Replay, Amazon team on digital video recorder

In a campaign set to begin today, Replay and Amazon will jointly market the newest version of Replay's digital video recording (DVR) device. The launch begins with nationwide advertising in the USA Today, The New York Times, The Los Angeles Times, and The San Jose Mercury News.

Replay's products will also be extensively promoted on Amazon's online electronics store, and featured in a broader Amazon ad campaign in December, executives said.

The campaign and narrow sales strategy are relatively novel. Historically, electronics stores have been the platform for introducing new, unfamiliar products such as digital television, because salespeople can more easily explain the new technologies and their benefits. Unlike retail stores, Amazon does not have "brick and mortar" locations and sales staff. In addition, the company has a minimal track record in selling electronics goods.

In the case of DVRs, there's a lot more to explain in comparison to the familiar VCR.

Instead of a traditional video cassette, personal DVR devices use a large hard disk drive, similar to those found in desktop computers, to record TV shows. Coupled with an easy-to-use electronic programming guide and pared-down online service, these devices can be programmed to record shows much like a standard VCR.

Unlike a VCR, however, users can automatically record an entire season's worth of shows with the click of a button. In addition, these devices can freeze and play back television shows while they are being broadcast. For instance, a viewer could "pause" a football game, get a snack, come back, and resume viewing where the viewer left off, even though the game in reality has continued past that point.

In essence, Replay is targeting an audience of technologically savvy users that are already more apt to buy online, according to Steve Shannon, Replay's vice president of marketing.

"By launching new products at Amazon, we are helping to cut our time to the marketplace," he said in an interview. Normally, it takes months to train sales associates about new products, time which otherwise could be spent actually selling products, Shannon said. Those extra months of sales can mean the difference between survival and extinction for a young company with scant revenue streams.

"This is an opportunity to turn the tables about the conventional wisdom of distributing consumer electronics," added Richard Chin, product manager for Amazon's consumer electronics business.

Chin said that Amazon can offer a variety of product shots and other information about the product that a consumer couldn't get in a store. For instance, Amazon's customer reviews are posted with the product pictures and extensive online versions of informational brochures, he said.

To be sure, sales over the Internet are growing fast, and Replay looks to be in a good position to take advantage of the trend. By the end of the fourth quarter, online sales are expected to reach $10 billion, which is about three times the $3.5 billion reached in the same period a year ago, according to Forrester Research.

But consumer electronics, as a category, has moved to the Internet with considerably less haste than books or CDs. In fact, the majority of electronics sales are still conducted at stores.

Additionally, the online efforts of retailers have been slow to take off. Best Buy, one of the nation's largest retail electronics outlets, has delayed its plans to sell more goods online, as has Wal-Mart.

Replay isn't forgoing traditional retail sales. Instead, the company will let manufacturing partner Panasonic handle marketing and merchandising of its product in stores when the Panasonic-branded version of the Replay device is ready next year, said Shannon. The benefit of selling the product directly to consumers, he said, is that the company is able to fine-tune the features of the device more quickly.

Replay, as well as competitor TiVo, still have one large hurdle for mass acceptance of their products: price.

Replay's newest set-top, the "ReplayTV 2020," doubles the recording capacity of the earlier entry-level model and will sell for the same price. The device will offer 20 hours of recording time for $699--still a high price for the average consumer.

The ReplayTV 2020 will be available only through Amazon through November 15, after which some other online retailers will be able to offer the product. Still later traditional stores, will carry the Replay box, but for now Amazon will be it.