Mystro Wants To Play

Cable World, July 7, 2003

Byline: SHIRLEY BRADY

AOL Time Warner executives were no doubt grinning when, in this season's second episode of Sex and the City, Miranda fell in love with her TiVo. The story line on the company's hit HBO series could not have come at a better time. Mystro TV, AOL TW's stealth interactive everything-on-demand technology, just happens to be ramping up for its first market trial.

Several senior-level programming executives approached to participate in the trial and an executive at one of the vendors involved tell Cable World that the company plans to test the technology in Columbia, South Carolina, as soon as this month. They say AOL TW is returning to Columbia because it is Time Warner Cable's oldest subscription-based, on-demand market, having launched HBO on Demand two years ago.

Marketing plans for the new service are under way. Last month AOL TW awarded the Mystro TV account to Wieden and Kennedy, giving the ad agency behind ESPN's SportsCenter campaign a creative budget reported to be worth $5 million to $10 million.

The time is ripe, in AOL TW's view, to start taking the wraps off the project, which has been flying under the radar - a legacy of the media drubbing for TW's Full Service Network, a money-losing 1994 interactive television trial in Orlando.

Mystro's roots reach back to FSN, of which the primary downfall was the vast body of computer code required and consumers who weren't ready. But times have changed. Viewers are savvier thanks to VCRs, DVDs, the Internet and now VOD. On the tech side, streaming video and bandwidth are cheaper than ever, while two-way digital cable and broadband platforms are fully deployed in TWC's 31 divisions.

VOD is now available in all divisions, and as of March 31 TiVo-like digital video recorders were available in 27 of its markets, with more than 100,000 DVRs now in the field.

No new subscribers are being accepted for the AOL TV interactive TV service, further positioning the company to eventually wean people off ITV/VOD/DVR and onto network-based subscription viewing.

Mystro's file-serve technology is capable of storing virtually 100% of cable and broadcasters' weekly programming output within days of being televised, while offering customers fast- forward, pause and rewind functionality.

But it can only record programming it has licensed. And it's bound

to frustrate TiVo-lovers like Miranda, who gleefully zipped through a JetBlue commercial in her zeal to get to her favorite TV show. Not only will Mystro disable fast-forwarding of ads - it lets advertisers insert their messages (for a price) during the pause or fast-forward functions.

Mystro, not likely to launch for at least 18 months, could eventually add home networking and other features.

The project is spearheaded by AOL TW's Interactive Video Group chairman and CEO Joe Collins and president Jim Chiddix. Collins was previously chairman and CEO of Time Warner Cable, while Chiddix was SVP of engineering.

The IVG team has remained enormously secretive. At one point, according to someone with direct knowledge, AOL TW even went so far as to pay Google to remove its cache of Mystro references. Industry analyst Jack Myers was also asked by the company to delete a section of a 2002 newsletter that discussed the Mystro project in detail from his archives. Mystro reps were at the NCTA show in Chicago last month, but demos were done privately - and away from the press's view.

The company won't comment on Mystro. Regarding claims that Columbia is the first TWC test site, spokesman Keith Cocozza said, "Your information is not correct."

The Mystro staff has quietly been working out technology and business matters in two locations. The New York team is based on the seventh floor of TWC's 23rd Street Manhattan offices. Its key members include Meeka Bondy, Mystro's VP of legal affairs, and Bob Benya, former SVP of sales and marketing at Road Runner.

As Mystro's VP of programming, Rob Golden - formerly of Court TV, Wink Communications and DirecTV - has been pitching programmers to get their buy-in for the concept. In return for licensing content to Mystro, networks control which of their programs will be available to users. The technology is designed to prevent piracy by prohibiting the making of or sharing of copies of programs.

Susan Rynn, Mystro's VP of ad sales development (formerly of DVR maker ReplayTV and VOD leader In Demand), won a Cable and Telecommunications Association for Marketing award in 2000 for her study on the DVR's impact on advertising. Rynn, who brought Ford Motor Co., Toyota and Coca-Cola to ReplayTV, is working with TWC president of ad sales Larry Fischer on developing VOD ad sales.

Chiddix hangs his hat at the 23rd Street office when he's in town. More often he can be found in Denver, where he and wife Trudy keep a home in Evergreen while he travels between Mystro's office in Westminster, CableLab's Louisville office (where Chiddix is helping its OpenCable interoperability initiatives) and TWC's national division headquarters in Englewood. Chiddix also relies on Mike Hayashi, TWC's Englewood-based SVP of subscriber technologies and advanced engineering, and Mike LaJoie, the East Coast-based EVP of advanced technology.