Comcast Trials Bring PVR Race to a Head

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The personal video recorder race is heating up this summer across the state of New Jersey as Comcast Cable is conducting two separate but simultaneous trials, pitting rivals ReplayTV and TiVo in direct competition.


Comcast has undisclosed holdings in both companies.


The trials represent a major step for the PVR companies as both seek the ultimate goal of their respective technologies being directly interfaced with cable set-top boxes. Comcast's decision of which company it aligns with will either boost or delay that goal.


"The products are slightly different, and the underlying technologies are slightly different, so that may result in a better consumer experience with one rather than the other," said Andy Adiss, vice president of marketing and new products at Comcast Cable Communications Inc., Philadelphia. "There is a consumer side and an operational side as well. We want to learn about this category and be able to respond competitively if we have to."


For the trials, ReplayTV will cover Comcast subscribers in Burlington County, NJ, and TiVo will be offered to those in nearby Cherry Hill, NJ.


Subscribers in the area will receive an additional set-top box -- either ReplayTV or TiVo -- that will be hooked directly into their cable set-top. They would then receive services just as they would receive their basic cable, with free installation, no deposit and no long-term commitment.


Comcast will provide installation and instruction on using the boxes, and will handle customer billing concerns. The respective PVRs will handle technical questions and will be able to track the use of their boxes through the separate phone-based Internet connection that the set-tops use. The PVRs will also conduct extensive interviews with subscribers who purchase the plans.


"We are looking at a number of things," said Jim Hollingsworth, senior vice president of sales and marketing at ReplayTV Inc., Mountain View, CA. "What is the customer satisfaction with the experience overall? Do they feel that it substantially enhances the value of their cable subscription by being able to more easily find, capture and watch on their own schedule additional programming that they are paying for?


"And from the cable operator standpoint, what effect does this have on the subscriber insofar as usability and satisfaction with pay-per-view and premium services? The final question is: Does the addition of this digital video recorder significantly enhance cable services?"


The only difference in the trials is price. TiVo will be offered for $18.95 a month, while ReplayTV will go for $11.95 monthly. The price differences reflect the retail price and the companies' overall business model when it comes to cable operator distribution. ReplayTV sees itself as a free service, while TiVo believes customers should have an additional charge apart from the fee for the set-top.


At retail, ReplayTV's 30-hour hard drive goes for approximately $550 and up but with no fee for service. The company also has a 20-hour drive available for about $400. TiVo's 30-hour drive sells for around $400, with service fees ranging from $9.95 monthly to $99.95 yearly to a lifetime service fee of $199.95.


Adiss said the price points were separately negotiated with each PVR and each "accurately represents the type of customer proposition that we would ultimately be able to offer, based on what the likely business models that the two respective players will put on the table."


This new direction in business model is the third for the two PVR companies. TiVo is sold as a stand-alone or bundled with Sony, Phillips, DirecTV and, come next year, AOLTV. TiVo is also part of a video-on-demand arrangement with DirecTV and BlockBuster that will debut next year. ReplayTV is distributed as a stand-alone or bundled with the Panasonic ShowStopper set-top. ReplayTV is also involved in a VOD trial itself -- with Time Warner in Los Angeles, which was the first time a cable operator and a PVR joined to market their wares to consumers together.


Comcast will market the boxes using commercial airtime and direct mail, while both TiVo and ReplayTV said they have worked with Comcast in designing the promotions, but will only go as far as to perhaps play their respective infomercials in the designated areas.


Adiss said Comcast's marketing position is one of simply alerting their customers that they can have the PVR service if they want it.


"Core to our strategy, in our trials we are not actively marketing to build a category; we are going to let TiVo and Replay do that," Adiss said. "Our strategy to the customer is, if this is something you want, before you think about getting it anywhere else, call us. And the reasons are threefold -- you can lease it from us and you don't have to buy a box that will be obsolete in six months; two, we'll come to your house, install it, make sure it works with all your other devices and we'll make it simple for you; and three, there will be some other promotional offer related to it -- for example, a free month of a premium channel -- which we are putting the final touches on now."


Both TiVo and ReplayTV have accepted that Comcast has created a line in the sand, and that once that line is crossed, it could spell trouble for the losing side.


Edward Lichty, director of business development at TiVo Inc., San Jose, CA, calls the dual trials "suboptimal" but added, "We are happy to compete with them and feel good about our ability to compete with them."


ReplayTV's Hollingsworth, however, had some words about TiVo describing the trials as a "deployment" in a press release.


"TiVo calls it a deployment, but a deployment indicates that there is a business deal beyond the trial, and if you talk to Comcast, you'll find out that that isn't necessarily accurate. So, at the end of the day, we are doing simultaneous market tests, and we will see what the results are."


"It's probably easy to say that any cable operator is going to make a decision, and probably work with one company or the other on real integration and rollout; that's typically how these things work. I fully believe that Comcast is going to evaluate both of these trials side by side, and that's going to help them make a decision on how to move forward," said Hollingsworth.


Meanwhile, there are additional concerns surrounding the PVRs, such as their fast-forward technologies being unfriendly to advertisers.


"That's a hornet's nest, and we are steering clear of that right now," Adiss said. "We just fundamentally want to understand if this is something the consumers will really be engaged with. Our gut and some research that we have does indicates that [fast-forwarding] is pretty high on the list in terms of consumer appeal, relative to other technologies. But that's further down the path, and we're not there yet."
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