This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Entrenched Media Ready for DVR War

If the entertainment industry has its way, DVRs won't ever become a mass-market item. The industry fears the effect that DVRs will have on the way people watch television, especially with regards to digital piracy and lost advertising revenue.

And so, in October 2001, a consortium of industry heavyweights, including Viacom (VIA), Disney (DIS - Get Report) and General Electric's (GE - Get Report) NBC, filed a lawsuit against SonicBlue, maker of ReplayTV. At issue is the company's ReplayTV 4000 DVR unit, which allows users to share digitally recorded files and skip commercials automatically.

"Copying programming for playback with defendant's auto-skip feature effectively circumvents the means of payment to copyright owners for the programming being viewed," the suit said. " ReplayTV thus constitutes copyright infringement."

The legal battles are heating up. In December 2001, SonicBlue and TiVo filed a countersuit against the entertainment industry. Less than a month ago, the Electronic Frontier Foundation, a nonprofit group devoted to protecting digital civil liberties, sued entertainment companies to protect the interests of DVR consumers.

"Hollywood is trying to stick as many fingers in the dike as they can to hold this technology back as long as possible," says Fred von Lohmann, senior staff attorney for the Electronic Frontier Foundation. "It's a delay tactic."

Lawsuits may make life more difficult for DVR makers, but few believe that the courts will move to block the spread of technology and reverse its 1984 ruling that legalized VCR use, which entertainment companies wanted banned because of copyright issues.

"This is just an extension of what we have with VCRs," says Badding. "They're going to have a hard time getting the courts to believe them."

If You Can't Beat 'Em, Join 'Em

There's some hope that entertainment companies and advertisers will warm to the medium. TiVo, which doesn't allow commercial skipping and is partly owned by AOL Time Warner (AOL), Sony (SNE) and NBC, has been working closely with the entertainment industry to create interactive advertisements that utilize the DVR's advanced features.

In May, the company partnered with Best Buy (BBY) on the retailer's annual wireless gadget promotion, which featured Sheryl Crow as a pitchwoman.

Instead of a standard 30-second advertisement, TiVo viewers saw a spot that gave them the option to pause television and opt to see rehearsal footage of Crow performing, along with information about Best Buy's mobile offerings.

"Think of it as video 'advertainment.' The notion here is to take the 30-second spot and use it as a gateway to more interesting entertainment," says Morgan Gunther, president of TiVo. "You'll see us do a lot more of this going forward."

The ads were a major success. Nearly half of TiVo's 500,000 subscribers stopped what they were watching at the time to check out Best Buy's showcase. TiVo has paired with other advertisers as well, helping pitch BMWs and Adam Sandler's latest movie, Mr. Deeds.

Over the next year, Mollie Weston, manager for Best Buy's broadcast strategy, says the retailer plans to offer three more showcases, with a holiday promotion debuting in the late fall.

"We walked away with the feeling that it was a great accomplishment, but our goal is to learn how consumers are using this technology," Weston says. "People have been consuming content differently today than they were five years ago. I think as advertisers, we have to pay attention to that and find new ways to reach them. This is one avenue that works."

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs