Audio Video News

Everything seems to be roses and lollipops for TiVo and SonicBlue, maker of ReplayTV devices. The Silicon Valley rivals are allies now that they've decided to put their time and money into promoting digital video recorders (DVRs) rather than fighting each other.

Both makers of hard-disk–based DVRs agreed November 8 to dismiss "without prejudice" all patent-infringement claims against each other. "We believe our energies are better spent expanding the market for DVRs rather than fighting each other," the former adversaries said in a joint statement. "Both sides believe in the merits of their respective positions, but the overall success of the DVR category is what is most important to the companies at this time." The two had sued each other over their similar technologies last year.

The agreement was reached only a few days after an article appeared in Advertising Age questioning the future of stand-alone DVRs, which allow viewers to pause live TV broadcasts and skip commercials. DVRs (also sometimes called PVRs, for "personal video recorders") have not exactly taken the market by storm, with only one in every 200 US homes equipped with a TiVo device. As Ad Age's Bradley Johnson put it, "More US homes have outhouses (671,000) than TiVos (504,000 to 514,000)."

TiVo and SonicBlue are feeling the pressure from cable companies and satellite services, which are beginning to incorporate DVR features into the latest versions of their receivers and set-top boxes (STBs).

By TiVo standards, Microsoft's UltimateTV did very well, almost equaling TiVo's total unit sales through September 2002. The software giant abandoned the DVR hardware business after concluding that there was no real market for the technology. The investing community seems to agree; TiVo's stock value has dropped 95% from its high reached in 2000.

DVR functions are most likely to be folded into new generations of receivers and DVD combo players, but TiVo and SonicBlue continue to make wishful marketing predictions for the near future, including the adoption of 20 to 45 million of the devices in US homes by 2007.

Santa Clara–based SonicBlue recently reported third quarter net revenue of $78.4 million, an increase of 43% over the $54.8 million in revenue reported for the same period last year. Even this surge in business was insufficient to lift the company into the black. The maker of ReplayTV recorders, Rio MP3 players, and Go-Video combo DVD/VCRs posted a net loss of $32.4 million for the third quarter ending September 30. SonicBlue lost $60 million in the first nine months of this year, compared with a loss of $340.3 million during the same period in 2001.