The battle is not yet fierce, but the warning signs are clear. There's a new product war on the horizon, one that could make the Cola War and the Browser War look like mere playground scuffles.
Call it the DVR War, the battle over which company -- TiVo or Sonicblue, the maker of the ReplayTV -- will come to dominate the future of digital video recorders, and, perhaps, the future of TV.
Digital video recorders aren't new, but after a slow initial rollout they're trending to become hugely popular during the next few years, according to analysts. Some predict that in the next five years there'll be tens of millions of DVRs -- which allow television watchers to pause, fast-forward and easily record TV shows, letting them watch TV the way network programmers never intended them to watch TV.
But complicating this TV utopia are the media companies wary of losing precious ad revenue once passive couch potatoes become active DVR-equipped ad-skippers. And this is where the product war comes in.
TiVo and Sonicblue have taken divergent approaches in their attitudes toward content companies.
TiVo has been accommodating the firms, teaming up with broadcasters and advertisers to offer special TiVo-only "advertainment" (the company's own word). Sonicblue, meanwhile, has added features to its DVR that are so offensive to media companies that several have banded together to sue ReplayTV into oblivion.
Sonicblue won one round of that suit this week, when a federal judge declined to order the company to monitor its thousands of ReplayTV users, as Paramount, Universal, Disney, CBS, ABC and NBC had requested.
At its heart, a DVR is only a hard drive with an electronic TV guide, a machine that digitizes an incoming TV signal and records it on the drive, so a user can play it back whenever he wishes. Both TiVo and ReplayTV allow users to pause, fast-forward and automatically record TV shows for future playback. But ReplayTVs are broadband-enabled, meaning that users can trade shows with each other -- including pay-TV shows. Also, the system features a button that skips ahead 30 seconds at a time, allowing much quicker ad-skipping than on the TiVo.
Sonicblue says that its features are there only because consumers want them.
"Customers are intrigued by the concept," said Andrew Wolfe, Sonicblue's chief technology officer. "And you know what? Some people are buying the Replay because they want to know what all the fuss is about."
In other words, Wolfe suggested, the networks' lawsuit is actually helping Sonicblue's popularity. "The idea is that this makes TV so good that networks don't want you to have it; it scares networks," he said.
He added that Sonicblue would like to work with the networks to see if there might be some mutually beneficial opportunities available, such as using Replay to sell consumers video-on-demand programs.
"There's huge opportunities that we're waiting for them to jump on," Wolfe said. "Some clearly are interested, intrigued, but the networks have made a corporate, collective decision to go against us."
And TiVo is "working for the network instead of with them," Wolfe said with a chuckle. "We consider ourselves working for the customers. And we've told the networks they should work with us and we should be creating a better television experience, but we have no interest in promoting the networks' agenda."
When told of these comments, a TiVo spokeswoman dismissed them as inaccurate and nothing but Sonicblue's marketing.
"Sonicblue likes to make themselves look like the consumer watchdog who is against the man," said Rebecca Baer, the TiVo spokeswoman. "It's not about supporting anybody's agenda, it's about trying to run a business. It's not about an agenda."
In trying to run that business, Baer said, TiVo has made a conscious decision to try to "bridge the gap" between consumers and networks. "When you use a DVR, you do find that you are more empowered and you realize how much control the networks have had," she said. "But as much as the consumers have difficulties with networks, they do provide the content -- if you're going to completely alienate them, what will happen to the content?
"We as a technology and service provider could be a bridge. We are bridging that gap between the control and convenience of DVRs and keeping the content around."
That's why the company decided not to include a "skip" button in TiVo, as Replay did. Skipping ahead, over the ads without even having to see them, would have alienated the media companies, Baer said. And it would have been unnecessary.
"Replay can make all the noise it wants, but in the end when people have (TiVo) in their homes, fast forwarding through the ads at 60 times normal speed (as TiVo allows) is fine for people. It's a very acceptable way to use the product," Baer said.
The company is also providing creative new ad models to show advertisers that DVRs don't necessarily mean the death of commercials. For example, in a new campaign for the electronics retailer Best Buy, TiVo users can hit a button on the remote control whenever they see a Best Buy and view "Video Showcase" of "innovative Best Buy branded entertainment," according to TiVo's press release.
That video showcase will include a "behind the scenes jam session" with Sheryl Crow and a chance to win a Sheryl Crow CD.
TiVo users are legendarily passionate about their TiVos, and on TiVo forums on the Web -- yes, there are such sites -- there isn't too much complaining about the Best Buy ads.
There is grousing about another "advertainment," though -- TiVo's recent usurpation of people's DVRs to record a new BBC show that folks hadn't asked for. Unless customers had something else scheduled to record at the time, TiVos in Great Britain recorded the BBC comedy Dossa and Joe, and the customers weren't allowed to erase the recording until seven days had passed.
This sparked a furor, and TiVo apologized for the move, saying that it should have let people know about it beforehand.
Still, said Aditya Kishore, an analyst at the Yankee Group, "The fact that it wasn't erasable was a big no-no in my mind. You're saying this box is giving you more control over TV viewing and then you go in and take away that control -- to me that's a very confusing message."
But Kishore thinks that if TiVo can avoid such missteps, its approach is probably more viable than Sonicblue's. In the long-run, after all, the DVR companies need the networks. "If they don't accommodate advertisers, and if you've got a substantial portion of the user base skipping ads, why would an advertiser buy programming time on a network?" Kishore asked. "And then what happens to network programming?"
But if TiVo is moving in the right direction, is TV moving to meet it? Kishore and Sonicblue both say no -- the networks don't see that this is a new era of TV.
"They seem to be focused more on trying to stuff the genie back in the bottle," Kishore said, "and I don't think that's possible."
