TiVo has a special relationship with the International CES. In 1999, the company helped to popularize the reputation of what was then known as the Consumer Electronics Show as a showcase for cutting-edge technology when it introduced visitors to the DVR. The device promised to revolutionize television by divorcing TV viewing from the network-dictated timetable, and empowering people to skip over ads. Now about half of all homes have a DVR, and TiVo CEO Tom Rogers is navigating his company through new changes in technology and business that will even more dramatically change where and how people watch TV. Deadline caught up with him at the Las Vegas confab this week to see what forecasts about the medium are real — and which ones are just hype. Here are his thoughts, edited for length and clarity.
DEADLINE: People at CES always sound enthusiastic about the state of TV. You have a different view.
ROGERS: If you walk out on the floor of the Consumer Electronics Show you’re hit by everything that’s cool about the future of television. The reality is that television is still playing total catch-up and is behind the eight-ball compared to where music is to the consumer. What happened to music is that the industry got crushed. But what came out of that was a consumer model where you can get anything out there and get it in streaming form or downloadable form, to any device in an aggragated form, a la carte, personalized. Really, it’s a wonderful model for the consumer. And television is not there. Read More »
The $7.99-a-month streaming service appears to have dampened many consumers’ interest in DVRs, which cost $10 or more a month, according a study out this morning from Leichtman Research Group. It shows DVR growth plateauing: 47% of households have one vs 45% last year and 44% in 2011. (It was 23% in 2007.) That’s partly due to cable marketing strategies. It’s easier to entice well-to-do customers to pay for multiple DVRs than to persuade people who don’t have one to buy. Half of homes that do take DVR service have more than one, up from 43% last year and 33% in 2011. But Netflix also is a factor. “It’s become a TV service in the last two years,” says Bruce Leichtman, the firm’s president. “Especially younger people are not going for the DVR. It’s an expense thing.” And Netflix affects a lot more than DVR usage. While the jury’s out on whether Netflix contributes to pay TV cord cutting, it appears to be a factor in what Leichtman calls “cord deferring.” Some 46% of people who don’t subscribe to pay TV buy Netflix, up from 34% last year. Leichtman also found that 51% of all 18-to-34 year olds subscribe to Netflix, up from 40% last year. People who get the service use it a lot. About 29% of all Netflix subscribers stream video daily, up from 10% in 2010, while 70% do so weekly, up from 43%.
This could be an important development, and not just for Cablevision customers. Cable execs have been keeping an eye on the company’s efforts to pioneer the cloud-based DVR, which gives subscribers the ability to use a conventional cable box — without a hard drive — to record shows and fast forward through the ads. Today’s changes boost the number of channels subscribers can simultaneously record to 10 from four, ups the storage capacity to 75 hours of HD from 25 hours, and raises the price to $12.95 a month from $10.95. (The company also is changing the name of the service to Optimum’s Multi-Room DVR, from DVR Plus.) “Our cloud-based DVR is the industry’s most advanced DVR service and provides customers with the flexibility they need to enjoy the programming they love without being forced to choose between shows,” says VP of Video Product Management Bradley Feldman. By comparison, DirecTV’s Genie DVR can record five channels simultaneously and Dish Network’s Hopper can record up to six. If Cablevision’s upgrades give it a clear advantage over its competitors, at a low price since it doesn’t require lots of new equipment, then don’t be surprised if lots of other operators introduce their own cloud-based DVRs.
For decades, TV networks’ promo campaigns for new series had been focused squarely on bringing in viewers to the shows’ premieres. For the first time, Fox last week broke tradition, swapping the tune-in ads for its midseason drama The Following starring Kevin Bacon for billboards urging viewers to set their DVRs.
Encouraging DVR viewing is a two-edged sword as it gives the networks extra audiences — most of which they can’t monetize since a large portion of viewers who time-shift shows skip some or most commercials when watching. But with people’s viewing preferences for this season already firmly established, Fox opted for the unusual campaign to help its new show get on viewers’ season passes as a way to bring in regular audiences. That is especially important for a serialized drama like The Following, where retaining viewership is crucial for its long-term success. Read More »
TiVo’s business model seems to be based on suing companies for selling DVRs that allegedly use its patented processes to do things that users take for granted such as watching one show while recording another. And today it challenged a formidable opponent: Time Warner Cable, which has 12M subs, is the No. 2 cable company and No 4 pay TV provider. TiVo’s attack comes in an amended counterclaim to its patent infringement suit against Motorola, which is being heard in a U.S. District Court in eastern Texas. It blames Time Warner Cable for providing its customers with Motorola’s DVRs. The cable company “engaged in objectively reckless conduct when they continued selling the infringing products in the face of an objectively high risk that they were infringing TiVo’s valid United States patents,” TiVo says. It has a perfect score so far in patent cases, reaching settlements with Dish Network, AT&T and Microsoft. TiVo has another suit outstanding against Verizon. B. Riley analyst Eric Wold says that while the counterclaim “could pressure (TiVo’s) litigation expenses, we believe it is well worth the investment given past success rates and settlement amounts.” TiVo wants a jury trial, and payments fro Motorola and Time Warner Cable for “compensatory damages.” The cable company won’t say yet what it thinks about the case, or how it will respond.
Throughout the opening of the 2012 International CES I’ve had a feeling that the technology news here will delight TV viewers — but frighten Hollywood studios and other content owners. My impression was clinched this morning at a small presentation by EchoStar, Dish Network’s technology-focused corporate cousin. The company’s new gadgets make it possible for pay TV providers to offer customers television’s most popular shows on-demand — including via TV Everywhere-like Internet streams to out-of-home smartphones and tablets — without having to pay programmers additional license fees. Some of those capabilities were displayed on Monday when Dish unveiled its Hopper DVR: Dish subscribers with one of these boxes can watch any ABC, CBS, Fox, or NBC primetime show from the previous eight days. The boxes also use technology from Sling Media (which EchoStar owns) to stream any of the channels that users receive or and shows that they record at home.
But this morning’s presentation made it clear that EchoStar is starting to build bridges with cable operators — the dominant providers of TV services and, ostensibly, Dish’s mortal enemies. Read More »
The 2012 International CES isn’t just an opportunity for the digital cognicente to look at new gadgets. It’s also a chance to brush up on the latest industry jargon. Don’t let it throw you. If you know the following words and concepts, then you should be able to easily hold your own in a conversation with someone returning from the annual consumer electronics spectacle in Las Vegas:
Ultrabooks: These are what you get when you cross a laptop computer with a tablet, and they’re grabbling the lion’s share of attention at the 2012 International CES. Ultrabooks are thin and light; most use solid state hard drives instead of the traditional storage drives built around a rotating disc. Intel is leading the cheerleading squad for ultrabooks, which it hopes will reenergize the laptop computer market. Read More »
Dish Network CEO Joe Clayton says that ABC, CBS, Fox, and NBC shouldn’t have a problem with his company’s just-announced PrimeTime Anytime DVR feature that automatically records the networks’ primetime shows, holds them for a week, and also streams them on-demand to computers, tablets and other mobile devices. But he doesn’t know. “I haven’t personally talked to every single one of them, but I’m sure they’re aware of it,” he says. He adds that Dish shouldn’t have to worry that it’s treading on their right to license TV Everywhere rights, or look-back VOD service to cable operators and online destinations such as Hulu. “This is no different than an opt-in for any DVR,” he says. I’m told that lawyers for the networks are reviewing the Dish service to see whether there’s a problem.
Clayton was in a buoyant mood, though, as he officially disclosed the news that had already leaked about his company’s powerful new DVR product — called Hopper — and Dish’s corporate makeover. Read More »
Dish Network is looking to make a splash at this week’s 2012 International Consumer Electronics Show in Las Vegas — but one announcement, which leaked out prematurely, could raise the ire of ABC, CBS, Fox, and NBC. Tech trade publications Dealerscope and TWICE broke news embargos tied to Dish’s press conference later today regarding a multi-room DVR called Hopper: It will have three tuners and a huge storage capacity of 2 terabytes. Hopper will make it possible for users to stop watching a recoded show in one room and resume where they left off in another, reports blogger Dave Zatz, who saw a posting of the TWICE article before it was taken down, and Multichannel News, which caught the one yanked from Dealerscope. But it also includes a feature called Primetime Anytime that will automatically record primetime broadcasts from local stations for ABC, CBS, Fox, and NBC and retain those shows for a week — in effect turning Hopper into into a catch-up VOD service. Broadcasters have been licensing catch-up rights to Hulu and cable VOD. The TWICE article also notes that Dish is dropping the word “Network” from its name as it focuses more on technology. Read More »
TiVo shares are up 11.4% in after-hours trading following its latest victory in its campaign to demonstrate that it controls the patents behind some of the most popular features for DVRs — including the ability to watch one program while recording another. AT&T said it will pay TiVo at least $215M through mid-2018 to license its DVR technology, with additional monthly license fees if AT&T’s DVR subscriber base grows beyond an undisclosed level. That heads off a jury trial in Texas over TiVo’s patent infringement claims — on largely the same issues that enabled it to prevail over Dish Network in a similar series of cases that resulted in a settlement last year. AT&T and TiVo dismissed their suits against each other, and agreed to cross license their advanced TV technologies. TiVo CEO Tom Rogers called it ”a great outcome for our shareholders” that also “allows us to avoid significant legal expenses.”
Nobody delivers the pro-broadcast network message more effectively than CBS Chief Research Officer David Poltrack. But he was far more bullish than usual today at his yearly industry forecast during the UBS Annual Global Media and Communications Conference. He says the broadcast networks are in for a great 2012 with ad sales up 7.3% — and not just because of the quadrennial effect. Even without the impact of political spending and the Olympics, broadcast sales would be up 5%, he says. That’s partly due to a pickup in the economy. “We remain confident that we’re on the road to recovery,” although he isn’t so sure about the pace, he says. The biggest drag on the economy, he says, is government spending cuts. ”This is also what is keeping the unemployment rate so high,” he says.
But he also expects broadcasters to begin winning back some of the $1.6B in ad dollars that have migrated to cable. He says that the move toward cable was largely driven by the growth in the number of channels, and that “has run its course.” Meanwhile, technologies that encourage time shifting — including DVRs and VOD — disproportionately help broadcasters. DVR time shifting has helped boost the major networks’ audience share to 45% from 43%. For example, Modern Family gains 8M viewers from time shifters — that’s the largest playback audience — while NCIS gains 5M. He’s also encouraged that viewers are starting to accept ads on VOD; CBS saw 70M VOD views of its primetime shows … Read More »
TiVo popped 7.9% in early trading after it prevailed late Thursday in a Texas court ruling that involves its DVR patent infringement suit against AT&T — even though the ruling curiously didn’t say anything about the other part of the company’s suit, against Verizon. You’ll hurt your head if you try to sort through the mostly technical issues underlying U.S. District Court Judge David Folsom’s decision about how he’ll deal with the patent claims. But the upshot is that “AT&T will see a high chance of losing and so will likely enter into a favorable settlement with TiVo,” Lazard Capital Markets analyst Barton Crockett says this morning. David Miller of Caris & Co isn’t so sure: He expects AT&T to go to trial beginning in January. He also decided not to raise his estimates for TiVo because it’s “somewhat confusing” that the judge didn’t include Verizon. ”The majority of the Street was under the impression that both cases were being heard in tandem,” he says.
It’s easy to understand why so many media and technology watchers are riveted by TiVo’s bitter patent infringement court fight with Dish Network. TiVo says it owns most of the processes that define the DVR — including the ability to watch one show while recording another. If TiVo can persuade the courts that the DVRs Dish provides to its satellite customers violate TiVo patents, then just about every cable and satellite company will have to pay TiVo to keep their own DVRs going. If TiVo loses the legal battle, then the company whose name is synonymous with the DVR probably will be kaput.
The U.S. Federal Court of Appeals could have delivered either side a knock-out blow on Wednesday in a ruling on Dish’s appeal of a lower court decision favoring TiVo. Instead the court gave both companies a reason to claim victory. TiVo prevailed in its argument that Dish’s older DVRs violated TiVo patents. That puts Dish on the hook to pay about $90 million to TiVo. Dish says that it has largely replaced the older DVRs with newer models that don’t violate TiVo’s patents — a claim that TiVo also disputes. The appeals justices left it to the lower courts to sort that out. And that gave Dish what it wants: the opportunity to drag the case out as long as possible in the hope that TiVo either loses, or runs out of cash. TiVo borrowed $150 million last month, mostly to keep going with its patent … Read More »
TiVo just issued this statement regarding the contempt sanctions ordered by the U.S. District Court, Eastern District of Texas, in the lawsuit against EchoStar and Dish: “We are pleased by the Court’s ruling to impose contempt sanctions of approximately $200 million against EchoStar for its continued violation of a Court-ordered permanent injunction, and to award TiVo its attorney fees and costs incurred during the contempt proceedings. This brings total damages and sanctions in this case to approximately $400 million through July 1, 2009, plus attorney fees, and is exclusive of potential further damages and sanctions. Additionally, we are pleased that the Court ‘will seriously entertain the award of enhanced sanctions’ if ‘EchoStar is unsuccessful on appeal and nevertheless continues to disregard this Court’s orders.’ We are confident that this ruling brings us closer to final resolution.”
TiVo, a pioneer of digital-video recording services, had sought $974.5 million from Dish for contempt of court in their 5 1/2-year patent battle. Dish, the second-biggest U.S. satellite-television provider, and EchoStar told a federal judge in July that the company has acted in good faith and sanctions aren’t appropriate. But U.S. District Judge David Folsom in Texarkana, Texas, found a $2.25 royalty per DVR subscriber was appropriate. Dish and Echostar were ordered on June 2 by Folsom to stop using a digital-video recorder that infringed the TiVo patent. The U.S. Court of Appeals for the Federal Circuit had put Folsom’s order on hold until an appeal … Read More »