DirecTV Deals for ReplayTV Assets

DirecTV Group Inc. (NYSE: DTV) sealed a deal today to purchase the assets of digital video recorder (DVR) pioneer ReplayTV from D&M Holdings Inc. of Japan for an undisclosed sum, but the satellite giant has been mum so far about how the move will fit into any larger strategy. (See DirecTV Picks Up ReplayTV.)

What's puzzling is that DirecTV already has a DVR. The company first partnered with TiVo Inc. (Nasdaq: TIVO) for the feature and still supports TiVo-equipped satellite boxes. Its new DVRs use software from News Corp. (NYSE: NWS) corporate cousin NDS Ltd. , and DirecTV recently extended a conditional access contract with NDS that's good through June 2013. (See DirecTV, NDS Extend Deal.)

A canned response from DirecTV didn't explain much.

"The acquisition of Replay TV's assets will enable us to explore new services as well as the potential of Replay's IP technology," a company spokesman said in an emailed comment. DirecTV, he added, has made "no decisions… concerning the integration of Replay technology with our existing platform."

Even without a specific outline from DirecTV, plenty of guesses are making the rounds.

Maybe DirecTV is looking to reset an internally run DVR technology and service strategy, as ownership of the satellite company shifts from Rupert Murdoch's News Corp. to John Malone's Liberty Media Corp. (NYSE: LMC), suggests Bruce Leichtman, president of Leichtman Research Group Inc. (LRG) .

"Maybe there's a way to keep [a DVR strategy] in-house to some degree with the ReplayTV assets," Leichtman says.

Then again, DirecTV might be seeking some legal shielding, considering rival EchoStar Satellite LLC "appears to be losing a legal battle with DVR provider TiVo Inc. over patent issues," writes analyst Stewart Schley of One Touch Intelligence in a blog entry.

The ReplayTV purchase may also give DirecTV additional leverage should it decide to negotiate a new deal with TiVo.

"That early relationship with TiVo was a good one," Leichtman says, noting that DirecTV probably moved to NDS to avoid paying higher license fees to TiVo.

D&M chairman and CEO Eric Evans said in a statement that the ReplayTV "asset and business was profitable" but that the sale to DirecTV "makes the most sense for this business, its employees, and us."

D&M said it will continue to honor its ReplayTV service contracts "for the foreseeable future," while DirecTV will take over most of ReplayTV's assets and its brand. D&M did not disclose the number of ReplayTV subscribers.

The DirecTV deal marks the latest change of hands for ReplayTV's assets. SonicBlue bought ReplayTV in 2001 but later filed for bankruptcy and sold its assets, including the ReplayTV components, to D&M in April 2003 for $36.2 million.

In June 2003, ReplayTV succumbed to pressures from studios and other copyright holders, agreeing to remove the "Send Show" and auto-ad-skip features from its 5500 DVR model. Send Show let ReplayTV users share recorded programs over the Internet, and cable programmers, particularly premium services, cried foul over the practice.

As for TiVo, it's been beefing up its cable strategy in the wake of its altered relationship with DirecTV. TiVo has signed deals with Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Cox Communications Inc. , though deployments with the former are just getting off the ground. (See TiVo Set-Tops Trickle Out .)

The cable industry is appeasing TiVo further with a refined version of the OpenCable Platform. This would let TiVo retail models with CableCARD slots run in two modes, including one that would preserve the TiVo user interface and reduce conflicts with local operators' applications and guides.

Cable is also developing a "tuning resolver" to let one-way TiVo DVRs with CableCARDs access programs in an operator's "switched" tier. (See TiVo à la Mode , CableLabs Spec Brings SDV to the Masses, and 'Tuning Resolver' Faces IP Hurdles .)

— Jeff Baumgartner, Site Editor, Cable Digital News

Jeff Baumgartner 12/5/2012 | 2:57:20 PM
re: DirecTV Deals for ReplayTV Assets Wow, thanks for the post. We've heard that the newer DVR platform was less than stellar, but didn't realize the situation was that bad. My "generic" Comcast DVR leaves something to be desired, too, this coming after I used a couple of SD TiVo stand-alone DVRs for several years...I'm looking forward to trying out the TiVo-Comcast port (whenever it finally makes its way to the Colorado system). Any other folks out there care to share their experiences with the DirecTV DVR -- both good and bad? Looking forward to seeing what DirecTV does with ReplayTV?
optodoofus 12/5/2012 | 2:57:20 PM
re: DirecTV Deals for ReplayTV Assets Anyone who has a DVR from DirecTV should be able to tell you why they bought the Replay IP. I have three DVR units through DirecTV. The first two are TiVos, and they are great. Reliable. Easy to use. The third is one of the new DirecTV DVRs. It is simply terrible. The UI is confusing, almost to the point of unusability. The SW quality is horrendous. I have to reset/power-cycle the unit at least once a month to keep it working. When one of my TiVo-based DVRs inevitably dies, I will switch to cable rather than buy another POS DVR from DirecTV. That is why they bought the Replay assets.

gottappp 12/5/2012 | 2:57:19 PM
re: DirecTV Deals for ReplayTV Assets I suspect DirecTV's acquisition of ReplayTV and Echostar's recent acquisition of Sling Media have more to do with beefing up their digital video Intellectual Property arsenal for future patent disputes, rather than having new/better/cool products to sell. As Echostar seems to be learning, without its own IP, they have no leverage when TiVO or others come-a-suing. It would seem likely that TiVO will at some point want to offer sling-like services on their boxes, as would DirecTV. So now DirectTV has DVR IP as well, so when they start slinging they're protected from Echostar.

On a side note, while I can't comment on DirecTV's DVR, Dish's DVR is fine. I do miss TiVo's pitch-escalating, triple-double-bubble fast forward sounds(this is still the noise we make when we want the remote-bearer to skip commercials). Other than that, no complaints.
Dr_Booda 12/5/2012 | 2:57:17 PM
re: DirecTV Deals for ReplayTV Assets I've had the DIRECTV DVR for over a year now, and agree it is horrible when compared to the DIRECTV TiVo. The unit was released last year with software that was not fully developed, and although improved, my unit will still crash about once/week. DIRECTV is trying to turn their in house DVR into a compilation of every other DVR on the market (DVR, Ineractive Gaming, VOD, Media Player) but are missing the central focus of a DVR; have a reliable unit that records programs flawlessly.

I loved my old TiVo but had to switch over to get all of the new mp4 HD channels. I agree that the Replay TV assets can only help the situation if they are wise enough to incorporate the software somehow.
lml2000 12/5/2012 | 2:57:12 PM
re: DirecTV Deals for ReplayTV Assets As an owner of a ReplayTV for just about 8 years, as well as an owner of a DirecTV HD DVR by NDS (HR20), my reaction to this development was positive.

I believe DirecTV purchase the assets of ReplayTV for two reasons: (i) the patent rights attendant to its IP portfolio; & (ii) the quality of its software.

DirecTV has publicly noted the value of ReplayTV's IP software. As DVRs become more prevalent in the home, the ability to share video among different locations in the home, as well as with friends & family over an IP platform, is going to become increasingly important to the consumer.

Moreover, it is a given that DirecTV has a big brand problem with its NDS manufactured DVRs, particularly in luring existing DirecTV TiVo box owners onto an MPEG4 machine. Some TiVo owners would "rather switch than fight" with the NDS machine.

As an owner of both machines, I can say that the Replay software is flawless. Extremely simple to use, intuitive. Hardly ever a problem. In contrast, the NDS machine is wrought with software glitches. With each firmware upgrade, the software has become slower, less stable, prone to temporary locking, sometimes requiring a reboot. The UI is poorly designed. And as one poster stated, & I've noted elsewhere much earlier, the engineers @ NDS seem much more focused upon ancilliary bells & whistles rather than upon a stable, well designed interface.

I think eventually, the NDS has to go. Many loyal DirecTV subs have given the machine a year to 2 years. The machine is poorly designed, & "upgrades" have improved ineffective in improving the machine at the most basic level. But for Murdoch's investment in NDS, NDS would not have the contract with DirecTV. The fellow who heads the technical development of this machine was slow getting it to market for obvious reasons. It is apparent that this machine was designed by an engineering team with little understanding of the consumer, nor how to build a stable UI. ReplayTV's IP offers DirecTV an option down the road.

Jeff Baumgartner 12/5/2012 | 2:57:11 PM
re: DirecTV Deals for ReplayTV Assets considering the importance of DVR interfaces and usability...how long before someone really makes a play for TiVo? thought that rumor is older than the hills....Can Comcast step up before a competitor like Echostar jumps in?
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