Seven, Foxtel chiefs' spat over DVRs

A WAR of words has erupted between the Seven Network and Foxtel over the effectiveness of Seven's TiVo digital video recorder amid claims the device will struggle to make money.

But Seven television boss David Leckie -- only recently recovered from septicemia -- and his likely eventual successor, Seven sales director James Warburton, have bristled at the claims, launching attacks on Foxtel's subscription-based model.

A typically feisty Mr Leckie used his first official appearance since his illness -- the launch of the $699 device -- to suggest 70 per cent of consumers had avoided a Foxtel subscription.

"It's about an expanded television experience for seven out of 10, seven out of 10 Australians ... who choose only to watch free-to-air television," he said.

"(With TiVo), you don't have to subscribe to Foxtel, you don't have to place an order, and you don't have to wait months for someone to install it."

Mr Warburton went one step further: "Seventy per cent of Australians have voted with their eyeballs and turned their back on pay-TV."

Both Seven executives argued the device -- which will have no subscription fees -- will run significant interference on Foxtel's own DVR, the iQ, and potentially the pay-TV operator's subscription model, which has seen it move into significant profit recently.

But Foxtel's head of content, product development and delivery, Patrick Delany, was dismissive: "The Seven Network has a lot to learn about multi-channelling and set-top units.

"The free-to-air offering -- in the way the channels are being played out and in the quantum of channels -- hardly gives rise to the need for a DVR."

TiVo will provide a number of features of the iQ devices, including multiple-program recording and viewing, live pause and the ability on recorded shows to seamlessly skip advertisements.

It is this latest feature that has led some analysts to suggest DVRs, like TiVo, could threaten the ad-reliant business model of the free-to-air networks.

But Mr Warburton told The Australian Seven was moving to protect its business model. "The whole notion of ad avoidance and ad skipping -- it's not like it's a new issue. In time, you'll have ad banners that you can sell -- almost like an outdoor billboard -- that go across the commercials and actually say such and such, sale on, and whatever the details," he said.

Mr Warburton said that by 2010, official TV ratings group Oztam would account for time-shifted viewing conducted through DVRs up to a week after a show had been first broadcast, allowing networks to better monetise such viewing.

"We are going to change our industry model from saying 'here is today's live and as-live viewing', to 'here is the catch-up and time-shifted viewing'."

The Seven sales boss hinted the Australian version of TiVo may offer certain services, such as movies-on-demand, and a "walled garden" of certain types of internet television, by early 2009. Asked about whether YouTube would be offered on TiVo, Mr Warburton said: "In America (on TiVo), they've done it, and it will be here ... call it by the first quarter of next year."

Mr Warburton said Seven was using the Beijing Olympics in August to drive subscriptions.

"Our need to get to market and to launch in the Olympics was always the case," he said.

"(DVR) penetration is driven by major sporting events."