Television broadcasters, film producers and video providers lost a last ditch effort to curb the growth of DVR usage today when the Supreme Court rejected their appeal on a case that alleged that Cablevision’s remote network-DVR technology violates copyright law.
Cablevision announced plans in 2006 to offer a network-based DVR
system called Remote Storage Digital Video Recorder (RS-DVR) that would
let subscribers store TV programs on the cable operator’s
computer servers and then play them back at will, thereby eliminating
the need for a set top box.
Content creators have alleged that Cablevision’s storage of the
video information online violates their ownership, but it’s not much
different from a standard DVR service, except for where the files are
And the decision today will lead to a much quicker blead of advertising dollars, highlighting the fact that network television has still not found a feasible ad solution to DVR fastforwarding.
With today’s go ahead, Cablevision, Comcast
and TimeWarner plan to rollout similar services that allow users to record video content without a set top box.
Hoping to slow that spread, the media companies — including NBCU, CBS, ABC, and 20th Century Fox — sued Cablevision in 2006 and won in a New York federal court. But the
US Circuit Court overturned the ruling in 2007, arguing that the service is not sufficiently different from current offerings — or even VCRs — to be illegal.
While the case was open, it allowed the content creators to slow the advertising revenue loss due to ad skipping. Networks have still not sorted out how to combat the loss of revenue that results from DVR ad skipping, and boxless DVR options are likely to encourage DVR adoption in more homes.
PaidContent estimates that the new technology could put DVR service in half of
American homes. That means a lot fewer commercials. And local broadcasters will be the hardest hit.
While the networks and studios may sue again from a different angle, the copyright violation quibble is not likely to stick. DVRs
that store video content keep it in their proprietary service. When a
customer cancels or changes their subscription, they lose access to the content.
A much more pressing concern is free content available for streaming at any time online. And that habit doesn’t seem to be ending any time soon. Just today, the Pirate Bay founders announced a competitor to Hulu and YouTube with a service called the Video Bay, where users can download free video content online.
At least so far online, video advertising is blocked from skippage. And content creators are much more likely to find judicial support to block the kind of video streaming of free video that will take place on sites like Video Bay. But as more quality content is available online without advertising, content creators will have even more to worry about when they’re looking for revenue.