PVR'S MONTHLY SERVICE FEE SHOULD BE DROPPED—PANELISTS
Monthly service fee for personal video recorders (PVRs) should be eliminated as annual sales increase to millions of units from current 200,000-300,000, officials told video-on- demand conference in N.Y. Wed.
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Monthly fee would be replaced by other revenue-producing options such as targeted advertising tied to content stored on PVR’s hard drive, said Richard Johnson, CEO of Thomson-Seagate joint CacheVision. Indeed, CacheVision has developed feature that allows ad to appear that user is fast-forwarding over PVR, he said. Recent study showed that 6% of those surveyed were willing to pay monthly charge, he said.
Also leading charge was Microsoft, whose UltimateTV PVR/DirecTV receiver combo currently carries $9.95 monthly service fee, same amount charged by rival TiVo. Latter also offers one-time $249 charge for service. Other PVR competitor ReplayTV doesn’t charge for service. “The $9.95 per month may be a short time opportunity for people to make money,” said Microsoft TV Platforms Group Dir. Philip Gorman, who estimated that dropping of fee wouldn’t occur until PVRs reached sales in “multimillion” range.
Among alternatives to monthly fee that Microsoft is developing are ads that appear when user pauses PVR during live TV broadcast. “The consumer obviously is going away and when they come back on their screen there is an advertisement and that’s just a tip of the iceberg for the opportunities that advertisers have,” Gorman said. “If there is an appropriate ad on the screen when the consumer walks back into the room, advertisers have an opportunity to capture that consumer on an impulse.” Ads also could be inserted at start and end of prerecorded programs, he said. TiVo spokeswoman wasn’t available for comment.
PVR industry’s search for new revenue streams comes as market experiences slower-than-expected growth in subscribers. TiVo has slightly more than 220,000 subscribers, while UltimateTV says it has surpassed ReplayTV, which as of Dec. 31 had just 26,000. Gorman declined to disclose exact figure, but retail sales through July stood at 11,600, according NPD Intelect.
“It [PVR market] expands quite rapidly, but not quite as fast as DVD because the costs haven’t dropped as fast and it can take a little longer for these devices to get incorporated into set-top boxes,” Gerbrandt said. “It can be one of the most important technologies out there, but we've all been a little sobered by the last couple of years and we've tried to reflect that in our long-term outlook.”
Holy grail, of sorts, for PVR will be $199 price that would enable technology to gain mass market and isn’t likely to appear before 2003, Johnson said. Indeed, wholesale cost of new 40 GB side-car module that CacheVision is expected to introduce as prototype in Nov. for digital cable market is expected to be priced in $200-$300 range, Johnson said. Keen Personal Media also has developed side-car module for Scientific-Atlanta and Motorola cable set-top boxes (STBs).
CacheVision also will demonstrate client/server application for its PVR platform at CES in Jan. and is supplying 40 GB drive for new Thomson PVR being introduced in Europe month later. Thomson device also has built-in feature that allows it to connect to GSM cellular network to enable user to set recording parameters on PVR.