Next-generation DVR will stimulate applications such as multi-room viewing

The two major cable operators in the United States are Charter Communications and Cablevision Systems Corp. Announced steps to get rid of traditional digital video recorders to meet the changing preferences of consumers.

Charter Communications announced that it has signed a multi-year agreement with TiVo to integrate traditional television programming with Internet content and social networking. In the early stages, scheduled to begin later this year, Charter will deploy the TiVo-branded Internet-connectable high-definition (HD) set-top box, as well as TiVo's user interface license for non-DVR set-top boxes. Charter also promised to deploy TiVo's upcoming multi-room and non-DVR platforms.

TiVo said that the initial product will have the following functions:

TiVo's HD user interface includes search TV, VoD, and web content to help users find what they want. ï‚Ÿ

Web apps: Allow users to use TV to access local news, sports and weather, online videos, Facebook and Twitter. ï‚Ÿ

iPad app: Serves as a command center, can browse program guides and recorded content, schedule recordings, post on Facebook or Twitter, schedule, search and browse programs from any location. ï‚Ÿ

Multi-room DVR: Allows viewing of common recorded content and playback of recordings in each room in the house, pauses recording in one room and resumes playback in another room, uses trick-play on recordings and can be removed from any room Recording content.

At the same time, Cablevision launched its non-physical network-based DVR (nDVR) system in the Bronx, NY, and stopped the traditional DVR set-top box. This activity is only applicable to new users. The original DVR users will keep their DVR set-top boxes. The price of the above service will be the same as the traditional DVR at $10.95 per month and will have the same storage capacity. The service, called DVR Plus, allows multi-room viewing and is compatible with most of the company's set-top boxes. However, there are some restrictions on older models, such as the ability to start and manage recorded content.

It's possible to win through alliances. Indeed, in the last few years, users' expectations for TV providers have become higher and higher, and companies that can meet these expectations will receive a huge return. This is a common view in the industry. Integrating the Internet, adopting cloud technology, or providing TV Everywhere and multi-screen access, regardless of the means adopted, the subscription television operators and their technology providers are all working hard to prepare for the next stage of television development.

Charter's agreement with TiVo is a good example of this trend.

Charter has shelved the TV Everywhere program due to lack of cooperation with the network owners. The collaboration with TiVo enables Charter to cater to users' needs by integrating Internet content into their traditional TV platforms without facing unnecessary risk from over-the-top video providers. In particular, Netfix's instant-streaming feature will be excluded from the TiVo set-top box that Charter issued. In addition, TiVo's technology will enable Charter to provide users with advanced services such as multi-room viewing and iPad-based functions, similar to the services provided by large operators, while at the same time they do not have to invest huge R & D funds.

For TiVo, the number of service subscriptions for the company has been declining since 2007, and the above cooperation has provided a much-needed source of operating revenue. This agreement came at a premium for TiVo, and its long-standing legal dispute over patents with DISH, AT&T, Verizon and Microsoft seems to have become more complicated. Although most of these lawsuits are in favor of TiVo, the company’s shareholders suffered from several setbacks in costly lawsuits. The agreement with Charter, the fourth largest cable operator in the United States, clearly helped to appease shareholders as it showed progress in the relationship between TiVo and major suppliers.

But the real significance of the agreement with Charter is that it confirms the status of TiVo, and it is obviously the main provider of software solutions for integrating Internet content and traditional TV programs. By reducing the focus on hardware and moving to the user interface (UI), the company may improve profitability because software companies generally have higher gross margins than hardware companies. In addition, if cloud becomes the favored storage medium for operators in the future, focusing on software will keep TiVo in its place.

Cablevision's strategy of directing users to web-based DVRs (nDVRs) is an example. Although other operators such as Comcast, TWC, Cox, Mediacom, and Charter now seem to have chosen physical multi-room DVRs, Cablevision has chosen a cloud-based solution that is expected to provide greater flexibility in the future. The nDVR not only supports multi-room and multi-screen viewing in the home, it also allows seamless viewing of recorded content outside the home once the issue concerning multi-platform power is resolved with the content provider.

It is not entirely clear what impact nDVR will have on Cablevision's profits. The company hopes that in the long run, the savings achieved through hardware deployment and on-site services will be able to recover the initial funding for the establishment of the system and safeguard its interests in the courtroom. However, due to the characteristics of US intellectual property laws, these savings may be difficult to achieve. In order to avoid infringement, Cablevision chose to create a separate copy of the desired program for each user, forcing the company to allocate dedicated storage space for each user. As storage-related costs will increase with the growth of nDVR users, this situation may prevent them from gaining economies of scale.

As for the savings realized from reducing on-site services, it is still necessary to observe whether the transition to nDVR will have an impact on the total amount of such demand.

Cablevision seems to believe this prospect. Otherwise, it will not advance the project in spite of content owners’ protests.

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