The final appeal by US studios against the use of network PVRs was defeated when the Supreme Court this week rejected a request to look at the case and instead allowed a lower court’s ruling to stand. That’s it, the law is now done and dusted in the US as far as that piece of technology is concerned.
The case was found in favor of the big New York cable operator Cablevision and against the major studios and everyone in the business can rejoice, because economically there is absolutely NO comparison in costs, reliability and service control between a server in the middle of a network allowing timeshifting when compared to multiple customer premises equipment operating at the edge of a network, storing programming at the customers beck and call.
There is a basic economic advantage to go with the reduction in support costs, the fact that little Tommy can’t spill coke all down the back of the machine in the living room, and overall provisioning costs and what that does to the bottom line of pay TV operators.
It comes too late to save Dish networks from the TiVo law suit, but then again Dish really can’t provide an nPVR service too easily since its content is distributed over satellite, so there is no way ‘ apart from using another operator’s broadband network, which it has in the past avoided, instead opting for its VoD services to be a push VoD service. No, satellite companies are just going to have to carry on investing in DVRs, and to some extent so will cable and IPTV companies ‘ but with a difference.
People are used to having a DVR in their homes. They are used to the new multi-room DVRs which IPTV and cable are finally bringing to market and nPVR versions of these will have to be developed. Many homes will insist that they continue to have control over DVR function (we prefer DVR to PVR but it’s the same thing).
There is a little inkling that the operators might make a few adjustments to the DVR experience when it is on a remote server. For instance it is far easier to set it up so that some specific ads, or indeed all of them, cannot be fast forwarded. It’s not impossible to do that in a home based DVR, but it is more prone to interference and re-engineering by the customer ‘ not to mention having the customer either a) cancel the service because of it or b) smash the expensive device to pieces from frustration. Cable and IPTV operations can now support their advertisers better in DVR environments than their satellite counterparts, as long as only new customers, which have not previously had DVRs, are offered slightly watered down DVR function, and also it will have to be carefully priced underneath the full home DVR set ups, so that it can be introduced as a cheaper option.
We think that operators may introduce it purely as a ‘free’ option. Why not? Make all your outstanding 60% or so of customers (where networked based DVR is installed) learn to depend upon timeshifting and do it without losing a single piece of advertising revenue for your channels or for yourself.
In time we suspect that these operators will try to shift everyone over to networked DVRs, but that the continued existence of services like TiVo, which will continue to be ahead technically of server based options, will mean that this is a slow process.
But what it does mean is that DTH satellite TV services will be forced to innovate. Channels will start to see, over perhaps the two to three year timeframe, better attention to advertising in cable and IPTV environments where there is a return path, as non-fast forwarding ad services are foisted, willing or not, on an unsuspecting audience. DTV will have to try to introduce the same type of features on home DVRs or come up with new ways to advertise in order to perform, as far as advertising in their paid for TV channels is concerned, just as well as their rivals.
So we might expect to see even cheaper DVRs with simpler function and lower cost brought in, but where fast forwarding in hampered if not blocked entirely. Also advertising which remains persistent through fast forwarding, and on disk advertising are all likely to be tried as well as various forms of addressable advertising.
We think at the top end of the market, there will always be full DVR function, but customers may have to pay a little more for this and this is not going to go away, but the continued investment in individual DVRs at a time when Pay TV operators do not want to continue investing, will no longer be there for some.
At the other end of the scale, the expansion into network DVR is likely to be careful and slow, and then gradually pick up pace as operators become sure of their plans. We suspect that there will be many more ideas other than just the ability to stop advertising from fast forwarding. You can innovate with adverts elsewhere in the service, perhaps on the parts of the EPG or in the loading screens. In the system Cablevision trialed, which caused all this fuss, the critical step was that keys of the remote control needed to be pressed to store a program on the customers behalf. No remote control key press, no stored copy.
So new systems will all have to vest the same control into the hands of the end user.
Will the system offer ‘storage list’ sharing, so your friends, presumably with permission, can see what you have decided to watch or store; or perhaps neighborhoods can be aggregated to show the most popular programs stored. Content addressable advertising will be easier to serve as well. There is the basis for further innovation here and it will take a few years to fully roll out.
For example it might be easier to collect data on usage and aggregate that, when it is all stored on the same server ‘ so audience data might become automated and bypass Nielsen style People Meter techniques. TiVo has already done this, but using the central sever makes this easier, but it will have to be anonymized from the remote keypress out.
In the case, the justices refused to review a US Court of Appeals ruling dating back to a complaint of the Cablevision introduction in 2006 of its nDVR system, called Remote Storage Digital Video Recorder.
The studios and TV networks which complained, included Time Warner, News Corp, CBS and Disney and initially they won the first round of the case before the Appeals court overturned it.
All the time Comcast, Time Warner Cable and others have sat highly interested in the outcome, making it clear that if Cablevision got itself clearance, they’d be right behind implementing something similar.
In the interim, less enlightened countries, for instance in the Far East and Central Europe, have ridden roughshod over content owners wishes, and introduced nDVRs, often based on the same technology which was under review in the US. We supposed that that investment was halfhearted due to the fact that if Cablevision lost, the law would almost certainly have found some way to become effected into many countries which have signed up to the World Copyright Treaty.
But now the starting gun has been fired, and first off the mark expect all the US Pay TV operators to adjust their strategy and in the process de-emphasize individual DVRs and begin to work on a centralized strategy and the all important point about which customer gets which. Europe and Asia Pacific will not be far behind, because curiously much of these territories, as we have said, are already experienced in nDVR.