Damien Read – February 2013
Over the last ten years digital video recorders (DVRs) have revolutionised TV watching, providing the most loved features for consumers; live pause and one-touch recording/series recordings.
However, there are two competing models for the evolution of these DVRs which are about to get into the ring with one another; cloud based network DVR (your recordings are saved in the network) and terabyte sized home ‘media servers’ that can stream live channels, recorded content and VOD around a home with full DVR functionality.
The central difference between the two is simple – the location where the hard disks are located when the recordings or the paused TV is saved. Network DVRs store recordings and even live ‘pause’ centrally in the network whereas the ‘media server’ DVR stores them in the home. This subtle difference actually has little implication for the consumer recording experience, but a big impact on what kit is in consumers’ homes, the quality of the broadband needed to deliver content to the home, and content rights structures.
Decipher think that the two paradigms will co-exist over the next decade; terabyte DVRs are arriving now and network DVRs are 3 to 5 years away. Both are exciting new developments, however network DVRs will be the end game as they reduce costs and will also be much more disruptive, opening up the TV industry to many new entrants.
‘Cloud’ digital TV is a much misused term – it already exists: the majority of video on-demand content which consumers watch – both on their digital TV boxes or on PC, Mac, iPad, smart TVs etc – is stored centrally/out of home and is streamed via broadband to the device. Importantly, DTV platforms must secure the rights to each bit of content to offer this. However, digital video recorders (DVRs) currently store all their content on hard disks inside the home. It cannot make sense for a significant section of the UK population to record thousands of versions of the same episode of Eastenders in each home. Catch-up on-demand (like iPlayer) provides some degree of central storage, but not all programming is available in catch-up and consumers generally like to keep content for longer than the seven day catch-up window.
Network DVR is end game…
So the allure of what is being called network DVRs is siren-like. Any recordings that a consumer wants would be made once by the digital TV platform and saved centrally. There would only be one copy of Thursday’s Eastenders and it would stream just like iPlayer on the TV or PC. It would mean that set-top boxes in homes would not need a hard disk and could get smaller and cheaper; perhaps ceasing to exist completely (or being integrated into smart TVs). You could play your recording to any device and so can watch shows in any room and even out of the home. Network DVRs would also lower the barriers to entry into digital TV; the business case for Tesco TV to offer such services gets more compelling and Lovefilm/Netfix would start to seriously ‘cut the cord’ of traditional digital TV companies if they included a network DVR element.
Home media servers are coming now…
So why does the digital television industry seem to be moving down the bigger and bigger in-home DVR approach? The answer lies with network size and cost required to offer a working network DVR. For the short term, as long as broadcasters are paying to broadcast into your home, its cheaper for the platforms to capture and store the content there. Secondly, these boxes can then provide a base from which the pay platforms can send live channels and VOD to every TV in the house. If those TVs are ‘smart’, this can be done via an app. If they are not smart, then they just need a small media streamer sitting next to them.
At CES this year, it became clear that the US is awash with 2 and 4 terabyte sized DVRs from the major operators that aspire to do just that. Our favourite is Dish TV’s Hopper; it not only has a large hard disk (2 terabytes) and the ability to record 6 channels at once, but it can stream live channels or recordings to little media streamers they call ‘Joeys’ which allow for this kind of multiroom TV. It also auto-records prime time across many main channels so that you can watch what you missed just like ubiquitous catch-up. Not only that but it allows consumers to skip ads in these recordings, which is much more controversial! There is a version which has integrated sling box functionality in order to allow streaming outside the home. All in all, it is a very powerful bit of kit. UPC in Europe also has similar aspirations with its now launched Horizon set-top box, and with the acquisition of Virgin Media it could be coming to the UK soon.
There are two major issues that are stopping the utopian network DVR/ cloud world emerging. Firstly, and not to be underestimated, are rights issues. The only reason the current DVR model is legal is because the software on the box makes a recording of content in initiated by the consumer in the home for personal use only. Currently, in order to launch network DVR risk free, you would have to clear all the rights with all the broadcast channels, and they in turn might have to get the sign-off from production companies/ sports rights holders etc. This seems like a big ask but KPN in Holland has already launched such a service and rumours are that the aforementioned UPC are getting serious about launching a network DVR in Switzerland (where the rights situation seems a lot more liberal). Secondly, the broadband network needs to work very well. The pipe from the central copy of the content to your home must be reliable and have enough bandwidth to cope with worst case, high definition football. This is especially true if live pause and rewind move into the network; just imagine the network stress just after that first goal.
So Decipher sees the world of terabyte sized media server DVRs coming over the next two to three years, driven by the large DTV platforms and monetised by higher up-front charges for the (expensive) kit and multiroom subscriptions. In the UK, Sky must be within a year or so of a terabyte, home media hub DVR akin to Hopper (although almost certainly without the ad skipping!). Whilst Virginmedia does have the option to use its new owner’s Horizon platform, it will probably build on the 1.3m base of existing Tivo subscribers. Whilst Tivo only has three tuners (i.e. can record three channels at once) its hard disk and software could be upgraded to get close to the Hopper experience. YouView will probably not prioritise this feature set as it is focused on the less demanding pay-resistor segment of subscribers. The venture’s ISP partners will probably try and sell multiple individual YouView boxes to the same household. This will work to some degree but they will not easily talk to each other.
Network DVRs have more of a question mark hanging over them; we really need a consumer friendly rights position. The consumer does not care if their recording is in the home or in the cloud so why should the legal framework limit technology and market innovation. Here in the UK, we hope that the upcoming Communication Act tackles this issue and opens up the TV industry to much more competition. It would also save many terabyte hard disk and much heat in millions of homes.