HERE COME PVRs

TED THAI FOR TIME
TV TOWER : Personal video recorders, top, are seeking to mount a pile of television peripherals: VCRs, DVD players, cable boxes and video-game machines

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Replay's LeMasters will also be helpful in negotiating peace with the networks, which are unsure whether to love the new technology or hate it. A number of media companies and TV networks have invested in TiVo and/or Replay. But many of the same players (including Time Warner, parent company of TIME) also formed the Advanced Television Copyright Coalition, which has threatened to sue the companies in the future for nonpayment of copyright license fees. No one, of course, is making such noises anymore about VCRs, which also record copyrighted material.

What spooks the nets is that PVRs could, theoretically, strip out their ads and insert ads of their own, and ultimately upset the entire system of ad-based TV. "These boxes are not a simple piece of consumer electronics, like a VCR," says Bert Carp, attorney for the coalition.

To hear PVR companies tell it, advertisers should be delighted, since the marriage of TV and online will make possible interactive ads and the ability to purchase products right off the screen. Changing the ads to include contests or other carrots will encourage viewers not to skip them. "Wait till the end of this commercial, and you can win a Ford Explorer," ventures TV analyst Josh Bernoff of Forrester Research.

Some industry observers have suggested that networks, through a combination of legal threats and investments, might try to pressure makers to drop the skip buttons. But analysts predict that as competition increases (Microsoft's WebTV satellite service will offer PVR-like features later in the fall), nothing short of an outright ban will prevent someone from offering such an option.

Nor will it take a big shift to affect television's business model. Ads are sold based on demographics. Suppose only relatively well-off, younger, tech-savvy viewers--the kind advertisers crave--adapt to PVRs. Bernoff posits that if X-Files fans bypass all those pricey tech ads, such highly acclaimed, high-budget programs could migrate to pay cable, replaced by more America's Favorite Self-Immolations--cheap programming aimed at downscale audiences.

The next step in broadcasting! TV on demand! On-screen shopping! We've heard this before, of course, from budding interactive TV services that so far have failed to deliver a video revolution. Television remains a defiantly passive medium, even though technology has changed viewing habits. Cable television cut into networks' audiences, and the humble remote created channel surfing. But beyond pushing buttons on keypads, couch potatoes have not proved willing to do much more. PVR sellers can perhaps count on your neighbor with the satellite dish and DVD; they now must convince the rest of us that they have not gone a box too far.