Big Issue

Here in the Big Issue column we take a regular look at the current issues that surround Sky+ and give our comment and analysis.

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This Month - A View of the PVR Now & In the Future     by Callum MacFarlane
Posted on Thursday 8th May 2003 

A Question of Control...                    
When asked by a student at Middlesex University for help in answering some questions about PVRs I expected the usual questions such as: "What is a PVR?" and "What is the difference between Tivo & Sky+"

But in fact what was asked of me, was a set of the most thought provoking questions I had seen in a long time.

Who's to say if the answers are what is being sought, but as a piece of work I thought I'd like to share with Plusworld readers, the questions put to me, and the answers I gave.

I would like to thank Kelvin Tan, whose research this is for kindly agreeing that Plusworld could publish his questions along with my responses:

1. Why do you think that TiVo, a similar service to Sky+, did not turn out to be as successful as expected, whereas Sky+ has? Is the way TiVo was marketed (with BSkyB) one of the reasons?

Tivo was and is the world's most advanced video hard disk recorder, but it failed in the UK for very specific reasons:

1) The name Tivo means nothing to the man in the street
2) Thomson, the sole manufacturer of Tivo was also completely unknown in the UK.
3) The high buy in price of £300 plus £300 lifetime subscription or £10 per month forever, proved too much for people who did get the Tivo message.
  Tivo led the field...

This Tivo pricing model was rigid, but interestingly in 2002 when the electrical superstores that decided to cease selling the Tivo units, discounted the units to £99, the sudden increase in demand was noticeable, even if it was current Tivo owners who were buying the units as presents for relatives and friends, and it was those buyers who were realising the true value of the product and the enjoyment that could be received from such a "gift". Powerhouse - discounted Tivos down to 99

Sky+ - innovative but not perfect Sky+ has not yet been proved successful, either in total sales, or in it's ability to meet all the requirements of the user, (you can't live pause a radio programme, or record another ITV region available under "Other Channels" because the software doesn't allow it). The Sky+ marketing slogan "Never Miss A Thing" is so untrue in relation to real time EPG updates and occasional non functioning 'series links' it's surprising that Trading Standards haven't been at Sky's door!

The marketing campaign for Tivo was obtuse and poorly coordinated. And despite its "backing and support" from Sky, it was as if Sky was holding back endorsing Tivo fully, and of course there was good reason, Sky+ was soon to be launched.

And strangely Tivo works best with terrestrial channels, as it has its own inbuilt analogue tuner, so that you can record one channel and watch another. Tivo working with Sky is fraught with difficulties, channel changing isn't foolproof and you can't watch one digital channel whilst recording a digital channel. Also the Tivo EPG doesn't use the Sky dynamically updated EPG at all, so late programme changes are ignored.

The chiefs at Sky knew that Tivo was a great product, but they felt rightly confident that Sky+ had some "killer features". And there was a small matter of the £10 per month for Sky+ all going to BSkyB, so why promote a product like Tivo when the greatest profit for Sky would be in Sky+. The demise of Tivo was guaranteed the day that Sky+ was launched.

2. TiVo and Sky+ are competitors, so what is the impact on Sky+ with TiVo having licensing deals with Sony and Toshiba?

Tivo and Sky are competitors in the same way as Ford and Vauxhall. They both sell similar concepts, but the products are a lot different, and the service they back that up with varies according to what you buy and whom you deal with.

Sky will not bat a "corporate eyelid" at anything that Tivo does in the future. The Sky customer base for their Standard Digibox service is so solid, and still growing that the "potential customers" who Sky can aim Sky+ at are just "sitting ducks".

Any Tivo marketing campaign in future based on new product will be extremely difficult to make a dent in the lead that Sky+ has grown to. They have no direct marketing strategy to the households that might be most interested in an alternative VCR solution. And with a brand as unknown as TiVo, all marketing is going to be an uphill struggle.

The likes of Sony & Toshiba have not made agreements with Tivo for fun, they see the future of television, and the future is Personal - Personal Television Recording. Sony Tivo SVR3000

Why watch live when you can watch through your "home entertainment command centre" with pause, multi channel record, slow motion, rewind, and not forgetting zapping through the adverts.

As the Americans say "it's a no brainer". And the truism that is most regurgitated in the industry about PVR/PTR owners is this: "Once you've tried a Tivo or Sky+ you'll never want to go back to watch normal TV again!"

So Large screen TVs with built in TiVo, DVD, VCR, PVR Hybrid products housing all the latest consumer technology, all branded and sold together as complete solutions. This is how the Americans/ UK market leaders are choosing to compete with the South Koreans and the Chinese manufacturers. The move "upmarket" to produce "high value", "high profit" products is no accident, it's all in the design and PVR is at the centre of that design.

How do these Sony & Toshiba's equate "high value" and "high profit"? Simple, create a business model that allows you to sell the hardware cheaply as a loss leader, so that the consumer is perceiving a "bargain" compared to standard TV, DVD, VCR, and then as part of the deal the buyer must sign the "service provision" contract that says they will pay a monthly fee for ever more, or a lifetime fee, so that the "high profit" aspect of the deal is the ongoing revenue generated from the service provision, of Daily Electronic Programme Guide listings, Future software upgrades, or just to use "the advanced options of the hardware" - like Sky+.

Only in this way, as part of their TV & DVD product set can Sony, Toshiba and the like hope to get a slice of the multi million pound market that will be PVR/PTR subscription income.

3. I read about the incident where subscribers had their TiVo recorders record shows on the Discovery Channel in the US after something similar happened with the BBC downloading the show Dossa and Joe last year. Is this a big issue? Is there a chance of Sky+ subscribers going through something similar? Is this a big issue?

Yes, it's one of the biggest. Tivo had the right idea with adding value to the users service, what they forgot to do was to ask the user if it was ok on an individual basis to download programmes to their devices.

The Tivo incident created upset amongst users, some thought their personal hard disk space was being taken up by a non requested programme, the truth was that Tivo had put aside space on the hard disk that wasn't part of the users own quota. But there were problems with the UK auto record of Dossa and Joe.   Dossa and Joe hijacked UK Tivos

For one, the BBC didn't run the show to time, so Tivo didn't catch the whole episode, and incredibly Tivo, a family product recorded an after watershed TV show that any child could have played back, without a parent knowing about it!
There was no advance warning about the programme to be recorded and Tivo staff were shocked by the scale & how vocal users were in their unhappiness.

Will Sky customers also get automatic downloads of programmes they haven't asked for? The current answer is "No", but the future should be optional.

Some customers would absolutely love content to be pushed to them and some would hate it. The solution lies in asking each owner what their personal preference is. This could be set in the Services menu of Sky+ for example as a changeable option, with the default being "no content to be pushed to the users Sky+".

However if I subscribed to the "push content" I could expect lots of exclusives that I wouldn't get anywhere else. e.g. next weeks The Simpsons delivered a week early, the new UK Top 10 videos pushed to met at 7pm each Sunday with automatic bookmarks. I could get exclusive offers, information and value added content. The limit is only your imagination, if this would not be exciting enough, the commercials that could be delivered to you, in your location with special offers, but more of that later.

The key to all of this is content management, something that hasn't really got off the ground yet. Each and every programme and element within a programme should be described with Meta data, tagged so that it can be identified.

e.g. each news item within a bulletin should be selectable within the EPG, so I can go straight to the sports news without fast forwarding through   Straight to sport please Sir Trevor..
each act on Top of The Pops should similarly be selectable. If I want to watch Robbie Williams and Liberty X only, why should I have to search manually for them? The artists should be listed as selectable options.   Why do I have to search through each performance?
The goals from my favourite teams should be getting recorded from Sky automatically, just games involving, Carlisle or Alloa for example.   Silverware for Alloa - the odd goal recorded would be nice too

The guests on This Morning or Des & Mel should be ready for me to access straight away without watching or searching the whole show. You get the idea...

If we had all this data coded and linked to shows and parts of shows it would make selecting and playing back particular items of interest much much easier.

Of course advocates of the Tivo system would say that to a degree, Tivo already does some of this advanced feature set by allowing key word searches, wish lists, record by actor, director etc.

But however good it is, it doesn't go into enough detail, to allow in my example for me to see a list of topics on the news bulletin and view just the relevant part. It doesn't know that Patrick Stewart is a guest on This Morning, because the EPG isn't detailed enough. It doesn't help with Top Of The Pops because the search facility is only based to programme level and not within a programme & not time coded to that actual second when an act is announced.

This is where the next 5 years is going to take us with content management; the question is who is going to provide the service and who is going to pay for it? So far Sky+ has steered away from searchable options on its hard disk, but with version 3 and onwards of Sky+ this functionality may change.

4. Other than the economic reasons, such as having to pay £10 per month, do you think there is anything else holding backing more BSkyB subscribers to join Sky+? Maybe Sky+ does not have enough features the customers want? Or is Sky+ a difficult concept to sell to consumers?

There are number of issues holding back Sky+:

1) Ordinary people in the street do not know, and quite frankly care what Sky+ is and what it can do for them.

Ask anybody in the street about Sky+ and they will likely just shrug their shoulders. "Something to do with Sky" would be a common response.

The concept is difficult to sell because Sky has to strike a balance between explaining the features and explaining the benefits. In the most recent commercials for Sky+ on Sky, the benefits of Sky+ have been pushed to the fore, and the technicalities of what the Sky+ system is capable of is rather overshadowed.

But for mass-market appeal, Sky is working in the same way as mobile phone operators, selling the experience, not the technology.

Once Sky hit miss market appeal with Sky+ the word of mouth should then help Sky move Sky+ units off the shelves like hot cakes. And what constitutes mass market? Once one million units of Sky+ are out there being used, then there will be 1 million ambassadors of the most advanced and liberating product since the invention of the aforementioned mobile phone.

2) The price is still prohibitive, with standard subscriptions, installation, mirror subscriptions, Sky+ subscription, and optional services such as Box Office, the total cost of ownership is high, and overly complex to many people. People know that consumer electronic goods come down in price over time and remember the high priced Sky digiboxes when they were launched that were soon given away "free". They expect the same to happen to Sky+.

Pricing structure is a complete mess and causes confusion and resentment amongst potential and new customers.

In an ever changing world, commercial savvy consumers expect value for money and do not like to feel that they are being told that today's price is a bargain when tomorrow's price will be cheaper.

The way to get around this is for Sky to bite the commercial bullet, they will choose to anyway sooner rather than later, but in the meantime £199 is the cost of Sky+. At that price point maybe only 10% of potential interested parties will take up the offer, if the price was to drop to £0 - free as with a standard digibox, then a huge proportion of interested parties would take up the offer of Sky+ with a £10 per month Sky+ subscription.

3) Sky+ does have enough features to sell itself to the majority of TV viewers in the UK, but the majority of viewers cannot understand a feature that is being marketed to them until they have actually used that feature for themselves. It's only then they are hooked.

Free trials of Sky+, videos of the product & its benefits posted to prospective customers. Roadshows to shopping centres, and schemes to introduce a friend as with standard Sky will all help consumers understand the product being offered.

Sky has made a start with demonstrations on the web at and by showing a demonstration of Sky+ on their own barker channel 998.

One feature which will turn a "why have" product into a "must have" product is the soon to arrive new ability to Dual Record to the hard drive of Sky+, so allowing a viewer to record say, Sky One, Record Sky Movies 1 and watch a pre-recorded programme from Sky+, all simultaneously.

Crystal Ball gazing, with Sky+ version 3 will it be possible to swap programme between Sky+ boxes with broadband? Why not? Just add a 50 pence transfer fee per programme swapped and before you know it another huge revenue stream, the revenue could even be shared with the programme providers if there was any copyright wrangle.
However Sky+ appears today, it is certainly an early version of what will appear on the roadmap of home entertainment, expect very big changes and enhancements over the next 5-10 years

5. Is it too soon to consider PVRs a success and start considering its potential implications such as the end of primetime television or personalised advertising based on the audience's viewing preferences?

It's a success for those who have and use it. Because we are not at mass-market stage yet the implications seem slight for the advertising industry or scheduling controllers.

However there will soon come a day when, like the Internet, there will be those who are plugged in and those who aren't.

For those people who are not part of PVR revolution, life will go on pretty much as normal, for the rest of us life will be a "high octane", self serviced, customer focussed, individualistic and "time constraint free" experience of selecting content and playback options giving us what and when we want it.

Primetime television does not really exist in a PVR home, and with Dual Recording for Sky+ coming soon will matter even less in future.

The Programme schedule on Sky+ is made of nearly all pre-recorded material ready to be played out at any time. Why watch live when you can do so much more with pre-recorded material?

The only way to break this cycle from a scheduler's point of view is to involve the viewer in the programme real time, so that the viewer can vote real time & find out the result real time, in the same way as I'm a Celebrity or Big Brother is appointment TV for its viewers. Sports events also have a benefit in being watched live.
celebrity compulsive live Big Brother live is addictive...

Personalised advertising is the ONLY way that advertising on TV is going to work in a PVR household. Our household is interested in photography, cinema, eating out, pop music and the Internet.

Adverts targeted at our household would be welcome - showing us great deals on digital cameras, trailers for the latest releases at our local cinema, restaurants in our area with special offer discounts to be quoted from the advert. Pop music adverts, "this is J-Lo's latest single, and to request a video of this to be recorded to your Sky+ please press Red now. To purchase the single press Green, to purchase the Album press Blue."

AOL Download by pressing a button   Another example of an advert might be:

For AOL Internet access - type in your e-mail address now and we shall send you an e-mail with a clickable programme shortcut for your PC for a free120-hour trial that you can click on and use straight away.

You could perhaps get a "free Box Office film" every month for agreeing to watch the adverts, if you wanted to take part.

The advertising opportunities are endless.

A simple advertising opt in / opt out would be controlled from the Services menu of Sky+ and the default would be no advertising.

6. Are PVRs just experiencing an initial hesitant market like any other technologies such as the Internet and DVDs? Would you say that if the last decade was the revolution of multi-channels, the next decade will be the revolution of PVRs?

Yes the PVR market is embryonic at the moment, but with funds available for a marketing campaign, that will be bigger and better than anything gone before the general public will all have an awareness of Sky+ by Christmas 2003 even if there isn't a huge buy in at that time.

Because a PVR is so personal expect 1 unit per household initially, but once the usefulness really hits home, every home will want one wherever there's a TV.

Because the Sky+ is so intrinsically linked into the Sky EPG an operates exactly as a standard digibox would, there will come a point in the lifecycle of production of Sky+ that when a new customer wants a standard Sky digibox, they will be given Sky+ for the same price, because the buy in factor once it's in your house, and you have remote control that can record and play programmes, and all you have to do to enable it is phone up Sky - well then you really do have a mass market product.

The Nineties were about choice on Sky Digital, this decade is all about control on Sky+.

Think of it as before you had a choice of hundreds of buses on predefined routes and timetables, but now with your car you can go wherever you want, whenever you want. That is the control that Sky+ brings.

As a generalisation, as a nation as we get more cash rich, and more time poor, devices like Sky+ & Tivo open up a whole new world of personalisation and control, giving us back the time we lost in the linear world of TV broadcasting.

7. A previous similar type of technology to a PVR is Video Plus, where instead of using a VCR, a hard disk is now used. Do you think customers are put off, as what they might think is just another Video Plus?

Videoplus is a great benefit to technophobes everywhere, but it still is rather limiting in the that it only programmes the VCR with a set instruction and no ability to change tapes, pause a live programme or do any of the host of things that a PVR can.

There is obviously a great deal of confusion from consumers between VCRs that use videoplus and Hard Disk Recorders that use software only solutions.

The solution is not to mention VideoPlus and to then concentrate on the message "You're in complete control" when extolling the virtues of PVRs.

8. In the April 2003 edition of What Satellite & Digital TV, it offers a DIY Sky+ upgrade from the current offering of 40GB of hard drive space. If it is technically possible to upgrade, why is it that Sky+ has not yet made it available to subscribers?

Enthusiasts of Sky+ & Tivo have trebled their hard disk capacity to 120GB - approx 60 hours of recording. This hard disk upgrade is not impossible by any manner of means, but it does take someone technically literate to do it, and of course it does invalidate any warranty that you may have on the PVR.

Sky are likely to make authorised hard disk upgrades available within the next year or two, another revenue stream for them.

At some point in the future bigger hard disks will be the norm anyway. 40GB today - 1000000GB in 10 years time?

9. If Freeview succeeds, so too would digital television. Without digital television, there would not be much point in having Sky+, since there are only 5 channels. Is it important to the growth of PVRs in the UK for Freeview to succeed in getting more viewers?

Freeview is almost an irrelevance to Sky+. The only thing that Freeview has in its favour is that because its free, any PVR like the Pace Twin PVR can record programmes without a subscription fee, making the ownership cost much cheaper.   20GB For a hard drive? !!  aaaarghhh!

If Freeview does not succeed, the main terrestrial channels will continue to digitally broadcast and the analogue signal will still eventually get switched off.

All that Freeview gives is choice and competition, both good qualities, but compared with Sky, it is a 2nd rate system.
Freeview is at least - free!

Conversely in this household 80% of programmes recorded are from the Big 5 channels (BBC1, BBC2, ITV1, Channel 4 and Five) - live viewing is reserved for Sky Sports channels, News channels and music video channels for relevant "mood" music.

Sky will dominate the market come what may, and will have the leading brand in Sky+. What the uncomfortable thought for some might be is that despite al these channels, Sky+ users might downgrade their channel package to "non-subscription" because the value of the PVR function at £10 a month means there is plenty of suitable content on the main non-subscription channels. In fact you can buy Sky+, pay your £10 a month and never subscribe to Sky programmes, in effect almost a duplication of the Freeview service, and with Sky+ you get dual tuners and ever improving software features.

10. Is there room for a Pay As You Go type of system in the PVR market?

PVR Rental or Pay As You Go would certainly have advantages on the "big purchase" scenario, where the customer has to spend a substantial lump sum in one go.

The Prepay option worked well for ITV Digital, and would work well in conjunction with standard payment terms as the other option.

Flexibility in the price model and ways in which people can pay for the PVR service would assist take up to a significant degree.
Pay as You Go or Rental..

When the Sky+ system is given away "free" (sometime before 2007) to people who sign up for the top Sky subscription package and subscribe to the Sky+ subscription, there will be no substantial lump sum and this will allow all people who can afford the monthly fees to use Sky+.

Of course, if you don't want to spend a huge sum of pounds a year on Sky+, then alternate PVR solutions such as the Pace Twin PVR will come into its own, the choice and control may not be quite the same as Sky+, but the economics and money saved over the year really come into its own.

11. To enjoy Dolby Digital 5.1 sound quality from Sky+, that means having to get amplifiers, in addition to getting widescreen television. Is Sky+ just a luxury? How soon before it becomes a standard?

Dolby Digital 5.1 maybe a bit of a luxury at the moment, the majority of Sky customers polled recently, said that they owned a widescreen TV. Sky+ is a luxury in many people's eyes, as it is perceived as an expensive digital version of a VCR.

It will become standard when the Sky+ subscribers reach 1 million homes, and then it will be the "must have" item of this decade.
  A dear old lark this home cinema setup...

The 2 scenarios that will effect how quickly mass market penetration happens is:
1) When Sky+ becomes "free"
2) When Sky+ is the new standard Sky digibox, i.e. everyone will get one whether they want one or not. (do you think everyone asked for Sky Box Office, or Sky Games? Or did they just get them thrown in with the digibox as part of the default deal?)

It all depends how quickly the manufacturers can push down production costs, and with new PVR microchip being created all the time, the cost to create such devices is falling rapidly.

12. Should the advertising industry be worried about Sky+?

Worried? They should be terrified! In this household, advertising watching has decreased by 99% ! It's the main time saver of having as PVR - skipping the adverts. If the advertising execs can be bothered to get off their corporate lazy asses and target this family - download dynamic researched adverts that we would be interested in, then they would have a chance.   Ad man busy at work for Sky+ punters...
This Brand Is Dead...Deceased...   Until then, "the brand" is dying in PVR homes and what matters is convenience and understanding the consumers needs. A whole new world of advertising is possible with Sky+ and other PVRs, just ask us to opt in and we might just do it!

13. Is it too soon to worry about the way forward for PVRs, such as capability to record interactivity, or should the industry just worry about getting more customers?

It is not too soon, in some ways it is already too late. Expectations of consumers are being ignored by the corporate sloth mentality of "maximum revenue per subscriber models" that mean nothing to the customer, but mean resting on its laurels for the corporate PVR makers.
Interactivity is the way forward, if I want to record my attempt at a personal best in Beehive Bedlam (a game on Sky Gamestar) why shouldn't I be able to? If I want to record the football with fans commentary on Sky Sports why can't I? If I want to record a News multiscreen feed, why can't I? Is it because it's impossible? No, it's because of low expectations and mass-market appeal. All the talk of control means nothing, if the control is not there in the first place.   I had a highest Score - Honest!!

The technology may not be there yet for simultaneous recording of 8 Sky News multiscreens with interactive choices for each, but a basic recoding of what's on the screen should ALWAYS be possible, whether it's a different ITV region in the Others menu, or a radio programme that you just want to live pause.

14. Finally, what do you think is the way forward for PVRs?

Make PVRs that consumers want. A 20GB Hard Drive in this day and age is an insult to the potential PVR buyer. In the same way tat you can have a mobile phone package with a number of minutes, allow consumers to choose how many hours of recording they want as an average and let them pay for that, 40GB for 20 hours, 80GB for 40 hours and 120GB for 60 hours. Allow the consumer to choose the number of tuners, 2, 3 or 4 so that they can record up to 4 individual programmes at the same time and let them pay for that. One size does not fit all and the sooner PVR manufacturers realise that the better.

Enable broadband swapping of programme content between PVRs. This is probably the most contentous issue for the future of PVRs, but it will be what consumers demand. It is already happening in the States, with SonicBlue's ReplayTV. Far too complicated for UK users? Here's a quote from ReplayTV's FAQ:   Missed a show - swap it with broadband...

"Q. How do I share my recordings with my friends?
A. If your friend has a ReplayTV 4500 or 4000, they can "talk" to each other over the broadband Internet connections.
From your Replay Guide, just select the show that you want to share. A pop-up menu will give you the option to "Send Show" and then ask you to select the person that you want to share the video with. All that's left is hitting "Send" and the video is sent the person that you selected. It's that easy!! "

A good business model could be made on programme transactions if managed properly, but as usual rights holders will probably stick their heads in the sand.

The future of PVR is undoubtedly tied up in "push technology" and offering the customer something above the norm, if they wish to opt in. Be it customised advertisements, samples of mobile phone ringtones, or a preview of a whole episode of an up and coming programme that has not yet been aired.

Sky+ is all about maximum revenue per subscriber and Sky should learn to treat their top paying customers like VIPs Thomson, the only previous manufacturers of Tivo in the UK have ceased production of the unit. Tivo do not have a new manufacturer in the UK yet but that may change and dual tuner Tivos will get to us eventually. Freeview type PVRs such as the PACE Twin are the cheap and cheerful way to get into PVR heaven with only one initial cost and no follow up costs.

Other PVR solutions will come to the market, such as Microsoft, Showshifter, Real Player, etc but only solutions that sit alongside or are part of your TV will have any chance of success.

The future is all about control in a relative "cash rich" "time poor" environment, and PVRs of all kinds deliver big time.

One thing is sure, the digital revolution in Home Entertainment has only just begun and we are the witnesses to the fastest rush in history to have the Television of the Future in our grasp,

In the same way that mobile phones and the Internet empowered people worldwide, the Personal Video Recorder will become the control centre for our window on the world.

So in a word, what exactly will make it successful, well the answer is in the name - Personal Video Recorder, "Personal" is the way we interact and understand our wants and needs, and the PVR will help make that "Personal" to you and me.

Footnote: Kelvin Tan has kindly agreed that Plusworld may publish his research work in full when it is available in July.

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