New Device 'Place-Shifts' TV; Changes Media Assumptions

Slingbox Facilitates Consumer Re-routing of Live TV Programming Across Broadband Web

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NEW YORK (AdAge.com) -- Like many American families, Jon and Suzanne Davidman used to relax after a long day of work by plopping down on the couch and watching their favorite TV shows, most of which they recorded on their DVR. Some nights they'd pull up "The Sopranos," other nights it'd be "Oprah." If the Dallas Mavericks were playing, they would check out the game, too.
When hooked to a TV, a Slingbox streams live programming anywhere in the world to a broadband-connected laptop or Windows-enabled smart phone.
When hooked to a TV, a Slingbox streams live programming anywhere in the world to a broadband-connected laptop or Windows-enabled smart phone.

Watch from anywhere
Nothing odd there, except that the Davidmans were living in Soto Grande, a small city in the south of Spain, and were watching their favorite American shows via Slingbox.

The unassuming device weighs only two pounds, costs a one-time fee of $200 and "place-shifts" live TV programming, which industry watchers say has the potential to be as revolutionary as time-shifting. Yes, that thing that looks more like a candy-bar than a consumer-electronics gadget has the potential to be as disruptive to media and marketing models as a DVR. In concert with a DVR, it's a veritable game-changer.

Place-shifting meets time-shifting
"It's unbelievable technology," said Jon Davidman, who's been back in New York for the past two months but still maintains his home in Spain. Hook up a Slingbox to a TV, and the device streams live programming anywhere in the world to a broadband-connected laptop or Windows-enabled smart phone. Connect it to a digital video recorder, and place-shifting meets time-shifting.

Rishad Tobaccowala, CEO of Denuo, the Publicis division charged with exploring business models for a digital world, believes Slingbox could have TiVo-sized impact on advertising models. First, he said, consider that people now shift content between devices -- TV to computer, PC to iPod. Then add time-shifting and place-shifting to the equation. Marry all that with the idea that search essentially allows users to go back in time and find content created weeks or years ago, and you've got what Mr. Tobaccowala calls "Einstein's theory of relativity meets marketing."

Leaps local TV boundaries
In less lofty terms, what Slingbox could do is make targeting TV advertising by geography much more difficult, potentially messing with local affiliates' businesses if enough people in one affiliate's region start slinging their content. DVR has already disrupted one fundamental aspect of the way in which TV is bought and sold -- the timing of a certain ad. Now suddenly another aspect of how consumers are targeted -- their location -- could be disrupted too, because it would be almost impossible to tell where a Slingbox-enabled viewer is watching an ad.

"From a consumer perspective, we're seeing social change in mobility," said Coleen Kuehn, exec VP-strategic development at Havas' MPG. "People are spending so much time out of the home and, in many cases, out of the office, so it's become this 'take it with you' culture. [Slingbox] is a perfect product for this time." She suggests the device could also create competition for the iTunes video market, where mobile versions of shows go for $1.99.

The NFL is said to be the most fervently opposed to Slingbox, which inherently undermines the geographic boundaries and blackouts that define much of the league's TV business model. (The league didn't return calls for comment.)

NFL objections
The NFL's objections are perhaps not surprising given that the box was, essentially, invented to counter those sorts of sports-viewing restrictions. Sling Media, which markets Slingbox, was founded by Blake and Jason Krikorian, brothers and baseball fans who wanted to watch their hometown San Francisco Giants' 2002 playoff run while they were away traveling on business. Over the next two years, with the help of friend Bhupen Shah, they refined the device, making it smaller and simpler to use.

While the technology is revolutionary in theory -- and said to interest cable companies -- whether it will ever be widely distributed enough to change TV-viewing habits is unclear. Michael Paxton, senior analyst of converging markets and technologies at In-Stat, said Slingbox has smaller appeal than DVRs, which Nielsen expects to reach 18% penetration by year's end.

"It's splitting a niche segment into a smaller slice," he said. "Cool technology, questionable demand."

$46 million in venture capital
Yet the company has enough believers to have raised $46 million in venture capital in January and spawned a cluster of imitators, including Sony's LocationFree TV, which beams TV to a Portable PlayStation, and OrbNetworks, which offers free online place-shifting software. Slingbox is available in such electronics retailers as Circuit City and Best Buy, and the company reported selling 100,000 devices in the first year, a number it argues outpaces many similar product launches.

Perhaps having closely studied TiVo's experience, Sling is taking great pains to present itself not as a threat to advertisers but as an opportunity to reach consumers in places where they wouldn't have been able to view their favorite TV shows. "What we do at the end of the day is connect consumers and their TVs," said Rich Buchanan, VP-marketing for Sling Media. "If anything, we allow more eyeballs to watch TV."

He said the company has worked with local advertisers to explain how the device works and that they're generally receptive to the idea that Slingbox helps them stay connected to out-of-town constituents. He also said that any home in the Nielsen sample using a Slingbox still would be measured, although Nielsen wouldn't be able to report where the viewer was watching.

Robert Davidman, CEO of Earthquake Media, a New York-based digital agency, has two Slingboxes -- the one that his ex-pat brother, Jon, used to watch American TV in Spain, and another that streams programming to his smart phone. One of his clients, Gibraltar-based PartyPoker.com, uses a Slingbox to view the company's U.S. ads and product placements.

New marketing platform
"It makes entertainment more accessible," said Mr. Davidman, just minutes after catching up on ESPN via his phone. But the better news, he said, is that the personal, broadband-connected environment Slingbox creates is a ripe marketing platform. Marketers just need to figure out how to harness it, using interactive features that would allow viewers to click ads for more information or the opportunity to buy.

Lori Schwartz, VP-director of emerging media, Interpublic Emerging Media Lab, agrees. "The potential to interact directly with a broadband connection, broadband applications and commerce opportunities while watching content is a very attractive proposition," she said.
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