As some of you may have heard, DNNA/D&M Holdings is finally shutting down the data service for ReplayTV units. Most of the remains of ReplayTV were sold to DirecTV back in 2007, but the customers and data service remained with DNNA. DirecTV only acquired the intellectual property. Even then RTV was basically dead, the last major update was in October 2003, with minor bug fixes until late 2004. DNNA announced they were pulling out of the DVR market in December 2005, and the last of the existing stock of RTV HW was sold off by early 2006. So, while those still using their ReplayTV units may not think so, they actually kept the service running for quite a while after the product line was, for all intents and purposes, dead.

But that’s just the framing…

With the data service is being turned off on July 31st, TiVo has decided to woo the remaining ReplayTV users with a special promotion on the TiVo Premiere, running through 8/15 – or while supplies last. (They’ve probably earmarked a set number of units for the promotion, so don’t wait too long.) And the good news is it is really open to anyone, not just ReplayTV users, so if you’ve been thinking about joining the TiVo cult family, this is a good time. There are two deals – both save $100.

The first is a TiVo Premiere for $0, with a two-year commitment to the $19.99 monthly service – which is the current going rate. Personally I’m not too keen on this deal, but if you’d rather have no money down and ongoing payments, now is the time. (OK, technically you’re only saving $99.99, the normal price of the Premiere.)

The second deal is the one I recommend – a TiVo Premiere with Product Lifetime service for $499.98. This is a savings of an even $100 off the normal rate – $99.99 for the Premiere, and $499.99 for Product Lifetime service. I think this is the better deal as you’ll break even with the $19.99/month deal in 25 months, and after that you’re effectively saving as you have nothing more to pay while the monthly subscriber continues paying.

Even better, Product Lifetime is attached to the unit, so you have equity – it is buying vs. renting. If you decide to upgrade to something else you can resell the unit on eBay, Craigslist, etc., and recoup some of what you invested. Whereas used units with no lifetime service tend to be worth nothing on the open market after a couple of years, since there is always a new model for just not much down.

I’ve owned six TiVos in total since 2002, and I currently own two. I’ve had Product Lifetime on all six, and I resold the other four as I’ve upgraded. I always recommend going with Product Lifetime whenever possible. Most people keep their TiVo longer than two years (TiVo amortizes the product lifetime revenue over five years, as an indication), so it is a better deal for most everyone.

Now, these deals are good for new TiVo subscribers, but if you’re an existing subscriber there’s no reason to jump on these deals. Remember that existing subscribers are eligible for multi-service discount (MSD) pricing of $14.99/month, or $399.99 lifetime. So the lifetime deal works out to be the same price ($0 + $499.98 = $99.99 + $399.99), and the monthly deal isn’t any better as, over the two year window, you’ll end up paying $20 more than you do buying the box up front and paying $14.99/month. So it is only a deal if you really don’t want to, or can’t, afford the $99.99 box.

But if you’re new to TiVo and you’ve been thinking of taking the plunge, I say take the lifetime deal while you can.

Zatz Not Funny got to this before I could, and there is some good discussion in the comments.

As Best Buy is D&M’s biggest customer, it makes good financial sense for the consumer electronics retailer. The implications for the types of equipment that will be offered in their Magnolia shops would increase in number as well as quality. McIntosh has a near fanatical following, though being able to roll down to your local Best Buy to check out the latest tube amps is probably going to be met with mixed emotions.

If they’ve been planning this for a while, and most likely they have, it could be a contributing factor in their unloading of ReplayTV to DirecTV in December. ReplayTV was the odd-man-out in this grouping of companies, and probably would’ve been a sticking point in the deal.

Picked up via EngadgetHD.

Japan’s D&M Holdings Inc said on Thursday it had sold its ReplayTV business, which develops software for digital video recorders, to DirecTV of the United States for an undisclosed sum.

If you’ve followed the long, sad saga of ReplayTV, this makes their fourth owner. First, they were founded in 1997 as a standalone entity, about the same time as TiVo. They released their first DVR to market shortly after TiVo did, in 1999. Failing to compete successfully, ReplayTV in 2001 was was acquired by SonicBlue. SonicBlue re-invigorated the brand and continued to market RTV DVRs as TiVo’s primary competition. However, SonicBlue themselves went bankrupt in 2003, and D&M Holdings picked up the Rio and ReplayTV brands at SonicBlue’s bankruptcy sale for just $36 million.

D&M made Rio and ReplayTV part of Digital Networks North America (DNNA). However, DNNA didn’t seem to know what to do with ReplayTV, and they quickly canceled future development of both hardware and software. One final major update, 5.1, was released under DNNA, but promised software updates such as MP3 playback, USB WiFi adapter support, and interoperability between the 4000 and 5000 series units were killed. It was reported that DNNA had dissolved RTV’s engineering group, moving some engineers to other brands, such as Escient, while most of the engineers simply moved on to other companies. ReplayTV’s last hardware update came with the 5000 series units released under SonicBlue in 2003 (before the bankruptcy), the 5500 series units were the same hardware. And the last major software update, 5.1, was released in October, 2003. There were minor bug fix releases until late 2004, but that’s all. In December, 2005 DNNA announced it was pulling out of the DVR market, and focused on simply selling off the existing stock of units, which they accomplished by early 2006.

D&M Holdings sold off Rio in 2005 to Sigmatel, and all they’ve done with ReplayTV is to slap the brand name on some new PC DVR software and rebranded hardware. The ReplayTV PC Software completely failed to find a place in the crowded PC DVR market, so it isn’t a surprise that D&M would decide to cut their losses. Or, as they spun it:

The company said the sale of ReplayTV would allow it to focus resources on its other businesses, which include high-end audio brands Denon, Marantz and McIntosh.

Basically, going back to the brands they had before they started their ill-fated diversification that included acquiring Rio and ReplayTV.

While the DirecTV acquisition is for an ‘undisclosed sum’, seeing as D&M acquired Rio and RTV both for $36 million, when both brands held a lot more value than they do today, I’d have to guess DTV picked up RTV for a song.

Dave Zatz got his hands on what appears to be a letter from D&M CEO Eric Evans to the company’s employees, and he posted this excerpt:

Today D&M announced that we have sold ReplayTV® to DIRECTV, a US-based satellite television provider. D&M will continue to provide service to the current subscribers for the foreseeable future but will not solicit additional customers. All remaining assets, with the exception of the office space and some furniture, will be assumed by DIRECTV.

So it sounds like the DTV has not acquired the existing ReplayTV subscriber base, which I’d presume includes standalone and PC users, but rather D&M has retained those subscribers and will continue to service them (providing guide data, etc). And that they will no solicit new subscribers. To me this implies two things:
1. The ReplayTV PC software is defunct effective immediately. D&M will not be continuing to sell it – no new subscribers – and I don’t see it fitting with DirecTV’s product line. Also, if DirecTV intended to continue offering the software to new subscribers, it would’ve made more sense for them to acquire the existing customers to provide an installed base to grow from. The fact that DTV wasn’t interested in the subscribers combined with D&M not acquiring new subscribers implies, to me, that the product is dead.
2. DirecTV was really only interested in the intellectual property – especially the patents. They don’t really care about the products or the service. The products are all defunct now, and the service they left with D&M.

So what does this mean about the rumors of TiVo and DirecTV reuniting once Liberty Media finishes acquiring DTV from News Corp? Possibly nothing. ReplayTV hasn’t produced new DVR hardware or software since 2003, and all of the old RTV engineers are reportedly no longer with the company. Even if DTV acquired the PC software development group, developing for the PC and developing for specialized hardware aren’t the same thing. I don’t see DTV forming an ‘in-house’ DVR group based on the RTV software, let alone the hardware. The hardware is completely obsolete – the design is over 5 years old now. It isn’t even useful as a starting point, so just ignore that. The software is over four years old now, which is pretty stale in such a rapidly changing market. It would have to be brought up to date to start, ported to new hardware, and then be modernized with all of the features required to be competitive today, as well as to handle DTV’s systems. That’s a lot of work.

And it would be unusual for DTV – they’ve always outsourced that kind of work. Even the DirecTV branded set top boxes are produced by other vendors. TiVo has experience writing an OS for DirecTV, and they’ve maintained that capability in their code base even since the split. They’re already working on a new update for DirecTV’s existing TiVo-based units for 2008. The relationship is in place, the software is in place, and it wouldn’t be hard to produce a new STB based on the TiVo HD for DTV – just as they’re localizing it for Australia and DVB-T.

So why acquire RTV? Patents. As one of the early developers of DVR technology, ReplayTV, like TiVo, has some fundamental patents. Years ago ReplayTV and TiVo even sued each other, and settled out of court with a cross-licensing agreement. That agreement could well have transferred to DTV with the purchase, which would help insulate DirecTV from lawsuits like the one that TiVo has against DISH Network. It would also give DirecTV a better bargaining position in any negotiations with TiVo for future partnership agreements. And it would give DirecTV some capability to go after the competition and their own DVRs for patent infringement.

If my speculation that they picked up RTV for a song is correct, it was likely a very cost effective move on their part. (It kind of makes me wonder why TiVo didn’t snap up RTV for themselves, to consolidate their portfolio.)

I don’t expect to see a rebirth of ReplayTV out of this. I plan to ask some questions of DTV at CES next month, but I suspect that this purchase was all about the intellectual property and not at all about the software itself. I guess we’ll see if I’m right in time.