Studios say 'No' to cable's next big thing
Pugnacious cable exec James Dolan has a cool new recording device - but you won't be able to use it anytime soon.
(FORTUNE Magazine) -- There's one thing we can say for certain about cable executive James Dolan: The guy doesn't shy away from a fight.
He's feuded with erstwhile Knicks coach Larry Brown (who he just canned), tussled with Mike Bloomberg, and even gone mano a mano with his father, Chuck, over the direction of their company, Cablevision (Charts).
Recently Dolan announced a new service that would allow customers to record and store TV programs without a special set-top box or TiVo-like device - knowing full well it would spark a battle royal with the company's programming partners.
Sure enough, a passel of Hollywood studios and networks (including a couple owned by Time Warner, parent of CNNMoney.com and FORTUNE) have sued Cablevision, claiming that the product is a video-on-demand service for which they must be paid extra.
Dubbed a "remote storage digital video recorder," or RS-DVR, Cablevision's system lets subscribers access content filed away on a centralized network.
At first blush the lawsuits seem like just another attempt by TV execs to keep consumers from "time-shifting" their viewing habits and skipping the commercials that help the networks pay their bills. Indeed, these remote DVRs, which don't require special installation, would suddenly make it easy for Cablevision's two million digital video customers to avoid TV ads.
Cablevision, which maintains that the service is legal, has delayed a trial run because of the litigation.
But the outcome of the Cablevision case also has big implications for the consumer who wants to store the latest episode of South Park on a network and then, say, stream it to his cellphone or laptop. The technology to do such device-shifting exists today, says Michelangelo A. Volpi, senior vice president of Cisco Systems, which makes gear for cable operators. Media companies, however, would argue that such a service runs afoul of copyright laws that prevent distributors from retransmitting shows.
"Content providers are going to have to get comfortable with the fact that consumers are going to want to access their content anytime, anywhere, on any device," Volpi says. Forrester analyst Josh Bernoff thinks the case will go to the Supreme Court, and that could take three to five years.
That's too bad, because the remote DVR is a nifty idea that consumers clearly want right now. (There are some 13 million digital recording gadgets out there today.)