Cable Guy Takes on TiVo:
Firms Offer Digital Recorders
By PETER GRANT
Staff Reporter of THE WALL STREET JOURNAL
In the past four years, TiVo Inc., the device that lets you pause "American Idol" while you grab a soda, has become a hit among TV junkies. Now, the cable industry is getting into the act.
The nation's top cable companies are beginning to roll out their own TiVo-like devices. AOL Time Warner Inc.'s cable division recently started offering the service to millions of its customers in states including New York and Texas. Cox Communications Inc. rolled out a similar offering recently, and Comcast Corp., the nation's largest cable company, will do the same later this year.
All of this marks a change of heart for the industry, which has been wary of the personal video recorder, fearing subscribers who record their own library of favorite shows wouldn't order premium services such as movie channels. Moreover, one of the most popular features of the recorders is that they let viewers skip commercials -- a major revenue source for cable operators and programmers. That is why the new service now offered by cable companies makes it more difficult to fast-forward through commercials.
Currently, about 1.7 million homes have personal video recorders, and the number is expected to reach 39 million by the end of 2007, according to Forrester Research. Cable operators are now expected to play a role in bringing the recorders to the mass market, in part because they have more than 70 million subscribers. In addition, the new cable services are cheaper and easier to use than most of their rivals.
Unlike TiVo, cable companies don't require subscribers to buy a separate box, because the recorders are built into special cable digital boxes. They typically charge a monthly fee of about $10 for the recorder feature, as well as the cost of the required digital service, typically about $10 a month more than a basic cable package. That means a typical subscriber would have to pay the cable company a total of about $54 per month to get the new service.
While that can add up for multiple TVs (each TV requires a separate box), it is less than most alternatives. To get a TiVo, for example, many viewers shell out $299 or $399 for the device, depending on whether it has 40 hours or 80 hours of recording capacity, plus a monthly fee of $12.95. DirecTV, the satellite TV company, offers its own version of a TiVo digital recorder, charging $199 for the box and a $4.99-per-month service fee.
Another difference among the players: Handy "skip" buttons, which enable viewers to leap 30 seconds ahead, the length of most commercials, with the one key stroke, are offered on recorders by EchoStar Communications Corp., the satellite company, and SonicBlue Inc.'s ReplayTV unit, a TiVo-like company. The TiVo and Cox and Time Warner's cable boxes, however, simply have fast-forward buttons, which force subscribers to skip through commercials manually.
For the Houston family of Gainesville, Fla., it wasn't price, but ease of use, that sold them on the cable version. They liked the fact that they didn't need a second box, or an extra phone wire to get the recorder running, and that a cable technician was a phone call away. "My husband is one of the least mechanically oriented men I've ever met," says Sherry Houston, 42. By contrast, TiVo comes in a box, is typically set up by the user, and technical support is accessible by phone or online.
While TiVo, which has about 624,000 subscribers, is pricier, it has more bells and whistles. It can be programmed to record all movies with Harrison Ford, for example.
The cable version can also search for particular movies, but viewers have to decide which one to record.
TiVo users are also able to rate shows with a "thumbs up, thumbs down" feature, which the recorder uses to record programs that it thinks the viewer will like. |
