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DirecTV buys ReplayTV out of DVR Deadpool

directv replaytv imageThere are always some who’ll hang on by a thread and look for a battle no matter the circumstance or how long the odds.  ReplayTV, once proud and promising rival of TiVo, fits that billing.   The company was first to market with a Digital Video Recorder.   They helped pioneer the DVR market in the late 90s and then found themselves virtually sued out of existence. Now they’re changing owners, again.  Satellite TV leader DirecTV will buy ReplayTV from D&M Holdings for undisclosed terms.

Founded in 1997, Replay was once a high flying star in the DVR market.  Sonic Blue bought the company in 2001 for $125m.  It then found itself in court, battling Hollywood over ad skipping functionality.  The protracted battle sent Sonic Blue in to bankruptcy.

In 2003, Replay TV and MP3 maker Rio were sold to Japanese technology company D&M Holdings for $36.2m.  D&M,  which is the parent of Denon and Marantz, kept Replay alive, even reportedly profitable though they moved away from the hardware focus in 2005.

It’s not clear what’s motivated the sale now, from either or buyer or seller.  There is some speculation that DirecTV’s interest is the feature set in Replay’s software package.  Other theories focus on legal maneuvering loosely tied to TiVo’s ongoing patent battle with DirecTV rival, Echostar.

In the Echostar battle, TiVo has already won a jury verdict that could force the operator of Dish Networks to disable customer DVR’s absent a license agreement with TiVo.  Currently, the case is being appealed but a verdict is due within a few months.

A reported agreement between TiVo and DirecTV has prevented a similar potential court battle between Tivo and DirecTV but that could theoretically change after 2010.

DirecTV once worked with TiVo before switching to DVR equipment made by NDS Corp (At the time, News Corp was the largest shareholder in both NDS and DirecTV.  News Corps 40% interest in DirecTV is in the process of being sold to Liberty Media)

Stifling hopes of a TiVo reconciliation, this month, DirecTV extended their agreement with NDS until 2013.  In buying the assets of ReplayTV, the speculation is that the intellectual portfolio includes some patents that could prevent a future TiVo battle.

The other prominent theory for the purchase is software development. ReplayTV has focused their energy on software development instead of set top box hardware design since 2005. The current ReplayTV product is designed for use on a PC.  DirecTV could use some of this software to expand or enhance their existing DVR products. They could also explore home entertainment computer convergence, though that seems unlikely.

Comments from the company haven’t offered much insight.  A DirectTV spokesperson said Thursday that “no decisions have been made concerning the integration of Replay technology with our existing platform.”

In additional comments, Jade Ekstedt only added that the purchase would allow DirecTV to explore new services and Replay’s intellectual property portfolio.

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