The danger of DVRs

April 24, 2011
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The digital video recorder (DVR) might appear to be simply the 21st century equivalent of a VHS tape that allows consumers to record films and TV shows to watch later. In fact, competition from the DVR is as significant a threat to packaged home entertainment as that from illegal downloads – if not more so.

The majority of consumers do not wish to spend time and energy to identify and download pirated films from dubious file-sharing sites with no guarantee of quality and the probability the “free” film will come with infectious malware. Time-shift premium content available legally from your service provider is trivial by comparison.

No longer does the primary challenge to packaged media stem from misguided, computer-savvy teenagers with a camcorder, or career criminals with a bank of DVD-Rs in a lock-up garage. Legal, high quality home entertainment in high definition, with or without advertising, can be stored and recalled at no extra charge to the viewer, using the recording and reproducing apparatus within their duty-free communications device.

A January forecast by the research organisation Deloitte predicts that a DVR will be in more than 50% of UK TV households by the end of this year. For the moment, Blu-ray quality has the edge but the announcement that Virgin Media is to test 1.5 Gbps broadband in London later this year means that eventually, for consumers at least, online streaming video will be almost indistinguishable from BD.

Other things being equal, broadband of that speed could accommodate the parallel delivery of 40 video streams at Blu-ray data rates and still leave more than enough space for many other online data and value-added services. While the implementation of the Digital Economy Act leads to court battles between ISPs and copyright owners, consumers sit back and enjoy paid-for, pre-recorded premium content, delivered to their TV from their STB.

The DVR’s ability to record many hours of viewing from multiple broadcast and cable channels causes consternation to producers of DVD and Blu-ray discs, but it also has put a crimp in HMRC’s tax raising plans.

Hollywood’s decision to launch a Premium Video On Demand (PVOD) service that offers first-run features to subscribers just 60 days after theatrical release has stimulated an angry backlash from cinema owners and packaged media vendors alike. Added to the mix is the near-universal provision of DVR capability in the set-top boxes (STB) offered at low or no cost to cable and satellite subscribers or even included in CE tuners and TVs.

Faced with probability that users will store and retrieve recent releases, rather than wait for the Blu-ray or DVD, the US launch last month of the “No to Premium Video on Demand” campaign comes as no surprise. Opponents of the idea of PVOD believe that disc sales and cinema admissions will plummet if the studios go ahead with this idea.

This new challenge to the status quo comes as innovation in digital storage technology allows current DVRs to hold three days or more of non-stop HD video viewing. Next-generation drives, with double the running time, are available now and will appear in consumer STBs as soon as prices start to fall.

The march of progress doesn’t stop there, Virgin Media’s innovative “backward EPG”, introduced late last year, is arguably the most significant advance in time-shifting technology since Philips launched the first video cassette recorder (VCR) with an in-built tuner, back in 1972.

The present-day combination of digital tuner and record/replay device would appear to be similar in concept to the VCR but a decision by the European Court of Justice in favour of BSkyB and STB suppliers Pace is at odds with this. The companies argued that because the Sky+ box plugs into a phone or broadband socket it is primarily a “communications device” and not a “recording and reproducing apparatus”. HMRC counterclaimed that the recording ability of the DVR inside the Sky+ box means it is subject to import duty of 13.9%.

The five judges assigned to the case pronounced it “an STB with a communication function” and dismissed the HMRC claim. As a result, DVR manufacturers are rushing to incorporate network connections into their boxes.

Although cable and satellite companies will benefit from the court’s decision, it is unlikely to affect what consumers actually pay. The intense competition between Sky, Virgin, BT Vision and third-party suppliers means that, recording apparatus or not, the STB has become a marketing tool, used to promote the take-up of subscription contracts.

BT advertises the Vision+ box at £199 to match the price of Freeview+ HD offers such as those from Humax and Sony, which do not have the additional requirement of a subscription. Virgin Media’s partnership with TiVo allows its STB to record two programmes concurrently, while viewers play content from the internal HDD. The “activation fee” of £49.95 sounds attractive although the commitment to a £30.50 monthly subscription soon adds up. BSkyB takes a different tack. Not only does the company provide a free Sky+ HD box but also until the end of April subscribers receive a £100 M&S voucher with each activation.

The pace of change is so great that, even as you read this, Virgin Media will have updated the V+ HD boxes it introduced in December. Uers may now record three programmes while watching playback of a fourth.

Given the bundled deals to supply the STB free of charge, the ability to store entire series automatically and the fact that 80 hours or more of recorded HD video is instantly available, it is perhaps surprising that DVD and Blu-ray sales hold up as well as they have.

The news last week that Apple might not implement near-field communication (NFC) within iPhone 5 when it is released later this year was followed swiftly by an intriguing rumour about even better things to come. With NFC technology integrated into both the Apple desktop computer and iPhone 6 (probably), any Mac could become “your” Mac, simply by bringing the two within range.

With the iPhone, your desktop, your files and all your personal data will be accessible on any next-generation Mac computer screen, anywhere in the world. Once you are close enough and, presumably, once you enter the correct PIN or password, the Mac in front of you is yours. Walk away and no personal data remains for others to track your activity. Hot-desking has never been hotter.

There is another more interesting twist to this news, however, which could have a significant impact on home entertainment. If iPhone “talks” to Mac computers, why not extend the idea to the main television screen in the home? Once the STB detects who is watching, based on the iPhones in the room, the Electronic Programme Guide (EPG) can display content that is appropriate to the assembled viewers.

NFC-equipped smartphones linked to the DVR would ensure that children could not access inappropriate programmes without parental permission. With no phone present, content could default automatically to a preset classification, from “U” to “R18”.

Linking smartphones to the TV could do much more than enforce parental control, however, as the British technology company Snell and London-based developer The Application Store (TAS) demonstrated at the NAB show in Las Vegas.

Over the past six months, there has been much talk about companion screens — the smartphones, tablets and laptops that accompany their owners into the primary viewing room in the home. While news, sporting events, reality shows and filmed entertainment appear on the big screen, social networking, searching and online shopping are the preserve of the companion screens. Until recently, there was no way to synchronise this activity.

Morpheus, with which Snell won the “Superior Technology” award at NAB this month, provides the synchronisation and metadata to link the screens. The Screentoo app from TAS delivers targeted advertising, information about content on the primary screen and provides a link to e-commerce. The package does not demand brand-new infrastructure from the user – everything required is already present in the handset, laptop or tablet. All that is needed is a simple, downloadable Screentoo application and Morpheus at the broadcaster or cable company.

Advertisers, media organisations and broadcasters may customise their own branded applications to tie in with a product, a channel or an individual show and the Screentoo app is available for all the major smartphone brands and operating systems.

Snell Chief architect Neil Maycock says, “Increasingly, consumers engage with media through multiple devices at once. The combination of Morpheus automation with apps such as Screentoo takes advantage of these trends, opening the door to some exciting new possibilities. Morpheus allows broadcasters to extend the experience onto secondary devices, where complementary interactive content drives up interest in programming and importantly, enables new levels of highly targeted advertising.”

With smartphones set to morph into companion screens, it is no surprise that Apple announced profits up 95% in the second quarter. As a supplier of communication devices, the company will continue to be a major beneficiary from the increased demand for secondary screens. The “iPhone 10” might offer a whole year’s entertainment bundled with every handset thanks to the increasing storage capacity of solid-state devices.

And it will be duty-free