And you thought your VCR was hard to program...

TV'S LATEST DIGITAL TECHNOLOGY IS BRINGING REVOLUTIONARY CHANGES TO OUR

There's a new genie hovering on the TV horizon, only this one doesn't dwell in a bottle. It is in yet another black box that will sit atop your TV set. If we are to believe the manufacturers of what has been dubbed the personal video recorder (PVR), we are on the brink of having more than a genie's usual three wishes. The promise is any TV we want, when we want it. The challenge such a sweeping statement brings: How do you deal with everything, and do you really want it?

The PVR is essentially a computer inside a large, ominous-looking case that enables you to play with any live TV show you're watching (slow motion, freeze frame, instant replay) as well as watch a show at another time or automatically record it anytime it comes on. Commercials can be completely zapped out, not just zipped past.

Why care about another high-tech gadget for the den? Because the PVR has the potential to reinvent TV viewing, as well as fundamentally change the way television is produced.

"Free TV as we know it will never be the same," says Josh Bernoff, a media analyst for Forrester Research in Cambridge, Mass. "This is a complete change," Mr. Bernoff adds, but notes that it won't happen next week. The time needed for a genuine change to a new technology is something close to a decade, he says.

By that time, "Half the commercials on television will not be watched and that simply won't work for networks as we know them now," he says. He foresees that the hit shows, such as "ER," will continue, but the networks won't have the necessary budgets to air anything less than a smash. "Highly rated shows will carry on, and people will probably watch them in real time," but modest hits "will get the ax."

But broadcasters are not willing to give up so easily. "We believe strongly in the broadcast model," says Lewis Goldstein, co-president of marketing for The WB network. He says viewers don't respond well to having undifferentiated access to everything on the air. "People need to have their choices framed," Mr. Goldstein says, "and we believe that is the service we provide, regardless of whether people tape or watch live."

A PVR differs dramatically from your videocassette recorder (VCR). It uses a computer chip interacting with a modem. The modem connects the PVR to a phone line and downloads information into the PVR's hard drive. (A separate phone line isn't needed.) To date, two manufacturers are offering PVRs, Tivo and ReplayTV. Prices range from $500 to $1,500. The two have some slight differences in the areas of memory capacity and interface options.

The PVR is a "smart" device: It seeks out shows similar to those you already watch, downloads them, and displays them the next time you turn on your set. In other words, it's a TV "personal assistant" that tries to guess your next whim and provide it.

TV producers, networks, and cable providers are watching this new development closely. PVRs were the darling of this year's Consumer Electronics Show in Las Vegas, where ReplayTV walked away with the Best of Show award.

Analyst Bernoff predicts that the coming holiday buying season will fuel demand for PVRs and speed up the industry changes and reassessments he's convinced PVRs will produce. He notes that when the PVRs first hit the market earlier this year, the networks downplayed their impact.

"Their reaction was, 'What a rash assumption, this is just like the VCR.' " But then, he says, all of a sudden, "everybody in the broadcast business has bought a piece of this [PVR] industry to get close and figure out what to do."

Both Tivo and ReplayTV have media heavyweights such as Time Warner, NBC, Showtime, and Disney on board as investors.

While the option of zapping commercials could signal the beginning of the end for conventional ads, the online interactivity of the PVR also opens the door to entirely new models for making money.

"Product placement is a dress rehearsal for the sorts of ideas that will begin to solve the problem of making money in this new model," says Robert Thompson, head of the Center for the Study of Popular Television at Syracuse University. "We've paid for free programming with our attention spans," he explains, but when the standard 30-second spot goes the way of the horse and buggy, advertisers will seek out all sorts of sophisticated methods of reaching into viewers' wallets.

Banner ads could be imbedded in the program, much like a Dow Jones ticker tape. Or shows might become more specifically geared toward product sales, not unlike infomercials.

The interactivity aspect raises further possibilities that have yet to be developed. "What if [program providers] begin to track the items we buy on the Home Shopping Network and sell that research, or even download targeted commercials to your hard drive?" Dr. Thompson asks. This could be the beginning of a whole new type of marketing, niche advertising made possible by new technology.

So far, both Tivo and ReplayTV have said that the interactivity of their units is limited to helping make programming choices and that demographic information will not be sold. But, as Thompson notes, once technology is invented, "It's not long before it's used at its full potential. Just think of the nuclear bomb."

(c) Copyright 1999. The Christian Science Publishing Society