SAN JOSE, Calif. — As powerful players including Microsoft and America Online enter the battle for dominance of the soon-to-explode digital video recording and entertainment market, a pioneer in the field has stumbled.
In the first sign of a shakeout in a business that is revolutionizing the way people watch television, ReplayTV Inc., announced this week it was laying off nearly half its work force and that it would no longer make the recorders.
The company said it would focus now on licensing its technology, the brains behind a service that enables consumers to store hours of TV offerings on built-in hard drives, freeing themselves from the shackles of program schedules and the hassles of videotape.
With personal digital recorders, people can selectively record programs based on individual tastes — with none of the awkward fumbling that programming VCRs involves. And while watching live television, they can pause, rewind and even do instant replays.
ReplayTV made its debut along with archrival TiVo Inc. a year and a half ago. Each promised that its boxes, which connected viewers with the company’s services, would allow viewers to watch what they want, when they want.
Teaching consumers about this new kind of viewing and winning them over has not been easy. TiVo has powerful partners, Sony Corp. and Philips Electronics, which are making its digital video recorders, and it is working with satellite operator DirectTV and AOLTV to deliver its so-called personal TV service along with their services.
And more competition looms in the market, which Forrester Research estimates could expand to 14 million American homes by 2005.
Microsoft Corp. launches UltimateTV early next year, a service that will be offered via DirectTV and combines the company’s WebTV Internet service with digital video recording.
The game plan of America Online, with its pending deal with Time-Warner, is unclear, but analysts expect AOL to be another formidable opponent in the area.
Prices of personal video recorders run as high as $700 for 60 hours of programming.
If consumers choose instead to get digital video recording services through other cable or satellite operators, they would need only to buy the right receivers. DirectTV receivers start as low as $50 and AOLTV’s set-top box costs about $250.
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