News

Remote Storage Is DVR's Future

1/24/2009 2:00 AM Eastern

The early January 2009 U.S. Supreme Court decision to seek advice from a Department of Justice's Solicitor General as to proceeding with the remote cable DVR storage case of Cartoon Network v. CSC Holdings (2006) means the high court's decision is many months or years away.

Yet, unlike the precedent-setting 2001 Paramount vs. ReplayTV case, the facts in this RS-DVR dilemma are decidedly against the seven large content-owning networks and studios. Similarly, the equities decidedly favor the RS-DVR defendant, Cablevision Systems, for presently, the technology is merely replacing individual in-home DVRs.

The RS-DVR would replace individual boxes with something cheaper, more elegant, more efficient, more manageable, easier for consumers to use, and better for all (including the content providers that are suing). Further, plaintiff Time Warner is in the awkward position of having pioneered RS-DVR development, but later bowing to a clear conflict of interest as an owner of both content and a huge New York cable system that neighbors Cablevision's.

In 2015, when The Carmel Group projects an individual in-home DVR saturation point of 75 million, fewer in-home DVRs will be offered to the then 75-plus million cable and telco video consumers by their system operators. They are rapidly replaced by RS-DVRs.

Concurrently, satellite-TV providers EchoStar Communications and DirecTV remain chained to individual in-home DVRs, because their systems lack the robust, two-way connection required of a true RS-DVR implementation.

By that time, seven years hence, courts, companies, trade groups and consumers will have understood that transitioning consumers from in-home to remote storage of content changes little (or nothing) from a practical, common-sense standpoint. Moreover, all affected by this seminal case will have further recognized the shallowness of the plaintiff's claim, professing that the shift in physical location of the content's storage changes the copyright base completely. It does not.

As long as the individual consumer decides how to use the DVR, what difference does it make where the hard drive is housed? Similarly, why should consumers lose their rights because of a change in technology, from a hardware model to a service model?

Further, the content plaintiffs' claim of an “exclusive right to profit” from the distribution of that content will have been measured as disingenuous. That's because what is tremendously different from the “ad-skip” and “show-forwarding” elements of their successful 2002 ReplayTV case, is that a “right to profit” is different from the mere “saving of money,” the latter of which is the only thing coming from this technology shift.

As the 2nd U.S. Circuit Court of Appeals in New York noted, RS-DVR subscribers will still control copying, rewinding, pausing, fast-forwarding and replaying — not Cablevision — as with the “fair use” allowed to the user of a home VCR in the seminal 1984 Betamax case. Cablevision's Dec. 5, 2008, appellate response aptly noted: “Nothing in the Copyright Act gives authors the right to demand royalties from every business that merely enables lawful fair use of their works.”

Sage business pundits have repeatedly advised, “Follow the money.” For this case, this author would add, “Follow the savings.” For here, both those paths favor the content-owning plaintiffs.

RS-DVRs allow content owners to create new offerings, because their clients, the cable or telco operators, will have new-found revenues to invest in new software and hardware. Because this relationship is typically so tight and so controlled, if Cablevision and other operators figure a way to get more revenues from content via the RS-DVR, few doubt they will ask first about a licensing agreement rather than risk an almost guaranteed loser lawsuit.

When all is weighed and considered, because of the cost, efficiency, and technological and even legal, outcomes and balancing, the RS-DVR will generally and rather soon replace the in-home DVR. And it will do so within a generation. Indeed, not a single industry observer I consider objective supported the content providers' position in this dispute. Nor did a single person believe the outcome would be other than one supporting the widespread deployment of RS-DVRs.

So, multiplatform America: Get ready for a new — and better — DVR solution, in the form of a device housed elsewhere, which costs less, but still serves the same function and is still controlled by you.

September