Competition heats up in PVR Market - TiVo and Replay Networks, Microsoft's WebTV - Product Announcement

Emedia Professional, Feb, 2000 by Lauren Wiley

Three companies will battle to establish their dominance in the personal video recorder (PVR) market this year: Silicon Valley start-ups TiVo and Replay Networks, and Microsoft's WebTV.

The digital machines download TV schedules into a searchable database, so viewers can select programs they want to record. Users can pause or rewind shows to watch segments they missed without interrupting real-time recording.

TiVo was the first to jump into the retail arena with a regional roll-out in the summer and a national debut in September. Philips manufactured the first TiVo player; Sony is coming on board this quarter.

"We've been through the hard lessons of going into consumer manufacturing and entering the retail marketplace, and we have maintained our leadership position," declares Stacy Jolna, vice president of programming and media partnerships at TiVo.

This year, he says, "We intend to get even more aggressive on behalf of our customers."

Available in 3,000 stores nationwide, by phone and online, players that store 14 hours of programs cost $499, and 30-hour recorders cost $999. TiVo service is $9.95 per month or $199 for a lifetime.

TiVo's first big marketing push will be for "dads and grads" in May, Jolna says, and he expects the totals for Christmas 2000 to be "explosive."

The company is working on increasing capacity this year, Jolna says, and users can connect PVR players to their VCRs to store all of their digitally recorded programs. Other planned innovations include increased personalization, control, and new content. PVR upgrades can be accomplished without any effort on the part of customers. New TiVo features are transmitted through phone lines along with TV schedules at night.

Replay Networks wasn't ready for an offline retail launch prior to the 1999 holiday shopping season. "We didn't want to stumble over ourselves and do a poor introduction," explains Steve Shannon, the company's vice president of marketing.

Sales went well online on sites such as Amazon.com, he says, and the company is hoping to catch up with a "huge retail launch" in the first quarter of this year, featuring its newly updated ReplayTV 3000 software.

The new software includes slow motion, frame advance, and enhanced program browsing. Modeled after Internet search sites, Replay wants its players to serve as "portals to the world of TV," Shannon says, organizing scheduled TV programs into different zones, such as movie zones and an area for network sponsors.

Panasonic and Sharp are Replay's manufacturing partners. Their players offer 20 hours of program storage for $699; $700 Replay players also are sold on the company's Web site.

Replay is confident it will close the retail gap between itself and TiVo this year, Shannon says. The company's biggest concern is Microsoft's entrance into the market during the 1999 holiday season.

Microsoft's WebTV offers its personal TV service with EchoStar Communications Corp.'s DISHPlayer 500 satellite TV systems in retail stores nationwide. The system retails for $299 with programming starting at $19.99 a month; Web personal TV costs $9.99 a month.

By the end of 1999, the DISH Network had signed up about 3.25 million customers; all new and existing customers can obtain software to subscribe to WebTV at any time.

Together, the DISHPlayer and WebTV deliver digital video recording, games, and a customized news channel. WebTV Personal TV service allows users to search the electronic programming guide for programs up to seven days in advance by entering a keyword or category. WebTV can store up to 12 hours of programs and has instant replay, pausing, and scene-skipping features similar to those of the two rival PVRs.

For an additional $24.95 a month, Web personal TV users may opt to add WebTV Plus to hop on the Internet (customers subscribing to both personal and plus services may be eligible for a $5 discount on their monthly bill). WebTV Plus service allows viewers to access more than 350 hours of interactive television each week, enabling them to play along with game shows, purchase products, vote in news polls, and get information on their favorite stars.

TiVo isn't worried about WebTV's encroachment into the PVR domain--at least not yet. "Microsoft is focused on a subset of what we do," Jolna says. "(WebTV) is a very elementary form of what TiVo is today. It's hard to see them as a competitor at the moment." He points out that TiVo has a lot of backing from high-powered entertainment companies including NBC, CBS, and Walt Disney, and the player has a lot more entertainment features than Web personal TV, such as thumbs-up and thumbs-down buttons to rate TV shows. The player then uses the ratings to record programs that match the viewer's preferences, to provide the user with information about other similar programming.

Jolna dismisses WebTV's ability to provide Internet access. "This is not about Web on TV, browsing on TV, doing email on TV," he says. "That's not a great TV experience. We believe that what we're doing is what consumers want."