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Commentary: Will strategy shift boost ReplayTV optimism?

It's not the box that's valuable. It's the application functionality and technology behind the box that builds value.

By Adam Sarner, Gartner Analyst

It's not the box that's valuable. It's the application functionality and technology behind the box that builds value.

Or so says ReplayTV, which has changed

See news story:
ReplayTV rewinds business plan
channels from being a marketer of interactive TV (ITV) equipment to being a purveyor of software that enhances advertisers' customer relationships.

Such a switch in strategy offers ReplayTV a meatier--perhaps even starring--role to play in the growing ITV marketplace. By 2003, Gartner forecasts that nearly 11 million households in the United States will have television access to the Internet. The driver of this acceptance of ITV will likely be the electronic program guide and digital recording of TV programs. Once consumers grow accustomed to such added TV functionality and use the new digital features regularly, e-commerce marketers will likely enter the picture.

ITV promises to be an important gateway to e-commerce, and as such, is a natural product line extension for cable TV operators, telecommunications companies, Internet service providers and satellite companies that already have a communications pipeline into consumers' homes. These companies expect consumers will gladly pay an extra few dollars a month, on top of their typical service bill, for an electronic program guide and the capability to digitally record movies and favorite TV programs for later viewing. Through ReplayTV's ITV software, these service providers can rake in incremental revenue without a significant cost.

Moreover, ReplayTV clearly sees that the future in ITV is its ability to act as a key building block in advertisers' and other Web merchants' nascent customer relationship management initiatives. By licensing its ITV software, which enables digital video recording and video-on-demand services, ReplayTV can position itself as a strong and complementary right hand to TV and set-top equipment makers and to ITV service providers. The winners in the ITV market will likely exploit interactive software technology as a means to personalize content and advertising messages.

The purpose behind that? To turn passive TV viewers into active Web buyers.

Such is the natural progression of the television itself, turning a one-way information and entertainment medium into an interactive appliance that promotes the exchange of information and--so cable, phone and TV companies hope--increased revenue from happy ITV advertisers.

(For related commentary on business applications for digital video editing on the PC, see TechRepublic.com--free registration required.)

Entire contents, Copyright ? 2000 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.