Networks Hammer Dish Over Ad-Skipping DVR
Three of the four major U.S. TV networks have pounded Dish Network with lawsuits over the TV provider's new DVR feature, Auto Hop, which automatically cuts out a program's commercials. The networks argue that unlike traditional DVRs, which require users to manually fast-forward if they want to skip ads, Auto Hop violates copyright law by directly tampering with the broadcast.
Fox, CBS and NBC filed lawsuits against Dish Network Thursday over a feature found in a new digital video recorder that lets subscribers automatically skip the advertisements on recorded shows from major networks.
Dish countered by asking a judge to declare that the feature does not infringe on any copyrights as claimed by the networks.
The so-called Auto Hop feature allows users to completely skip broadcast TV commercials on recorded programs that are broadcast on ABC, CBS, NBC and Fox. The major networks accuse Dish of copyright infringement, saying that it is not within Dish's rights to tamper with broadcasts for its own economic gain.
None of the major networks nor the Dish Network responded to our requests for comment.
Dish Digs In
Though many DVRs allow users to manually fast-forward through commercials, Auto Hop makes it easier, letting subscribers simply click one button to avoid advertising completely. It's a perk that doesn't sit well with the networks or their advertisers.
"Permitting consumers the ability to eliminate the viewing of paid advertisements threatens the very business model of the television industry establishment," Michael Elkin, managing partner at Winston & Strawn, told the E-Commerce Times.
Networks have waged battles against this type of feature in the past. In 2001, Replay TV launched a similar feature only to face lawsuits from the networks. The reason networks are coming after Dish, rather than makers of standard DVR services that allow users to manually zap commercials, has to do with the ease of Dish's approach, James L. Johnston, attorney at Davis and Gilbert, told the E-Commerce Times.
"The key difference between this service and standard DVRs is scale and ease of use," he said. "Dish is being incredibly aggressive here. They haven't just added a single feature that incrementally pushes the boundaries. They've added a collection of features that, when used together, can transform how television is viewed."
Evolving Television Industry
Dish argues that it is indeed changing how television is viewed, but for the advantage of the networks. In addition to the Auto Hop feature, it said, its service also automatically records most of the major networks' prime-time broadcasts, which encourages people watch more TV. It also argues that the feature doesn't function until 1 a.m. Eastern on the day after the show airs, and that many viewers tend to watch recorded programming on the night that it airs.
But the networks argue that regardless of how much TV a viewer watches, it does the network no good if the viewer doesn't see any ads, and even a passing glimpse of an ad on a standard DVR service is better than the option to skip it completely.
"I've seen research that shows people do view and recall the ads even when viewing a show that has been recorded on a DVR," Peter Koeppel, founder and president of Koeppel Direct, told the E-Commerce Times. "This product would eliminate this type of ad viewing entirely, so I think the networks could justify this device as being different from a traditional DVR."
That argument could give networks some leverage if this case were to go to court, but with the number of countering lawsuits, that could be a long, drawn-out battle.
"Like many cases in the digital media space these days, this will be a novel application of the copyright laws and decisions to a consumer-driven distribution of entertainment," said Elkin. "Not for the faint of heart."
Instead of litigation, networks might be better off adapting to the evolving industry, Steven Weinberg, attorney at Holmes Weinberg, told the E-Commerce Times. Technology isn't going to slow down enough to keep traditional advertising methods sustainable, he said.
"Historically, the networks view any new technologies that could negatively affect their relationships with advertising sponsors as a threat," he explained. "We had that situation when home video recording entered the scene decades ago, and somehow they found a way to survive."
The trick, said Weinberg, will be finding the balance needed to keep advertisers -- and therefore networks -- as happy as the viewers.
"Technology will keep changing to support viewer interests, and the networks will keep fighting," said Weinberg. "The end result ultimately will not be law-driven but economics-driven -- advertisers, the networks, viewers and technology companies will find new ways using all available media to enhance the viewer experience and make money. Ultimately, viewers love to be entertained and to consume, so there's a happy medium to be reached."