TheStandard.com
A Fight for the Top of the TV
By Ronna Abramson and Terry Lefton
It was early in the game's second half when Mike Lang, hosting a Super Bowl party in football-crazed South Bend, Ind., experienced a problem on the sidelines. Lang's 2-year-old son, up after hours, was throwing a tantrum. This, of course, was a job for TiVo. With the push of a button, Lang froze the game and took the kid to bed. No one missed a play. "Until then, the Super Bowl was one of the few times all year I watched live," says Lang, who bought his TiVo in 1999. Now, he notes, "I don't see how anyone lives without one."
Yet the problem for TiVo and the other makers of personal video recorders is that almost everyone is getting along quite nicely without one, thank you. When the first recorders hit the market a couple of years ago, industry observers predicted the device's ability to skip commercials, pause live television and record as many as 60 hours of programs on a hard drive would catch on faster than Pokemon at a preschool. It didn't happen. Consumers, it seemed, just didn't get what the machines could do. It didn't help that the recorders carried a four-figure price tag and monthly fees.
Two years later, the prices have dropped, but the expected sales burst hasn't taken place. Only 300,000 to 400,000 units have been sold - an adoption rate comparable to the early days of the VCR in the late 1970s. Critical mass is still over the horizon.
Manufacturers think that could finally change. In February, Microsoft dove into the personal video-recorder market with Ultimate TV, buoyed by a $50 million marketing campaign. Early players TiVo and EchoStar Communications' Dish Network are pushing ahead with new ad campaigns for their own devices. And competitor ReplayTV is back from oblivion with a new backer and a revamped business strategy. It all adds up to a renewed battle in the personal video-recorder business. Each player is betting that its marketing attack will be the one to capture consumers' imagination - and wallets. But it may be the combined surge of the onslaught that pushes the personal video recorder into ubiquity, along with the CD, the TV and the Walkman.
The pitch for Microsoft's Ultimate TV is designed to crack one problem TiVo couldn't: explaining how the technology works and how it can benefit viewers. "In our television campaign, we went to great pains to show a demo in every spot," says Beth Kachellek, director of advertising for Ultimate TV. The barrage of ads show users pausing live TV, recording two shows at once and watching their favorite shows when they have time. And the demos don't stop at TV commercials. Last week, Ultimate TV dispatched a fleet of trucks to parking lots of electronics stores and baseball stadiums in 11 cities around the country. Consumers will be able to stop into these tented "living rooms" and try out Ultimate TV for themselves.
Executives at 4-year-old TiVo, based in San Jose, Calif., abandoned an early attempt to explain all their product's features in 30-second TV spots. It was just too complicated, they concluded. Last year they launched a series of quirky ads designed to promote the TiVo brand name. (One showed football greats Joe Montana and Ronnie Lott discussing embarrassing "male itch.") A new batch of ads launched last week takes a different approach. In one spot, for example, a family races through dinner to catch a prime-time show. The goal, according to TiVo senior VP of marketing Brodie Keast, is to overcome ingrained TV-watching habits built up over three generations. "We've learned that we need to talk about TiVo in the context of real-life problems to break that inertia," he says.
TiVo execs are hoping that their advertising push combined with Microsoft's will boost sales across the board. "There's a huge education component of any marketing strategy that's going to require a big investment from multiple players,'' notes Keast. Still, TiVo knows all too well that marketing costs lots of money. Last month the company announced it would lay off 23 percent of its staff to save $60 million and avoid seeking more funding this year.
Until recently, ReplayTV was in even worse shape. The company, based in Mountain View, Calif., priced its unit too high - as much as $1,499 - and lost out in the early running to TiVo. Last November, Replay pulled out of the retail market and announced it would license its technology to other companies. Now ReplayTV is in the process of being acquired by consumer electronics maker SonicBlue. Last month it struck a critical licensing deal with Motorola, which agreed to build ReplayTV into as many as 5 million set-top digital cable boxes. (Motorola controls about two-thirds of the set-top box market, with more than 14 million units sold.)
The potential of this deal lies as much in the marketing as in the distribution. ReplayTV will be pitched to cable customers when they order or change their service. Charter Communications (which, like ReplayTV, is tied to Paul Allen's Vulcan Ventures) has already signed on to be Motorola's first customer.
ReplayTV is not alone in seeing the potential of distribution and marketing through the cable guy. TiVo has links to AOL Time Warner, Comcast and Cox Communications (which hold equity in the company), and Microsoft is looking for cable partners. Meanwhile, EchoStar's Dish Network is offering its own recorder, dubbed the Dishplayer. This month, the company, based in Littleton, Colo., will launch its first national advertising campaign for the device.
With all that marketing muscle behind them, personal video recorders may finally make good on optimists' projections. For viewers of the notoriously anticlimactic Super Bowl, that will bring an added bonus: They can fast-forward through the game to get to the commercials. |
