updates will happen automatically via phone line. You’ll be able to create your own channels/zones of favorite shows, themes, or actors with a couple of clicks

Staying Power

OK, so you’ve thought about it and you’ve decided to get one of these services. Time has proven that these companies are not gooing away. Microsoft and Philips will give this category credibility and staying power. The three players who started it all are TiVo, Replay Networks, and WebTV/Echostar.

Tivo has captured mindshare as well as many fans in the press. TiVo has teamed up with Philips for manufacturing its first OEM set top box. TiVo entered into an agreement with NBC last year. Suntel Communications and Direct TV are distribution partners. HBO, Showtime Networks, ZDTV, and the Weather Channel will provide "Showcases" of the best content their networks have to offer.

Replay saw its window for going public shut and it will merging with Sonic Blue in the second quarter of 2001. A joint venture with Motorola, Charter Communications and Vulcan Ventures is creating a new platform to speed integration of personal television into advanced digital cable set-top boxes as early as the end of 2001. Manufacturing giant Panasonic has been selling the ShowStopper Replay System for some time. Runco International, manufacturers of one of the most talked-about high-end home theatre products at the Consumer Electronics Show was its first OEM. E! Entertainment television will create specialized content. MCI will provide local point of presence for access to the Replay Network. And Tribune Media Services supply on demand viewing information and personalized channels.

Microsoft has two offerings. WebTV, owned by Microsoft, has partnered with EchoStar for its entry into satellite offerings. Customers of the Dish Satellite Network will be able to purchase the Echostar 7100 and subscribe to the WebTV Plus service built into the box. Ultimate TV which will probably become WebTV's successor incorporates the Microsoft TV platform into a nice package and is currently offered through Direct TV.

Like the Internet portals they are emulating, we expect these "television portals" to continue to establish content partnerships as well as manufacturing and distribution alliances.

TiVo

TiVo’s Michael Ramsay is a veteran of Silicon Graphics. TiVo’s Board of Directors includes Stewart Alsop, Geoff Yang of Institutional Venture Partners and WebTV founding Director Randy Komisar. The TiVo Service features not only the control over live TV: personalization components and showcases of the best programming (such as NBC’s must see TV), but also the Couch commerce mall which allows viewers to shop from the comfort of their sofa. Tview™ the Distributed Television Viewing Management Platform promises to bring enhanced commerce, advertising, programming, and personal television services to consumers without infrastructure spending by cable, satellite or broadcast operators. When we talked to Ramsey at DEMO99 he said, "We have spent a good deal of time setting up the infrastructure including a call center and robust ecommerce network…. It is more important for us to get the first product right than to beat a 'so-called competitor' to market. Roel Piper Executive Vice President of Philips Electronics, that they selected TiVo based on their leadership in the development of the underlying technology and services, which enable Personal TV. Philips, one of the makers of the WebTV box, is also the first licensee of the TiVo technology.

Replay Networks

Founded in 1997,Replay Network’s goal is to design, build, and market next-generation television products using advanced digital technologies. Replay guarantees viewers will never miss their favorite television shows because its service automatically finds, captures, and stores programs digitally for on-demand playback. Anthony Wood, Replay president, has assembled a seasoned management team. The company has, in a very short time, captured significant kudos including Innovations 99 winner for Video at the Consumer Electronics Show, Popular Science’s 1998 Best of What’s New Award, Editor’s Choice Award from Popular Mechanics, Digi Award from Wideband Magazine, and People’s Choice Award at David Coursey’s Showcase 99. This mindshare is a result of the extremely easy to use interface and free base-subscription service. According to Scott Shannon, VP of Marketing, Replay Zones--recommendations for promotion of products and content--can be set up, for example, Panasonic-branded stores for e-commerce, but as yet they have not. Replay's newest model, the 4000 series offers a whopping 320 hours of recording time and the ability to distribute programming to other Replay boxes for subsequent veiwings.

Ultimate TV/Direct TV and WebTV/Echostar

WebTV Networks, Inc and Echostar have combined their services by integrating the DISH network’s digital satellite television programming with the Internet TV experience. According to Steve Perlman, President and Co-Founder of WebTV Networks, "The Echostar 7100 satellite receiver is a milestone in the history of television. …This product is the world’s first glimpse of 21st century television." Initial features include an advanced electronic program guide (EPG) with Internet content links, a "TV Recent" feature which saves thumbnail pictures of the last six channels viewed, broadband data delivery, printer port, parental blocking features, PIP for viewing the web inside your TV picture, and video games. Later this year digital video recording and such enhanced digital features as TV pause, which allows you to freeze the picture for up to 30 minutes and resume when you are ready to watch again, will be available. Ultimate TV provide the same features and more storage.

 

Comparisons

To see a comparison matrix courtesy of ReplayTV click here.

The devil is in the implementation

While many maintain that the main differences between the services are the ease of use, user interface, and feature set, they may find during actual usage that something a lot more important may help them make the buying decision. The keys to picking out one of these services will be the reliability and availability of the infrastructure (especially for e-commerce) as well as privacy and copyright issues.

While WebTV has been very successful in providing couch potatoes with the ultimate Internet experience, some users have complained that it "takes twenty minutes to log on" and that the service is "too slow." Maintaining an acceptable quality of service, as more and more users start using it, will be more important than all the bells and whistles.

In addition, copyright issues are bound to come up. Says Seamus McAteer Director of Web Technology Strategies, Jupiter Communications, "When Echostar and WebTV is launched in spring, it won’t record. It’s a very clean MPEG feed coming from Echostar. This creates copyright concerns with programmers. They are adverse to allow anyone to record a digital bitstream to a hard drive, which could then be used to burn video CDs and ship them to China. WebTV will have to address this. They will have to work around and insure security. They claim they’ll be able to support recording in fall 99." Replay says their system right now records an analog signal, stores it digitally, and has analog output making the quality inferior to digital.

Another important issue is that of privacy. All these boxes have a phone line connected to them. Each updates program information in the wee hours of the night via a built-in modem that is always connected. It would be easy for each of the services to poll the box to find out what you’ve recorded and what ads you’ve fast forwarded through. While TiVo’s Ramsey says they would never do that, advertisers might want that information to see if their ads were effective. In fact, they could send custom ads just for you based on the types of goods you’re interested in buying at any particular point in time. After all, eventually these boxes all aim to be providing your interface to electronic commerce.

What the future holds for this category

Since it is the service and not the hardware that will make money for the companies, each company is taking a different approach to competitive advantage. TiVo and WebTV are charging subscriptions for the basic service, and Replay plans to have a premium subscription available as well as pay per view and transactions. TiVo plans to use excess bandwidth on the DirecTV satellite to download broadband data like trailers and commercials. Replay’s initial customer focused approach tries to make the end user experience as compelling as possible. WebTV wants revolutionize your TV viewing by letting you send email, play games, and surf the Web in addition to providing an enhanced EPG and advanced television capabilities.

According to Forrester Research, "wide screen standard definition digital displays are the wave of the next three years. When displaying square-screen analog pictures, wide displays will use the extra screen space to show data feeds, program guides, or views of other channels." Chances are very good that TiVo, Replay, or WebTV technology will eventually be built right into the TVset.

Users of personal television recording devices will have more choices in customizing their viewing fare than ever before. We look forward to the day when hard disk space is unlimited and quality of the viewing experience rivals over the air clarity.

Microsoft (MSNTV and Ultimate TV)

1-800-469-3288 or 1-877-ULTIMATE

www.microsoft.com

SonicBlue (Replay)

800-266-1301

www.replaytv.com

Tivo Personal Television Service

877-FOR-TIVO

www.tivo.com

WebTV/Dish-Echostar

888-437-1553

http://www.dishnetwork.com/satserv/model7100/index.html
©2002 JAB Consulting