Pausing Live TV

While some technologies are easy to explain—the video recorder, wireless telephony, or the portable computer, for instance—others require a bit of explanation and hands-on experience before users “get” it. In the case of the digital video recorder, or DVR, it took a lot of explanation, much experience, and quite a bit of word of mouth over nearly 10 years before more than 40 percent of the American TV-recording public and the television industry itself understood just how profoundly the concept of “time shifting” has changed television viewing and the broadcast industry as a whole.

In the interregnum between its introduction and its widespread adoption, though, consumer indifference and broadcast industry antagonism almost killed the DVR.

Blue Moon Friday

In the wake of the introduction of the DVD and digital TV broadcasting in 1997, an opportunity opened up. DVD was largely a playback-only technology; supposed to replace the analog low-resolution VCR for TV recording, DVD recording decks cost more than $2,000. The market was ripe for a cheaper alternative to record digital TV programming.

Three entrepreneurs with impressive Silicon Valley résumés attempted to fill the niche with digital video recorders using hard-disk drives rather than removable discs. Anthony Wood, who had recently sold his first software company, founded ReplayTV. Michael Ramsay and Jim Barton, two former top executives from Silicon Graphics, easily found the venture capital funds to start a company they called TiVo, a nonsense name with no meaning. The key to both devices was the software interface and electronic program guide to make it simple to find, record, store, and play back their favorite shows.

ReplayTV and TiVo both announced their existence at the 1998 International Consumer Electronics Show in Las Vegas, but in truth each was more than a year away from shipping product. A development race started, both companies grimly aware that whoever hit the market first would enjoy a huge advantage.

In early March 1999 TiVo was still way behind its promised end-of-the-month delivery date. Ramsey cajoled his staff to meet the deadline, dubbing the effort Project Blue Moon since there was a second full, or blue, moon that month. Working 24-hour days, the TiVo staff hit their mark and shipped their first boxes on March 31, beating ReplayTV into the market by a couple of weeks. Two months later, DISH Network started selling its DVR-equipped 7100 satellite receiver.

We Get It—Finally

ReplayTV and TiVo units, both the same size box as a VCR, sold reasonably well to early adopters who understood the concept of pausing live TV. Users raved particularly about TiVo’s interface, which has changed little through the years—its search-by-actor/director/program name capabilities, flexible series recording options, and its seemingly supernatural ability to accurately “predict” and record the programs a user might want to watch based on what that person watched and asked it to record.

But there was a fly in the ointment: most consumers weren’t interested in recording. The VCR might have been invented to record TV 25 years earlier, but most consumers left the clock blinking at 12:00 and instead used the deck to play rental tapes. In addition, retailers didn’t know how to demonstrate DVRs. Salespeople couldn’t explain it, and stores lacked the phone connections required to obtain the program guide. Meanwhile, cable providers began to offer DVR-equipped cable boxes to their customers, which meant just one set-top box instead of two.

Sales for the two competitors sagged; by early 2001, they had attracted a mere 200,000 customers combined. TiVo’s stock plunged from $78 to $3; the company laid off 25 percent of its workforce. Wood sold ReplayTV in February 2001 and founded Roku, set-top boxes that stream content from the Internet to TVs. TiVo held on, though, thanks to its compelling software, which it licensed to DirecTV and, later, Comcast and other cable providers. Even though hardware sales remain relatively low, its customers lovingly extol its virtues. The company reached a peak of just 4.36 million subscribers in 2005, but its visibility turned its name from a proper noun to a verb describing the recording capability of all DVRs.

By mid-decade, the DVR business underwent a radical change as dual tuners enabled consumers to record one show while watching another. HDTV DVRs also became available from cable operators, more of whom made DVR cable boxes available to their subscribers. In 2008, sales more than doubled to 20.2 million DVRs of all stripes. A wide spectrum of users could now program their own commercial-free TV schedule.

Future:

As with many similarly compelling devices, once someone bought one DVR they wanted to affix one to every TV they owned. More and more, cable and telephone video services such as Verizon FiOS and AT&T U-Verse are offering networked multiroom DVRs, which let you record a show on a box in one room and watch it from another box in another. Networking also enables DVR owners to program recordings via cell phone or the Web—and even watch recorded shows remotely. As the price of memory keeps dropping, cable companies can offer DVRs with larger hard drives. But the future DVR may include no hard drive at all. Cable companies have been experimenting with “cloud DVRs,” remote storage that a user would access via the Internet to program and watch recordings not only from a TV but from a wide number of devices.

Stats:

2000 DVR unit sales: 249,000

2010 DVR unit sales: 18 million