ReplayTV vs. TiVo
When I went shopping for a digital video recorder (DVR) late last year, the clerk at my local Fry's electronics store told me that the identically priced TiVo and ReplayTV units were essentially the same.
He couldn't have been more wrong.
To be sure, both companies emphasize largely similar features, most notably the ease with which TV viewers can eliminate commercials when watching programs recorded with their machines. What the clerk didn't know, however, is that one machine makes commercials essentially invisible while the other does not.
This is no small matter. The outcome of the skirmish between the two approaches could well determine the future of commercial television.
Forrester Research conservatively estimates that DVRs such as those made by Replay TV and TiVo will cut ad revenues to broadcasters in half over the next 10 years. And there's even more bad news for broadcasters: Early DVR buyers are coming from a critical demographic group -- technophiles with discretionary cash -- exactly the viewers TV advertisers can least afford to lose.
DVRs are destined to become a must-own consumer electronics item, particularly as prices fall. I don't know anyone who has one who would ever willingly go back to watching TV the old-fashioned way.
That's because DVRs make everything that ever irritated you about a VCR history. Among their many other convenient features, DVRs let viewers pause live programming and then resume watching from the point you left off while the rest of the program is still being seamlessly recorded. DVRs also automatically record every episode of your favorite programs with a single command regardless of when those shows are broadcast. Recorded shows are stored on a massive hard drive for later viewing, neatly eliminating all the hassles involved with bulky videotape cassettes.
The biggest difference between the two leading machines, however, is the technology used to allow viewers to skip over commercials.
ReplayTV's remote control comes with a 30-second skip button, which makes avoiding ads a cinch because ads are usually broadcast in 30-second intervals. When you're watching a program recorded with a ReplayTV DVR, you just push the remote control's skip button one or more times at the beginning of each commercial break and the ads simply vanish. The advertisers get absolutely nothing for their money -- no eyeballs, no captive audience.
TiVo's remote control, by contrast, doesn't have a 30-second skip button. Instead, the TiVo unit has a fast-forward button with three different speeds, coupled with a feature called "auto-correct," which automatically backs programs up a few seconds from the point when you hit play before the televised action resumes.
Not only are TiVo viewers forced to watch as ads zip by on fast-forward, "auto-correct" makes them sitting ducks for the last eight seconds or so of the commercial immediately preceding whatever program they choose.
That last few seconds before a program starts certainly isn't much, but it may soon be the only commercial time broadcasters will have left that's worth selling.
The move was deliberate.
"We didn't want to alienate millions of advertisers," explains Richard Bullwinkle, who carries the title of chief evangelist at TiVo. He says TiVo considered, but opted against, adding a 30-second skip button.
Ironically, TiVo has been emphasizing the ability to skip commercials as a key product feature in a very amusing TV ad where ex-49er greats Ronnie Lott and Joe Montana exchange faux advice on the best way to cope with crotch itch.
Basically, TiVo is telling consumers one thing, and advertisers another.
"When advertisers asked us if our machine lets viewers skip commercials, we could honestly tell them no," says Bullwinkle. "The ads are always there in the background."
TiVo made that decision, he says, with the goal of striking lucrative business deals with advertisers and broadcast networks, several of which are already in the works.
TiVo's strategy shows some early signs of paying off. Boosted by support from its corporate partners, TiVo's more heavily advertised units have taken the early lead, outselling those produced by ReplayTV by about three-to-one so far, according to industry sources.
But it's still early in the game, since just 160,000 or so DVRs had moved off store shelves by the end of last year. That's roughly one-10th the number of similarly priced personal digital assistants such as the Palm Pilot that were sold over the same time frame.
It's unlikely that advertisers will get much use out of ads seen only in fast-forward. But preserving a chance for them to insert a little bumper ad before a program resumes could keep the network's ad dollars rolling in. Forcing people to look at messages they wouldn't otherwise see, even if only for a few seconds is, of course, an essential ingredient for successful advertising.
The difference over commercial-skipping technology has become a prime selling point for the folks at ReplayTV who say, not without justification, that their machine was designed to give consumers what they want while TiVo's machine was designed to protect commercial, ad-based broadcasters from total annihilation.
The big broadcasters, including the three largest television networks, are already hedging their bets by making substantial investments in either, and in some cases, both TiVo and ReplayTV. "They're going to kill us eventually," one top TV network executive said at a recent off-the-record media gathering. "We might as well make some money off our own demise."
Top broadcasters are also working with the DVR-makers in a variety of promotional experiments as they scramble to come up with other revenue-generating opportunities linked to the programming their networks provide.
Although TiVo currently has the more broadcast industry-friendly technology, the company has apparently positioned itself to respond rather quickly if consumers begin flocking to ReplayTV's competing product to take advantage of its commercial-skipping feature.
In fact, TiVo's remote control unit already has a button on it that looks suspiciously like a 30-second skip button. The button currently duplicates a command (returning to live television) which is already handled by another button on the TiVo remote control. All TiVo's engineers have to do is change the configuration instructions that are sent via telephone modem to its DVRs each night and, voila, the TiVo units would instantly mimic ReplayTV's 30-second skip button.
The only questions left are how smart and discriminating consumers will be, and how quickly their choices will drive a stake through the hearts of the old-line, ad-based TV stations.
When that happens, television channels will either disappear or go entirely pay-per-view, like popular premium channels HBO and Showtime. Broadcasters could try to fight back by looking for more ways to embed ads within programs, say, by conspicuous placement of certain products. Or they may eventually try shorter 17-second or 22-second ads to foil viewers armed with 30-second skip buttons. But that won't work for them in the long run either, because DVRs can easily be reprogrammed to skip any length of time that might become a commercial standard. And it's hard to imagine how national broadcast networks can operate without some standard break lengths and program start times.
As a journalist who has seen lots of friends lose their jobs lately because of dwindling advertising revenues, particularly online, I'm not one to make a big argument that ads are inherently evil or even undesirable. In fact, given the tough time advertisers are currently having, those of us in favor of free media might want to begin thinking about declaring the denizens of Madison Avenue an endangered species, and perhaps start looking for ways to protect their habitat.
But in the meantime, don't let anyone tell you there are no differences between the two leading DVRs. ReplayTV's 30-second skip feature has the power to bring free commercial television to its knees.