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ReplayTV Tunes Out Consumer Market

12/04/2000 02:00:00 AM Eastern

MOUNTAIN VIEW, CALIF. -Personal video recorder company ReplayTV said it will no longer market hardware and services for its hard-drive-based video recording system directly to consumers, and will instead focus on licensing its software, technology and program listings services to cable operators and other consumer electronics manufacturers.

In shifting to a business-to-business approach, ReplayTV will let manufacturer partners, including Panasonic, build and market ReplayTV set-top recorders and services. ReplayTV will concentrate on offering its technology to digital video service providers, such as cable system operators and direct-to-home satellite operators who wish to distribute their own integrated decoder boxes with hard-drive recording features.

ReplayTV is currently beginning market trials of its service with AT & T, Time Warner Cable and Comcast services, offering a "two-box" solution, according to a ReplayTV spokesman. If approved, cable operators are expected to integrate the recording components into their own digital cable decoder boxes.

Additionally, ReplayTV announced it is working with Motorola and Charter 5000 on a "Project Disco" cable box that incorporates ReplayTV digital recording technology.

The company continues with direct broadcast satellite providers to have the system incorporated into satellite decoder boxes.

ReplayTV's announcement did not appear to have any immediate impact on the prospects of Panasonic's ShowStopper hard-drive recorder products. A spokesman for Panasonic parent Matsushita said the company will continue to sell and promote the Panasonic ShowStopper device with service from ReplayTV.

Additionally, Sharp, which had shown a prototype ReplayTV recorder at last year's CES, said it continues to negotiate with ReplayTV on delivering a product under the Sharp label.

"We still have a letter of intent to produce ReplayTV products, but have not been able to reach a business agreement that made sense," said Bob Scaglione, Sharp home digital division associate VP. "I think their latest decision will be positive for our relationship with them. We believe their restructuring will give them an opportunity to work with us on a proposed new model that will be positive for both of our companies."

Scaglione could not elaborate on that new "business model," but he added, "this will help. It's still a great technology. We've always loved the service and product."

ReplayTV said the retail portion of its business was losing money at the same time that cable and satellite TV operators, which represent the next level of business expansion for the hard-drive recorder market, were looking for more control over their personal recording services.

ReplayTV had sold set-top recording devices under its own brand for the past year through its website and other e-commerce partners, including Amazon.com, while Panasonic sold ReplayTV-enabled set-top recorders under its brand through brick & mortar retail accounts.

A slower than expected rollout and a strong marketing campaign from rival TiVo contributed to the system's early challenges. Some analysts estimate it had garnered only about 30,000 users to date.

Even TiVo, which reported only 75,000 subscribers at the end of September, has also experienced slower-than-anticipated acceptance of its personal video recorders, which are offered by Philips, Sony and others, due in large part to difficulty in communicating the complex concept and benefit to consumers.

TiVo recently began offering new recorders integrated with set-top satellite decoders for the DirecTV platform and expects to get a boost in awareness from related advertising and marketing campaigns.

Meanwhile, Microsoft is preparing to roll out its UltimateTV hard drive recorder products, which integrated WebTV terminals and satellite decoders for the DirecTV system. It has offered a similar device called DishPlayer through EchoStar for almost two years. EchoStar said that device has enjoyed very strong acceptance, leading many industry observers to believe that the devices are most compelling as an adjunct to digital video services.

But where TiVo and Microsoft have linked primarily with satellite services to date, ReplayTV appears to be focused on licensing its technology to cable TV operators who wish to provide their own personal video recording services to their subscribers. ReplayTV is also stepping aside from selling advertising through its platform.

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