Thanks for the heads up. It would be nice if more coverage is available on CUBE. Good up-to-date coverage. Hopefully others will get involved too. Maybe the more they read about ReplayTV. As posted on Yhoo.....Again folks are getting a lot more excited by end products based on Dvx type tech than Dvx itself. Any chance for branding for CUBE on these devices?
briefing.com
Updated 25-Nov-98
Replay Networks, Inc. Another Promising Company
The Internet revolution. The convergence of TV and the Internet. Digital satellite TV transmission.
This is what most people see as the forefront of the video-broadcast world. But, recently, Briefing
saw a simple device which we think could cause a bigger disruption sooner in the television industry
than any of those factors listed above.
Replay TV is a digital VCR with intelligence, built by Replay Networks, Inc.
Replay TV is a box that you purchase, and use with your current TV and television delivery system.
Like a VCR, it captures and stores video images displayed on a TV, except it does it digitally.
The big difference between Replay TV and a VCR, however, is the programmable intelligence and
its use of an Internet-based database of program information, the "Replay Network Service
(RNS)." The database not only contains the title, time and channel of the broadcast, it contains the
director, actors, year, and other details about the show.
Intelligent Content Selection
Currently, a VCR is programmed by selecting the time and channel you wish to record. The VCR
itself isn't capable of knowing what the actual content of the broadcast is.
The Replay TV device, by virtue of accessing the internet based database, knows about content.
Instead of choosing the time and channel of a show to tape, you specify the content you want.
While watching a Seinfeld rerun, you can, with one click, specify that it record every Seinfeld
episode. Bumped by a hockey game? Doesn't get recorded.
Content can be even more vaguely specified. With a Replay TV, you can specify that the box
always record every movie that has Sean Connery in it. Because the Replay TV dials into the
internet every evening and accesses the RNS database, it can "know" when a Sean Connery movie
is playing. It then automatically programs the recorder to capture the movie. In fact, the first time
you find out that a movie has been recorded may be when you turn on your Replay TV and find out
that it has recorded "The Man Who Would Be King" for you.
It is the ease of use that makes Replay TV so likely to be adopted.
Replay TV is also capable of organizing the stored information in the form of "channels" for you.
You can set up a Sean Connery channel, and a Seinfeld channel. When you later view the Replay
TV's "channel guide" it will list the stored programs by channel, making it easier to find what you
recorded.
You can even flip through the Replay TV channesl with the remote.
Business Model Changes
Okay, sounds cool, but what's the big deal?
Briefing thinks Replay TV has the potential to shake up the current power structure in the
television market.
Currently, content is king. Advertisers pay more to be carried on the best content. The best
content is broadcast when the most people are watching. The power struggle between the four
broadcast networks (ABC, CBS, FOX, NBC) is all about securing the best content.
Replay TV will change the dynamics of how this game is played.
First, the concept of "prime time" may be altered. People with Replay TV can watch anything
at any time. Just because they are sitting there between 8:00 PM and 10:00 PM does not mean
they will be watching what is available then. VCR's never altered this concept, primarily because it
is just too much work to "time-shift." Replay TV does it all automatically, after a one-time setup.
Second, because the stored video is digital, and because Replay TV comes with a
"skip-30-seconds" button that works immediately, it is easy to skip the commercials on replay.
Fast forwarding through commercials on a VCR never worked. On Replay TV it will be
instantaneous.
Since this is a far easier method of taping than a VCR, time-shifted viewing will probably grow.
Watching a "replay" on Replay TV is closely modeled after watching real TV. You sit down, the
TV displays what's stored as "channels" and you choose something. It is as passive as regular TV.
VCR recording requires first programming, then remembering to view a VCR tape. It is a very
active process that most people avoid. (We remember reading somewhere that 50% of all taped
shows on a VCR never actually get viewed.) How many more people would watch soap operas or
Oprah or Jerry Springer every evening, if it were just as easy as switching to another channel?
A commercial's effectiveness may be diminished. To Briefing, it seems almost worth getting a
Replay TV device, if just to skip the commercials. Because Replay TV can record and playback at
the same time, even the same show, you could start viewing a half-hour show when it is 10 minutes
old, and skip all the commercials. You'd only finish a few minutes after the show actually ended.
If Replay TV lives up to just these two aspects of its technology, and people come to appreciate it,
it changes everything for TV broadcast networks and cable companies.
Replay TV comes with a hard disk to store up to 6 hours of TV. A 20 hour disk is an optional
add-on. Although these aren't long enough to store every movie you'd ever want to see, there
would be nothing in the technology to prevent additional storage. In addition, if you want to build an
archive, you can always save a movie to VCR tapes.
Replay TV's Business Model
Replay TV will derive revenue only from the sale of the Replay TV box, expected to be around
$500 at introduction in early 1999. The company does not plan to charge monthly fees for
accessing the content database. While this makes the initial box more pricey, it will make long term
adoption perhaps as prevalent as VCRs. Additional storage add-on products will also be available,
prices not yet available for those.
Replay Networks, Inc.
Replay Networks is a private company, founded just over a year ago by CEO Anthony Wood.
The company, based in Palo Alto, recently announced that Marc Andreesen, co-founder of
Netscape, has invested in the company and joined the board. There is a fair amount of information
available at their web site: www.replaytv.com.
Replay TV From the Investor's Perspective
Unfortunately, Replay Networks is still a private company. However, while you can't invest in it yet,
we do think it is worth thinking about its effects over the long term, especially if you have
investments in any of the established companies in the media industry:
Broadcast television is entirely based upon advertising derived revenue. Since Replay TV has the
potential to alter the impact, and therefore, the power of TV advertising, broadcast television
business models will suffer. How this effects the major networks is still unclear, but it is certain to
have an affect. Prime time, and unavoidable commercials will become weakened concepts, but we
haven't calculated the extent of the impact.
Is it likely that TV advertising will become more creative to keep viewers from pressing the
"skip" button? Certainly, people like certain types of advertising (the Budweiser frogs, for example).
Perhaps TV advertising will simply become more expensive to produce, limiting it to larger
companies.
Cable companies also are threatened. One of the key concepts behind the success of Ted
Turner was replaying classic movies, continually. Ever notice how often they repeat the same
movies? TV is passive, and by continually repeating the same movie, they reach more eyeballs, and
sell more ads. But Replay TV is just as passive, and users can capture any movie they want.
Although a user still needs to remain a cable customer, Replay TV diminishes the effectiveness of
advertising.
Video-on-demand pay-per-view is perhaps most threatened by this technology. Because
Replay TV captures current broadcasts, already paid for by the consumer, it will be easy to watch
a movie without charge. Video-on-demand's appeal is the ability to watch a movie whenever you
want, start it when you want, but you pay for it. But if you can do basically the same thing without a
fee, using Replay TV, which will you choose? Video-on-demand will probably become more
focused on first-run movies, as pay-per-view movies are now. But since one of the strengths of
video-on-demand was the ability to watch any movie or show when you wanted to, Replay TV
clearly impacts its marketplace.
Briefing Summary
Replay Networks isn't the only company involved in making the instant replay digital VCR.
TiVo (web site: www.tivo.com) is another company building pretty much the same thing. Briefing
hasn't had the chance to evaluate the two products side-by-side, but it is likely that both will be
successful. However, it means the Replay Networks, Inc. won't be a runaway monopoly.
But what it really means is that in just a few short months, the broadcast television era will
encounter the biggest alteration in the landscape since cable television. All carriers of
content will likely be affected, including companies like Disney (DIS) and Time-Warner (TWX)
which derive revenue from broadcast TV. Companies like CBS (CBS) whose core business is
broadcast content will be most affected.
However, it's too early to really calculate the extent of the change.
Nevertheless, of all the products Briefing looks at from time to time, the Replay TV product is one
of the few that we definitely want to get. And we think others will too. |
