PVR Players Land Deals For Enhanced Set-Tops

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Just as there was a spate of interactive-television-advertising deals during May, there was a flurry of activity in terms of personal-video-recorder agreements last week.

America Online Inc. and TiVo Inc. signed a three-year strategic agreement, while DirecTV Inc., Microsoft Corp. and Thomson Multimedia formed an alliance that some industry observers saw as the satellite industry's response to "AOL TV."

These PVR-related agreements will expand consumers' ability to interact with their TV sets. But since PVRs also empower viewers to zap or fast-forward through commercials, none of these deals alleviated the concerns of those who buy or sell advertising on the national or local level.

Under the AOL/TiVo pact, TiVo will become a programming partner in AOL TV, and AOL will invest "up to $200 million" in TiVo and receive warrants to purchase additional TiVo shares.

AOL TV subscribers will get access to TiVo's "Personal TV Service" as of early 2001, when the AOL TV-branded set-top box incorporating TiVo's features should reach retailers, the companies said. Initially, AOL TV will use a set-top box running on a Liberate Technologies platform.

TiVo owners can record television programming digitally, without videotape. They can also pause live TV fare, as well as enabling instant replay and slow motion. With the click of a button, they can automatically find and record every episode of The Simpsons or Baywatch that airs, for example, or even every program that stars, say, William Shatner.

The RCA DirecTV system, the "RCA DS4290RE," with Microsoft's WebTV Networks' "UltimateTV" service-due to hit retail stores in time for the Christmas holiday season-will add digital-video recording, interactivity and Internet access.

Last month, Showtime Networks Inc. signed with TiVo to enable the pay service's subscribers who also own TiVo devices to click on an "Ipreview" icon and preplan recording of upcoming Showtime movies, series or boxing events. Basic network Home & Garden Television inked a similar deal.

Showtime also linked with ReplayTV Inc. on a Father's Day promotion running through July 31-a $50 rebate on a Showtime subscription when a consumer buys any ReplayTV unit. ReplayTV owners can program their own "ReplayTV Zone" channels based on genre or program.

ReplayTV and Nielsen Media Research signed an agreement in principle in April to develop, test and implement software systems for measuring ReplayTV's audience.

PVR sales at retail are expected to jump as more and more agreements are made to embed that technology within future TV sets. For instance, Sony Corp. late last month began selling its "Sony Digital Network Recorder" with TiVo. Meanwhile, Replay-TV includes Panasonic Consumer Electronics among its hardware partners.

Elsewhere in the personal-video field, Liberate and News Corp.'s London-based NDS Group plc agreed last week to integrate NDS' personalized "XTV" technology into Liberate's TV platform and to license it worldwide to various consumer-electronics manufacturers. Liberate and NDS will also co-market their joint developments.

Several ad-agency executives expressed concerns about how PVRs might impact their commercials' effectiveness at a Cabletelevision Advertising Bureau conference in March. So did some clients at an Association of National Advertisers forum.

At the CAB confab, TiVo chief programming officer Stacy Jolna sought to allay their fears by noting that investors in the company include ad agencies and TV and cable companies.

ReplayTV vice president of business development Randall McCurdy likewise stressed to MSOs at the recent National Show that its technology can help them to deliver targeted, interactive ads to their customers.

ReplayTV named Michael Teicher senior vice president of ad sales in April. He had held a similar post at Turner Broadcasting Sales Inc.'s global-client-solutions division.

Still, cable operators voiced their fears at the local level two weeks ago during a CAB Local Cable Sales Management Conference session featuring Liberty Digital CEO Lee Masters, who pointed out that his company has made investments in both TiVo and ReplayTV.

Masters said, "I don't have an answer" on PVRs' potential negative impact on ad sales. Whether it's PVRs or Napster Inc., new technology "presents phenomenal opportunities and phenomenal challenges," he added.

"We're all inundated with advertising," he said. "When reading magazines, you're in control and rip past ad pages" that are deemed uninteresting. And that's where PVRs will play a role, he felt.

When Charter Communications Inc. vice president of ad sales Wes Hart asked about the likelihood that PVRs could replace scheduled spots, Masters said, "They can do it, but it's unlikely to be done. These companies don't want to raise the ire of the advertisers any more than they may have already."

Later, a Cable One Inc. manager was among several operators to complain privately that Masters soft-pedaled PVRs' negative impact on advertising because Liberty has stakes in both PVR companies.

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