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TK's MORNING BUZZ: The Bursting of the ReplayTV Bubble Isn't Surprising

5 Dec, 2000 By: Thomas K. Arnold

The bursting of the ReplayTV bubble isn't surprising. You may have read reports that the company, one of the leading players in interactive television, has laid off nearly half its work force, canned its chief executive and plotted a new strategy in which it will get out of the consumer retail market in favor of licensing its technology.

Replay's demise can be explained in one word: confusion. There has been a ton of hype about Replay and its chief rival, Tivo, which is still in business.

But wading through press release after press release, it took me quite a while to figure what, exactly, their respective set-top boxes do. It took me even longer to figure out why anyone would want them.

Both companies have done a great job in building consumer awareness. But it's also a good idea to make sure consumers want what you're selling, and to make it perfectly clear, through your advertising and marketing, exactly what it is you are selling.

These last two things, neither company has done.

Tivo, which has twice the subscribers and charges significantly less than Replay, is in a great position, for now. Its only real competitor is effectively out of the picture, and Tivo can savor its moment in the hype spotlight all by itself.

But hype only goes so far, and it is my feeling that once the next high-tech flavor-of-the-month is unveiled, Tivo, too, will have a real difficulty building and maintaining a market for itself. The product, in a nutshell, is a glorified VCR that doesn't use tape.

Is it revolutionary enough for consumers to add yet another set-top box to their growing pile of components? I doubt it. But even if it is, the advertising message is so ambiguous that it's hard for consumers to get a handle on what a Tivo player really is, and does.

The most successful consumer electronics products in our business are clear as a bell. Consumers know a VCR lets them watch movies and record TV shows.

They know a DVD player lets them watch movies on shiny little discs that look like CDs. They know the new PlayStation 2 machine can play PlayStation games as well as DVDs, and they've probably heard about Microsoft working on a similar machine that can also play games and DVDs.

Ask the average person on the street if he or she has ever heard of Tivo and chances are the answer will be "Yes." But ask that person if he or she knows what Tivo is and you're likely to get a blank stare--or a ho-hum shrug of the shoulders.

As 1960s pop philosopher Marshall MacLuhan once said, "The medium is the message." In this case, neither one is very clear.

Comments? Contact TK directly at:TKArnold@aol.com

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