Market Insight

Ad-skipping Hopper set-top box gets legal reprieve

October 21, 2014  | Subscribers Only

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The Autohop feature of Dish Network's Hopper set-top box - which automatically skips broadcast primetime commercials - is looking as if it's here to stay after a federal judge tentatively ruled that it does not violate Fox’s copyrights. However, the PrimeTime Anytime feature, which automatically records the entire primetime lineup, may be a breach of contract, the judge expressed being 'on the fence' about it. Judge Gee did not offer final rulings ahead of a scheduled January court date between Fox and Dish to settle copyright infringement and breach of contract claims.

The Autohop feature has been a bone of contention between Dish and the broadcasters since it launched in 2012, but it doesn’t seem like the suit is going anywhere. The ad-skipping feature is only available for primetime shows from ABC, CBS, Fox and NBC a day after they air. The judge reaffirmed an early decision from the Ninth Circuit Court of Appeals on the legality of the Hopper, made on July 2014. Under a precedent set in the US Supreme Court’s 1984 Sony Betamax decision, a company is not liable for copyright infringement for recordings by the consumer for the purpose of timeshifting viewing.

The federal judge did admit that Fox may have a case of Dish being in breach of contract when it came to the Hopper's Primetime Anytime feature over its auto-copying functions. Fox prohibits Dish from offering its content on video-on-demand and Primetime Anytime may be breaching it, although Dish is arguing that its service is still digital video recording.

Our analysis

Any solution which undercuts the effectiveness of advertising is going to be a hot button issue for programmers. The tentative favourable ruling for Autohop is a blow not only to Fox, but the other broadcasters. However,  Fox is in a strong position to win its breach of contract claim against Dish's Primetime Anytime feature, and it may be the silver lining for the networks. It is plausible that if Hopper recordings are deemed VoD performances which are not allowed by current contracts, that the future of the Hopper's Primetime Anytime service may be in doubt.

For Dish customers who use Hopper technology to consume network content, the ruling is a win in the sense that they have been granted the right to continue to view non-live broadcast content without commercials. However, if the ruling regarding the creation of an unlicensed VoD service favours Fox, Dish customers could be forced to have to manage their DVR queue in a more traditional fashion.

Ultimately, if the VoD ruling goes against Dish, the company will have some tough choices to make. On one hand it may be forced to disable the Primetime Anytime technology; on the other hand it may be forced to pay a new licence fee for VoD rights. Regardless of the outcome in court, it seems unlikely that subscribers will be barred from using the Hopper.

For more analysis of the Dish Hopper from IHS Advertising Intelligence please see our report, Dish Network launches new multimedia home gateway.

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