From yesterday's WSJ on TiVo & Replay Networks. Do the consumers really want another electronic gadget? All these things are complicating my life already. My Rio 500 MP3 player is on order. There goes the next several weeks after it comes in. But PVR's sound good for Quantum. Also good for DCLK and ENGA who can mine data from advertisements watch on their PVR's. And it should be a hot IPO.
<<Sony and TiVo Strike Deal
On TV-Recording Device
By EVAN RAMSTAD and DEAN TAKAHASHI
Staff Reporters of THE WALL STREET JOURNAL
Underscoring the rush to embrace a new consumer product, Sony Corp.'s U.S. unit said it will license technology for "personal video recorders" from TiVo Inc. and sell co-branded products next year.
America Online Takes a Stake in TiVo for Interactive-TV Push (August 18)
Broadcast Group Threatens to Sue Makers of Personal Video Recorders (August 12)
NBC, Matsushita Create Ventures for Recording of TV Programs (June 9)
Philips and TiVo to Begin Selling Their Digital VCRs (March 29)
The move gives TiVo a second major backer in its race with Replay Networks Inc. to develop the market for personal video recorders. The two Silicon Valley companies make devices for recording television programming that are so new that major manufacturers weren't even talking about them 10 months ago.
TiVo previously signed up Philips Electronics NV to make and sell its product. Replay has signed up Matsushita Electric Industrial Co.'s Panasonic brand.
Both TiVo and Replay have been selling their machines, which range in price from $500 to $1,500, on the Internet for several weeks. Best Buy Co. Friday will begin selling the Philips TiVo device, the first time a national chain of electronics stores has offered one.
An Electronic Butler
A personal video recorder attaches to a TV set and acts as an electronic butler and recorder. Instead of using a removable tape, like a videocassette recorder, the PVR stores viewing material on a hard disk, similar to the kind found in a personal computer. A hard disk can simultaneously play video programming and record other programming.
Analysts say PVRs, with their simple on-screen guides and ability to record programs by relying on keywords such as "Dallas Cowboys" or "Dawson's Creek," may lead to a broad change in TV viewing habits. Already, TV programmers fret about the ability of PVRs to skip over commercials more easily than with VCRs -- a user can start recording a show, then skip back to the beginning even while the show is ongoing and view the show on a slightly delayed basis, making it easy to fast-forward through commercials. Some major media companies also recently formed a coalition to protect TV copyrights that they feel could be violated.
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Couch Potato's Pal
What they are:
Personal video recorders are new TV-recording devices that rely on a hard disk instead of removable tape to store images. This allows viewers to replay a portion of a program while the machine continues to record the rest. A VCR can also plug into them so programs may be transferred to tape.
Two companies are driving the technology and products:
TiVo
Sunnyvale, Calif.
CEO: Michael Ramsay
Business model: Develop technology and license it to manufacturers, operate a service for distribution of programming information and interactive features.
Device Prices: $499, 10-hour capacity; $999, 30-hour capacity
Service fees: $9.95/month; $99/year; $199/lifetime of device
Brand-name Manufacturers: Philips, Sony
Replay Networks
Mountain View, Calif.
CEO: Anthony Wood
Business model: Develop technology and license it to manufacturers.
Device Prices: $699, 10-hour capacity; $899, 14-hour capacity; $1,499, 28-hour capacity
Service fees: None
Brand-name Manufacturers: Panasonic
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But most participants in the coalition also have invested millions in TiVo and Replay. For instance, Replay, based in Mountain View, Calif., last month raised $57 million from investors that include Time Warner Inc., Walt Disney Co. and General Electric Co.'s NBC unit.
TiVo, based in Sunnyvale, Calif., has received backing from NBC, America Online Inc. and others. In addition to its product-development work, Sony Corp. of America invested more than $25 million in the company; neither Sony nor TiVo executives would confirm a precise amount.
Stay Tuned for IPO
In an amended registration statement filed Wednesday for its initial public offering, TiVo said Sony would own 2.6 million shares, or an 8.8% stake, and take a seat on the board. TiVo plans to sell 5.5 million shares at a maximum price of $13 apiece, according to the latest filing. Company executives are beginning a road show for prospective investors and the actual public offering isn't expected until later this month or October, a spokeswoman said.
The company plans to use the $71.5 million from the stock sale for advertising, product development and general purposes. Analysts expect TiVo and Replay to advertise heavily during the holiday season, when electronic sales are heaviest, as they try to establish a foothold.
Due to high prices and limited availability, the devices this fall are likely to be purchased mainly by videophiles and techies. However, market researchers expect sales to take off next year as prices drop and more manufacturers offer them.
Eventually, hard-drive-recording technology is expected to spread to other types of video accessories, including cable and satellite receivers and even digital videodisk players. Just this week, Quantum Corp., the Milpitas, Calif., company that supplies hard disks to both TiVo and Replay, launched a TV ad campaign to raise consumer awareness of its role in these products, similar to Intel Corp.'s "Intel Inside" ads for chips.
"At some point in time, people are going to add extra storage to these boxes and there will be a retail opportunity for us," said Jeff Klugman, Quantum's vice president of marketing. "We are trying to establish our brand today."
Sony, meanwhile, has been studying ways to store video information on hard drives and other devices, and that led it to the TiVo deal. "We thought this was a shortcut to where we were going," said Howard Stringer, president of Sony Corp. of America. "This is the perfect cornerstone for our home networking strategy."
Interactive 'Jeopardy'
Sony executives believe they will be able to promote the company's movies, music and other entertainment through the TiVo device. Yair Landau, executive vice president of Sony Pictures Entertainment, said Sony could introduce interactive versions of its "Jeopardy" and "Wheel of Fortune" TV game shows through the TiVo box.
The arrangement between Sony and TiVo isn't exclusive, however, and executives from both companies said they will continue talking to each other's rivals.
Replay's top marketer, Steve Shannon, said there are still many prospective alliances for his company to forge. "Sony stepping in is really testament to just how big a deal this product really is," Mr. Shannon said.>>
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