A survey of E-entertainment
Smart boxes
Special reportOct 7th 2000 edition
IF THE point of your product is to undermine the television-network business, and you try to trumpet your message on a television network, you may have a problem. That is what TiVo, a small company in San Francisco, discovered in July when it tried to get its advertising campaign screened on CBS. The ad featured a couple of heavies tossing a network executive out of a window. CBS rejected it, saying that it was not a proper representation of how a network operates.
TiVo and Replay, another San Francisco company, sell personal video recorders (PVRs)—the same sort of thing as video cassette recorders (VCRs), only digital, and with a memory. The technology is causing something of a stir, because people in the industry expect that it will change viewing patterns far more dramatically than the VCR did, by allowing viewers more control over what they watch and when they watch it, and thus loosening the network schedulers' grip on the audience. Hence the defenestrated executive.
VCRs are used almost exclusively for playing pre-recorded, rented video tapes. Not many people use them to record programmes off the air, because they are too difficult to operate. The PVR is far easier. You look at the programme guide, press a button, and it does the rest. You can skip the ads entirely, instead of watching them fast-forward. You can pause live programming, which is automatically recorded, and then settle down to watch it a few minutes later. You can ask it to record programmes on a particular topic—thus, in effect, programming your own channel.
The networks' fear is understandable. If people skip the ads, then bang go the networks' revenues. So why have all three networks, along with Time Warner, Disney, several cable and satellite companies, and ICM and CAA, the two biggest Hollywood talent agencies, invested in TiVo and Replay?
Partly because they reckon that the technology is so powerful that they want to own a bit of it. Entertainment companies have learnt from the industry's past mistakes. If, for instance, the broadcast networks had invested in cable rather than trying to squash it, they would be richer, and Ted Turner and one or two other billionaires would be poorer. They do not intend to shut themselves out of this one.
Anyway, nobody is quite sure how the PVR will affect advertising. It might wipe out its value, or it might greatly increase it. For although it gives viewers more power over the programming, it also gives the programmers more knowledge about their viewers. And knowledge, in advertising, is valuable stuff. Advertising to an unknown audience is inefficient. Far better to advertise your luxury carpeting to the people who have asked their television to select home-improvement programmes. And if the advertising is relevant to them, maybe they will be happy to watch it.
The TiVo and Replay boxes have been on the market for over a year now, and have not been selling very well: fewer than 100,000 between them. But most people in the business expect sales to take off when the technology is bundled into the set-top boxes that form part of a cable or satellite package. Cable operators around the world are now testing PVRs; this month TiVo and DirecTV, a satellite operator, are launching a two-in-one box; Microsoft is marketing its own PVR technology with DirecTV; and in Britain, BSkyB is putting PVRs into its boxes next year. They may soon become a standard part of the living-room kit.
Thrills and spills
Putting the colour in Black and White
Sex, news and statistics
Siren songs
Learning to e-read
There's nothing on
Two new-media moguls
This article appeared in the Special report section of the print edition under the headline "Smart boxes"