Recording a piece of content didn't used to be so hard. Yes, the quality when you hit record on EP mode with your VHS tape was less than stellar (Millennials, see: VHS on Wikipedia), but at least you knew you'd be able to watch your favorite program and fast forward through all of the commercial breaks.
And then came digital video recorders. Holy 30-second skip, Batman!
But somewhere en route to cloud DVR, something went wrong. In the latest example of said downward trend, YouTube Inc. is reportedly cutting off access to commercial fast-forwarding for several programs as part of the cloud DVR feature in its new YouTube TV service. According to The Wall Street Journal, users are able to skip through ads in recorded shows, but only if those shows are not also available on-demand. When a show is available on-demand, users will default to that version of a program rather than the one they recorded. No ad-skipping allowed. (See also YouTube TV Is Here... in 5 Markets.)
The YouTube debacle highlights the ongoing rights issues around streaming and recording content. Slowly, pay-TV operators are re-negotiating long-term contracts to include streaming retransmission rights in addition to traditional broadcast. But even where streaming rights are granted, programmers are still loath to enable DVR functions that cut into advertising revenue, as evidenced by YouTube TV.
Before over-the-top content took off, the pay-TV industry found a compromise legal solution in the Remote Storage DVR (RS-DVR) approach. RS-DVR allows distributors to store recorded content in the cloud, but each recording by an individual has to be stored as a discrete asset. There are no shared copies of program, meaning that distributors are stuck with devoting resources to storing and transmitting duplicate copies any time a recorded program is requested. That's turned the programming rights issue into a major technology challenge.
Even for Comcast Corp. (Nasdaq: CMCSA, CMCSK), the largest cable company on the planet, storing individual copies of a program is a resource strain. As distinguished engineer Neill Kipp explained recently, Comcast has racked up 640 petabytes of total storage for its cloud DVR service, a process that took more than a year to complete. And distribution isn't ideal either. By law Comcast can't cache copies of a program in its content delivery network (CDN). Every copy has to be passed directly through to a subscriber. (See IP Video Not Yet a Slam-Dunk for Cable.)
Even when there are solutions to the legal and technical issues of video recording, pay-TV providers that want to offer cloud DVR service online still have to work through negotiations with their programming partners. Comcast has huge clout to negotiate streaming and recording contract terms. Smaller companies, less so. And for a company like YouTube that wants to keep prices down for consumers, there's presumably a correlation between what YouTube is willing to pay programmers and what feature benefits it's able to secure. In other words, if YouTube paid programmers gobs more money, they might be willing to relax their cloud DVR restrictions, but then YouTube TV wouldn't cost just $35 per month.
There are plenty of incentives for pay-TV providers to get cloud DVR right, and many are working very hard to do so. Dish Network LLC (Nasdaq: DISH) introduced its Sling TV cloud DVR service in beta on Amazon devices a month ago and has now extended access to Roku and Android devices, with more integrations on the way. But even with Sling TV, the cloud DVR feature isn't available for all channels -- a casualty of contract negotiations without a doubt.
Ultimately, the tipping point for cloud DVR will have to come as a result of consumer pressure. The more consumers demand it, the more service providers will find a way to offer it... and without all of the caveats currently in place. But cloud DVR won't come easy, and it won't come cheap.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading