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When ReplayTV a month ago announced it was retreating from the retail market for its own branded personal video recorder, the industry began questioning the viability of a stand-alone PVR.
This chief difference between Replay and rival TiVo is that TiVo is selling a hard-disk inside a box as a marketing vehicle for its PVR subscription service whereas Replay was selling just the box itself.
"We now consider ourselves as a software licensing company," says Steve Shannon, ReplayTV's marketing vice president. "TiVo is more of a service provider."
Is that the way the overall PVR business is headed? On the heels of sizable financial losses--partly due to subsidizing the box price--staff layoffs and a top management shakeup, Replay's new business model reflects marketplace realities, says Shannon. "What happened is that cable and satellite operators came to us and said, 'We love your technology, but your business model does not work for us.' We said, 'Fine, you can keep all the revenue streams, but it means we can't afford to subsidize your service.' That's why we've gone to a licensing model, selling to anyone, including services that want to compete with TiVo. Of course, we're not opposed to revenue sharing. How we get paid is flexible."
For cable, Replay has announced MSO deals with AT&T Broadband, Comcast, Time Warner, and Charter. Replay also is licensing its system to set-top maker Motorola, and is continuing talks with Scientific-Atlanta. For satellite, EchoStar is a ReplayTV investor, while DirecTV is shipping TiVo. For consumer electronics products, the Panasonic PVR box using Replay's system remains on the shelves.
With Replay re-focused on licensing its technology to others, and TiVo continues selling its stand-alone box, the key question is whether the long-term solution is integrating a hard disk with PVR software into the digital set-top box, eventually the TV set itself.
"An integrated PVR is inevitable," says Arthur Orduna, vice president of marketing for Canal Plus U.S. Technologies. "The cost for the bill of materials has to drop until it's a no-brainer for set-top and TV set designers to include a PVR as standard equipment. Once we get to the point where PVRs become ubiquitous, it will be up to the creative community to develop compelling content."
PVR integration excites Charter Communications corporate development vice president James Henderson. In October, Charter unveiled a joint venture with Replay, Motorola and Vulcan to integrate hard-disk recorders into DCT-5000 set-tops for storing video, audio and Internet content. He says the unit will be ready for testing in the first half of 2001 with commercial launch by late 2001.
"A stand-alone PVR is a simple and straight forward matter compared to the complexity of integrating PVR technology into an advanced digital box," he says. "We're still working out such issues as the electrical power demands, integrating a second channel tuner, and intellectual property rights management."
Pace America's marketing director David Novak expects standardization of the set-top application interface before integrated PVRs are sold nationally, starting with standardizing middleware just as the cable industry is doing for its digital set-tops via its OpenCable Application Platform.
"Once TiVo, Replay and Pace's X-TV box have a common API, that's when we'll each decide what's appropriate for us to do," says Novak.
"You have to balance price and functionality," says Henderson. "And because I don't believe we're going to be subsidizing a (PVR) box, even with Motorola's early indications of the box being under $200, the real question is what consumers are willing to purchase."
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