So far, almost everyone is living quite easily without one. When the first personal video recorders (PVRs) hit the market a couple of years ago, industry observers predicted that their ability to skip commercials, pause live television and record as many as 60 hours of programs on a hard drive would catch on faster than Pokemon at a preschool. It didn’t happen. Consumers, it seemed, just didn’t get what the machines could do. It didn’t help that the recorders carried a four-figure price tag and monthly fees. Two years later prices have dropped, but to no burst of sales. Only 300,000 to 400,000 units have been sold. But it’s early days yet: the now ubiquitous VCR had comparable adoption rates in the late 1970s.
Manufacturers think that may soon change. In February, Microsoft dived into the PVR market with Ultimate TV, propelled by a $50 million marketing campaign. Early players TiVo and EchoStar Communications’ DISH Network are pushing ahead with new ad campaigns for their own devices. And competitor ReplayTV is back from oblivion with a new backer and a revamped business strategy. But it may be the combined marketing surge that finally pushes the PVR into tens of millions of homes.
The pitch for Microsoft’s Ultimate TV is meant to solve one problem TiVo didn’t: explaining how the technology works and how it can benefit viewers. “In our television campaign, we went to great pains to show a demo in every spot,” says Beth Kachellek, director of advertising for Ultimate TV. The barrage of ads show users pausing live TV, recording two shows at once and watching their favorite shows when they have time. And the demos don’t stop at TV commercials. Last week Ultimate TV dispatched a fleet of trucks to parking lots of electronics stores and baseball stadiums in 11 cities around the country. Consumers will be able to stop into these tented “living rooms” and try out Ultimate TV for themselves.
Executives at four-year-old TiVo, based in San Jose, Calif., abandoned an early attempt to explain their product’s features in 30-second TV spots. It just seemed too complicated. Instead, they ran a series of quirky ads promoting the TiVo brand name. (One showed football greats Joe Montana and Ronnie Lott discussing embarrassing “male itch.”) Now they’ve gone back to basics: in one spot launched in April, for example, a family races through dinner to catch a prime-time show–unnecessary with a PVR. The goal, according to TiVo senior VP of marketing Brodie Keast, is to overcome ingrained TV-watching habits built up over three generations. “We need to talk about TiVo in the context of real-life problems to break that inertia,” he says. “There’s a huge education component of any marketing strategy that’s going to require a big investment from multiple players.” TiVo knows all too well that marketing costs money. Last month the company announced it would lay off 23 percent of its staff to save $60 million.
Until recently, ReplayTV was in even worse shape. The company, based in Mountain View, Calif., priced its unit too high–as much as $1,499–and lost out in the early running to TiVo. Last November, ReplayTV pulled out of the retail market and announced it would license its technology to other companies. Now ReplayTV is in the process of being acquired by consumer-electronics maker SonicBlue. In April it struck a critical licensing deal with Motorola, which agreed to build ReplayTV into as many as 5 million set-top digital cable boxes. (Motorola controls about two thirds of the set-top box market, with more than 14 million units sold.)
The potential of this deal lies as much in the marketing as in the distribution. ReplayTV will be pitched to cable customers when they order or change their service. Charter Communications (which, like ReplayTV, is tied to Paul Allen’s Vulcan Ventures) has already signed on to be Motorola’s first customer.
ReplayTV is not alone in seeing the potential of distribution and marketing through the cable guy. TiVo has links to AOL Time Warner, Comcast and Cox Communications (which hold equity in the company), and Microsoft is looking for cable partners.
With all that marketing muscle behind it, the PVR may at last be ready for prime time. For viewers of the often anticlimactic Super Bowl, that will bring a bonus: they can fast-forward through the game to get to the commercials.
