Tivo/Replay, meet the guys that make money from those commercials.........................
mercurycenter.com
Posted at 10:28 p.m. PDT Thursday, August 12, 1999
Media giants take on digital VCRs
Copyright: Group wants TiVo and Replay to obtain licensing.
BY DEBORAH KONG
Mercury News Staff Writer
Five media giants have joined to assert their copyright privileges over companies that use digital technologies to give consumers new and easier ways to find and record TV programs.
CBS Corp., Discovery Communications Inc., ABC owner Walt Disney Co., the Fox Network's owner News Corp. and Time Warner Inc. on Thursday said they were prepared to sue companies such as Sunnyvale-based TiVo Inc. and its rival, Mountain View-based Replay Networks unless they obtain licenses to use their programming.
At issue are the companies' new digital video recorders, hybrids of a computer and a VCR that go a step beyond traditional VCRs by letting users automatically record shows that match criteria they specify. For example, users can tell TiVo they want to see every episode of ``Star Trek' or direct Replay to find and record every show Tom Hanks appears in.
The devices also allow viewers to pause, rewind or create their own instant replay of a live basketball game, for example, while the game is still going on.
The dispute is bigger than just consumers' ability to benefit from new technologies that exceed traditional VCRs. Members of the Advanced Television Copyright Coalition say the new machines could cut people's viewing of commercials to the point that there wouldn't be enough advertising to support free television.
Viewers can use the devices to simultaneously record and play back their favorite shows a few minutes later, so that they could skip through commercials, eventually ``catching up' with the program as it's broadcast. The technology also allows TiVo to substitute broadcast commercials with others that might more closely match the viewer's demographic information.
Networks concerned
All of this has the networks worried that they'll lose control of their content. They argue that because companies like TiVo and Replay are building a business by using and repackaging their programming, they should have to acquire the rights to that content.
``The future's in front of us and we need to take the position that if people find ways to build service businesses on picking our networks apart and putting them back together, they need to talk to us about it,' said Bert Carp, an attorney representing the coalition.
Citing a Forrester Research report, the coalition says the new services have the potential to cut television ad viewing nearly in half within 10 years. Without advertising, consumers could end up paying for the content they're used to getting for free, said Gil Schwartz, senior vice president of communications for CBS. ``There's a momentary thrill where you say `Ooh, this thing enables me to eliminate all commercials,' ' Schwartz said. ``In fact, it's those commercials that keep your television programming free and that's particularly important to people when it comes to things like the Super Bowl.'
Ready to listen
Jim Plant, Replay's director of marketing, said it is working with the companies and is eager to understand their concerns.
``We're pretty much on the same page with those companies regarding copyright issues and licensing whatever maybe appropriate,' he said.
TiVo officials declined to comment on the new coalition.
Much of the furor is predicated upon whether the units actually become widely adopted. TiVo, which sells two units for $499 or $999 and charges a $9.95 monthly service fee or a one-time $199 fee, said it has sold a few thousand units. Replay, which sells for $699, has also sold thousands of units, Plant said.
The coalition says it's not trying to block the new technology. In fact, NBC, CBS, Walt Disney, Discovery, Showtime Networks, satellite broadcaster DirecTV and cable TV operators Comcast Corp. and Cox Communications are all investors in TiVo.
``Everybody understands this is a start-up technology,' Carp said. ``Nobody's trying to block it by imposing onerous demands on it. What people are trying to do is establish the principle that these things are subject to the licensing process.'
Technology analyst Gary Arlen said many of the industry fears are similar to those when the VCR was introduced 20 years ago.
Change is inevitable
``It's amazing to watch some of the same arguments revived, which underscore how compelling the technology is,' Arlen said. ``There are a lot of ways this is changing how people watch TV. The (networks) know it's going to change the way they do business. They think it's going to kill them, and fear is a mighty motivator in a $27 billion business.'
It's hard to predict how people will use the technology, though, Arlen said. For example, while it was assumed that people would use the VCR to record and watch programs at their convenience, the device actually ended up boosting sales of pre-recorded cassettes, such as movies. |
