SonicBlue (Replay/Rio) Bought By D&M

An anonymous reader writes "Here's the announcement that many have been waiting for all week. Yesterday, the ReplayTV and Rio product lines of now-defunct SonicBlue were auctioned off in a bankruptcy court. Despite earlier negotiations failing to result in a deal, the Japanese holding company D&M, makers of high-end Denon and Marantz stereo gear, bought the product lines for $36.2 million. The big question is what about all of the "lifetime subscriptions" that people bought? No answers as of yet, but we can all be hopeful."

Comments

That's not much money

[Ignorant Aardvark]

Only $36.2 million? That's really not that much for an entire line of TiVO-like products. It sounds to me like D&M might make a killing off this investment, if they play their cards right.

Re:That's not much money

[levik]

Not neccesarily. Don't forget that SonicBlue already *HAD* these product lines, and still went under. These may not be all that commercially viable.

The PVR market is still high end, still small and already saturated.

Re:That's not much money

[Scyber]

Yes, but SB was already saddled with debt when they bought ReplayTV. Then they developed the newer 4k and 5k units. So they probably never got a chance to recoup there R& D costs

D&M already has a viable product design, they just need to keep the software updated.

Lifetime Support?

[fewnorms]

Heh, "...until death (or hostile takeovers, bankruptcy etc) do us part ...." =] So much for life time support I guess. However, Rio was a good brand a while back, so I hope the new company continues it's services.

Lifetime?

[Good Sumerian]

Lifetime support has always meant the lifetime of the company. They got what they paid for; it was a gamble, and, unfortunately, they lost.

Re:Lifetime?

[deanj]

Well, not necessarily. When ReplayTV got bought out, the company went away, and the assests went to SonicBlue. They honored the lifetime agreement for ReplayTV owners.

Re:Lifetime?

[Zathrus]

Well, not necessarily. When ReplayTV got bought out, the company went away, and the assests went to SonicBlue. They honored the lifetime agreement for ReplayTV owners.

Yes, but lifetime subscriptions are not an asset - they are a liability. The press release doesn't go into any detail, but I'd presume that D&M got saddled with the liabilities (court cases, outstanding debts, and lifetime subscriptions) as well as gaining the assets.

This is why $36.4M is not a "deal" by the way... and it's why they went under in the first place. They have far more liabilities than assets at this time.

Re:Lifetime?

[zsmooth]

I admit I'm not that familiar with the product line, I use a DirecTiVo myself, but I thought ReplayTV's didn't use the subscription model that Tivo uses? I seem to recall folks using that as a reason to get a ReplayTV in place of a Tivo.

When Replays first went on sale, the cost of a lifetime subscription was included with the unit, so they all cost like $500 or $600. Then they realized that Tivo's method was working better since a lot of people didn't want to put down that big a chunk of change all at once.

Re:Lifetime?

[BreadMan]

Says the article:

D&M Holdings said it bought inventory, receivables, intellectual property and capital equipment, and that it would also take over certain contractual relationships and liabilities.

I'm guessing that "certain contractual relationships" means customer agreements.

I don't see the business case of buying a hardware company that relies on subscriptions and then stiffing your subscribers. If you manage not to upset your subscribers, you have a good pool of people you can up-sell something to in the future. Plus, the nice word-of-mouth referrals will help pick-up business from new customers.

This might hold an answer

[austinij]

Silicon Valley Biz Ink is indicating that all current customers will be retained. Hopefully, it works out that way.

-- I

Hi-fi buys lo-fi

[southpolesammy]

Interesting....this is a paradigm shift for D&M, as they've typically invested their R&D on the high-end of the audiophile spectrum. I'm somewhat perplexed by what they hope to accomplish with buying a line of low-end audio devices...

Re:Hi-fi buys lo-fi

[Drakino]

I'm somewhat perplexed by what they hope to accomplish with buying a line of low-end audio devices...

SonicBlue fired all the low end audio people a while back, leaving the audio engineers in the UK (The empeg folks). They are very capable of delivering quality high end devices if so requested. I believe the empeg sound system came close to any high end ($1000 and up) in dash stereo unit for potential audio output quality.

Hopefully this means the empeg Mark 3 might see the light of day.

Re:Hi-fi buys lo-fi

[fewnorms]

They can't be very high end if I've never heard of them. Kenwood, Sony, Pioneer... those are high end. D&M sounds like the Apex of the audio world. Dude, you are probably not an audiophile. Denon and Marantz are related to the likes of Kenwood, Sony and Pioneer like a ferrari to a volkswagen. You probably also never heard of Quad or Nakamichi? heh ... now that's an audio system.

Re:Hi-fi buys lo-fi

[NetJunkie]

You'll probably see these come back as Philips branded devices, assuming they don't have a exclusive agreement with TiVo. A lot of Denon/Marantz products are released in a lesser form as Philips... My Marantz remote control is almost exactly the same as the Philips TSU-2000 remote.

Re:Hi-fi buys lo-fi

[Anonymous Coward]

you are probably not an audiophile

s/probably/obviously/

Re:Hi-fi buys lo-fi

[Wyatt Earp]

D&M isn't high end.

It's more of a high-end of the low-end.

Rotel, Krell, Sunfir, Mark Levinson, anything with vaccum tubes and the list goes on are more towards the middle and hugh end of the audiophile spectrum.

You know stuff where each mono-block amp costs more than the most expensive D&M box. Or when your system has a phono cartridge that costs 5-15,000 bucks, that's high-end.

But me, I'm happy with my Denon AVR-3803

Re:Hi-fi buys lo-fi

[Zathrus]

They can't be very high end if I've never heard of them. Kenwood, Sony, Pioneer... those are high end.

Congrats... you've just named all of the major low-fi vendors.

Would you like to play again? Maybe, this time, try something more simple. Like automobiles. Hint - Honda, Toyota, and Ford are not the top of the line, despite sales figures.

Re:Hi-fi buys lo-fi

[Anonymous Coward]

D&M aren't high-end. They're middle-range. Think Meridian and TAG and such for high-end.

Re:Hi-fi buys lo-fi

[Surreal_Streaker]

You know stuff where each mono-block amp costs more than the most expensive D&M box. Or when your system has a phono cartridge that costs 5-15,000 bucks, that's high-end.

I'd argue that when your system sounds good it is high end. Thousand dollar phono cartridges only guarantee that your system is expensive. High end systems take more than just money.

Re:Hi-fi buys lo-fi

[ePhil_One]

Denon and Marantz are related to the likes of Kenwood, Sony and Pioneer like a ferrari to a volkswagen

More like middle range, say more like a Volkswagen to a Jaguar. What the average joe thinks of as high end, but folks who are really dedicated to it know there's lots of stuff even higher and/or more specialized. Carver would more closely map to Ferrari, perhaps McIntosh to Lamborgini. And there are more out there that map to even more exotic stuff, like McLaren's, Liegnfeter(sp?), Vector, Shelby, Panos, ... (Ok, so I'm more into cars than audio) Probably maps pretty well in terms of volumes, etc.

I'm still cursing my freind for getting me hooked on the idea of getting a Carver Sunfire (http://www.sunfire.com/)

Lifetime Activation

[Christopher_G_Lewis]

INAL, but if D&M continues the ReplayTV "Name" (ie, they purchased the name, not just the products) then they should have to honor the agreement. If the company all of a sudden become "D & M R-TV", or even "ReplayTV+" then the current owners might be screwed. Hopefully, they'll honor the current agreement, or only charge a small "transfer" fee.

From the service agreement...
SonicBlue

REPLAYTV Digital Video Recorder

Activation and Service Agreement

This Agreement applies to your use of the ReplayTV Service and is a legally binding agreement between you, SONICblue Incorporated and its wholly owned subsidiary, ReplayTV Inc. (collectively "ReplayTV"). By clicking the button marked "I Agree" below or by otherwise communicating your acceptance to ReplayTV or by using the ReplayTV Service, you agree to all the terms and conditions in this Agreement. IMPORTANT NOTE: Your ReplayTV digital video recorder works only by activating and receiving the ReplayTV Service offered and provided by ReplayTV. If you do not agree with all the terms and conditions of this Agreement, you are not authorized to use the ReplayTV Service, and you may return the ReplayTV unit to ReplayTV or the authorized retailer from whom you purchased the product for a full refund within one (1) month of the original purchase date.

Re:Lifetime Activation

[Anonymous Coward]

This is an asset sale not a stock transaction. Certain assets of SonicBlue (apparently including it's Rio and ReplayTV technology, trademarks and customer list) were purchased by D&M.

D&M is *not* SonicBlue's legal successor and will *not* assume SonicBlue's liabilities. The "lifetime" service people are just a few of many SonicBlue creditors who are going to lose here. It's unfortunate but they are no more deserving than the unpaid vendors and creditors that get burned in any bankruptcy. We should just be happy that the product line was picked up by a firm with the apparent resources to continue the scheduling service and to continue to develop the software. Tivo's software has pulled ahead in recent weeks. I'm hoping for big things from the next software update on the Replay.

S.O.L.

[Anonymous Coward]

The big question is what about all of the "lifetime subscriptions" that people bought?

I'm pretty sure D&M would've had to have bought out any and all contracts that SonicBlue had held, too. If they haven't bought the company outright, I don't think they're obligated to any service contracts or anything like that.

As somebody pointed out above, a lifetime contract means the lifetime of the company. Pretty rare that you'll find a sucker willing to take on the responsibility of assisting a previously installed user base-- it's usually not worth the money.

lifetime

[ih8apple]

I've been a replaytv user for 3+ years and considering how much effort it takes to support the subscriptions, I'm assuming they will honor the lifetime subscriptions to keep customers loyal.

I mean, how much effort could it take to download a bunch of schedules from tvguide or whoever, encrypt them into the proprietary replaytv format, and put them on an FTP site. For the broadband users, they're done. For dialup, they need a simple agreement with a national ISP to support a few thousand 5 minute calls every night.

Doesn't any one RTA? Subscription info...

[splatter]

"D&M Holdings intends to keep all ReplayTV
customers and will design, manufacture and distribute a line of ReplayTV and
Rio products."

Sounds like they plan on continuing as normal. Hopefully D&M won't be buryied like Sonic Blue.

Re:Too bad

[evilviper]

Unfortunately, it just doesn't work out very well just yet. TV-out devices available for Linux have poor quality, as do the TV tuners available. I've tried. I'm still hoping somebody from gatos will change their minds on TV-out and get the AiW 8500DV working... Supposed to be near-DVD quality output, but lack of drivers screws Linux over again.

Now, this entire situation will be reversed once HDTV gains popularity. Then, input and output will both already be digital, and your computer will have no trouble. That is still assuming that an unrestricted HDTV tuner will be available, and Linux drivers will exist. But, until then (years from now), TVs and Linux PCs won't get along well together.

Philips and Marantz

[Anonymous Coward]

Philips owns a significant part of Marantz, you know.

http://www.twice.com/index.asp?layout=story_stocks &articleid=CA66618

Re:Philips and Marantz

[matthew.thompson]

I believe that story is now out of date the www.marantz.com site now states, under their History link.

MARANTZ TODAY

The Philips period ended in 2001 when Marantz Japan Inc. acquired the brand and all overseas sales subsidiaries. Today, Marantz falls under D&M Holdings, a joint holding company set up in 2002 to integrate Marantz and Hi-Fi manufacturer Denon in a strategic union that will strengthen both companies in the current tough economic climate. The company employs more than 1600 people in over fifty countries. It carefully selects its dealers to ensure that the quality of the service they provide matches the quality of the products Marantz produces. A dealer must satisfy strict requirements regarding demonstration facilities and store layout before Marantz products can be sold.

Re:Philips and Marantz

[Anonymous Coward]

"&M Holdings Inc. will establish a new head office in Sagamihara City, Japan, with Kabumoto as the new president and CEO of the company. Sakamoto will be installed as the new president and CEO of Denon, and Takashi Sato will serve as the new president and CEO of Marantz. All shares of Marantz and Denon will be transferred to D&M Holdings, making Denon and Marantz wholly owned subsidiaries. Marantz shareholders will receive one share of D&M Holdings per share of Marantz stock, and Denon shareholders will get 0.4416 shares for every share of Denon stock. Ownership by Marantz shareholders and Denon shareholders in D&M Holdings will be 30 percent and 70 percent respectively, which means Philips and Ripplewood will have stakes of 14.7 percent and 68.6 percent in the new company."

As of Apr02...

Re:Too bad

[jackalope]

The ReplayTV OS is a modified version of VxWorks from WinRiver.

One shouldn't immediately assume that there are only 2 operating systems in the world. There are a slew more than that, especially in the embedded device arena.

This is what scares me about these services....

[Flabby Boohoo]

"....what about all of the "lifetime subscriptions" that people bought?"

That is exactly why I have never taken the plunge. I don't want to invest in hardware that (more or less) requires the company to be around for it to work properly. For example, the only broadband options in my area are fixed point wireless. The problem is that I have to invest $500 in the hardware. What happens when they disappear in a year or two? I am stuck with useless hardware (unless someone else offers the service).

I guess the dot com mess is still fresh in my mind...

Re:This is what scares me about these services....

[Snowspinner]

For what it's worth, TIVO has repeatedly promised that, should they go out of business, they will release ways to continue getting the channel information for free. ReplayTV hasn't made a promise like that, but I'm honestly not terribly worried about them if they're owned by D&M, who I doubt are going anywhere.

Re:dial up for replaytv - not a few thousand

[ih8apple]

yeah, but how many of those are dial-up and how many are broadband?

Consider this:

1. When broadband support was first announced 3 years ago (after replaytv had been in business 2 years), the reasoning behind it was that over 85% of replaytv customers had broadband access at home (cable/dsl/isdn)

2. All of the devices since then have focused on broadband (any model 4000+)

I'm assuming that, at most, the dial up need is in the low 10's of thousands, not in the 100's of thousands

D&M made a good purchase

[steelerguy]

Both Denon and Marantz make pretty high quality products and some nice higher end audio and video equipment. This looks a nice aquisition for them so they can expand their product line in a nice progressive way. They already make good DVD players and receivers, now they can add a media center device that will allow DVR capabilities and MP3 music libraries.

I do have a feeling that they will somewhat support the Replay TV customers, but they will no do any additional development. My guess is they will come out with their own unit and offer Replay TV owners deep discounts if they trade in. They are not going to want to support someone else's service.

Re:D&M made a good purchase

[MortisUmbra]

Erm, how is it someone elses service? They bought that "someone else" so it's THEIR service. The point here is that D&M don't HAVE to make their own service, because they bought someone elses service, so all that infrastructure work with channel guide updating, and so on, and hardware design, os customization,menu building, it's already done. Otherwise they would have just made their own from scratch.

There is absolutely no reason to buy a company who's assets contain everything you need from top to bottom to get a functional PVR out the door, and then change crap so it becomes "yours".

It already IS yours. Any changes you make to the system (outside of new features and whatnot) is just making life harder for you than it needs to be.

It would be like me buying, oh, GM, then changing the engine bays so they don't fit the standard GM engines anymore, then making my own engine just to put it in the car and say it's "my engine".

Why dothat? It's stupid, just use the engines and bays and layouts you paid for.

D&M will be fine

[WIAKywbfatw]

Denon and Marantz has a very solid core business - home audio entertainment. It's a well-respected, much-loved brand.

The likelyhood of D&M running into financial difficulties is slim, simply because their traditional businesses are cash cows. Even if the SonicBlue division (whatever it ends up being called) makes a loss, D&M will be fine (short of some vey serious mismanagement).

It's like Microsoft and Hotmail - even if Hotmail was to sink like lead, the money that Microsoft makes from its other businesses would more than keep it afloat.

As someone else has said, $36.2 million to buy yourself a major slice of the PVR market (not to mention portable digital music players) is a steal.

If it's anything like a "lifetime guarentee"...

[aerojad]

...those usually are void once the company goes under. You basically have a lifetime guarentee as long as the company is around, which is why it only really means something when the company has been around a long time, like Sears for example.

If the agreement is anything like that, the buyers of the assets can in theory say that since the original company is gone, they don't have to continue the service but they can offer them a new service, just like the old one, at a higher price.

Think $$$: Why wouldn't they keep their commitment

[evenparity]

If D&M are going to continue the Replay line, they would be crazy not honor Rio's lifetime subscriptions. Subscribers are assets.

Not only do you get a chance to upgrade them to next model, the eyeballs themselves must have some value. Marketing departments are constantly trying to develop channels like these subscriptions, and they are willing to pay for them.

It costs big $$$ to develop the guide data, but costs very little to distribute it more widely to these lifetime subscribers. By not honoring the agreement, it will cost them a lot in goodwill.

Of course, I can see them maybe offering lifetime subscribers a year or two of free service and then maybe making them pay, too. But it seems like there is an advantage of not making these people feel cheated. Cheated customers never return and they complain a lot (LOUDLY!).

(I'm glad I am a happy Tivo user.)

BK Court Info - Sonic Blue's sale of Replay &

[slogadget]

Looks like the Bankruptcy case for Sonic Blue will be held in the Northern District of California Bankruptcy court. Judge Marilyn Morgan is hearing the case. Here is a link about the sale of Replay and Rio: Sale of Replay, Tues 15th April 2003 ~Robert

Hi-fi elitism

[theLOUDroom]

I've already see a few posts on this topic that just made my stomach turn. Here's an example:

D&M isn't high end. It's more of a high-end of the low-end. Rotel, Krell, Sunfir, Mark Levinson, anything with vaccum tubes and the list goes on are more towards the middle and hugh end of the audiophile spectrum. You know stuff where each mono-block amp costs more than the most expensive D&M box. Or when your system has a phono cartridge that costs 5-15,000 bucks, that's high-end. But me, I'm happy with my Denon AVR-3803

Here's another one:

Dude, you are probably not an audiophile. Denon and Marantz are related to the likes of Kenwood, Sony and Pioneer like a ferrari to a volkswagen. You probably also never heard of Quad or Nakamichi? heh ... now that's an audio system.

I'm not an "audiophile" if by audiophile you mean "sucker." People who spend a ton of money on this stuff are buying some VERY overpriced equipment. Just because something is the most expensive in the world doesn't make it the best. And tubes? Yeah, you can make a good amp with tubes, but you can make just as good or better of and amp with transistors. (Guitar amps are a slightly different story.) Saying something has tubes, doesn't necessarily make it good.

I've decided to stick to pro-audio gear for all new audio purchases. There's just something stupid about spending $200 on unbalanced phono cables, but "audiophilies" have no problem with that. Nor do they seem to have a problem with $1000 speaker cables, etc.

If you're going to spend a ton of money on your audio system, I suggest you buy the same things a recording studio buys.

Just to show you guys are being a pompus asses, here's a brochure from quad:
here
check out those power amp specs: 108 db SNR

Now lets go look at some pro gear:
Check out the specs. page for this Crown amplifier.
SNR 120dB

People "in the know" don't buy that ridiculously overpriced "high end" stuff, they buy pro grear. It performs wonderfully, takes abuse, and costs less.

Re:Hi-fi elitism

[mkldev]

Exactly. The definition of high-end depends on who you are.

For average audio users, companies like Kenwood and Pioneer are seen as (relatively) high-end.

For audio engineers and other people with discerning ears, Denon, Marantz, Nakamichi, etc. are seen as high-end.

For the folks who blindly believe that they can hear the difference between 48 KHz and 96 KHz audio or between a $5 cable and a $1500 cable, there are plenty of even more expensive brands that are considered high-end....

For people with good ears, Denon and Marantz are high-end. For the rest of you, there's Mastercard.

Re:Too bad

[dirty]

Why does everyone think that this is the end of ReplayTV? So far everything looks like it's not going anywhere, and that there will probably be a lot more developement on the ReplayTV line. People were making the same comments two weeks ago when the deal between SonicBLUE and D&M "fell through". I think D&M was offering $40mil then. Yesterday they paid $36.2mil. That's $3.8mil more cash D&M has now. How is that a bad thing?

Re:Maybe I missed it

[SomeOtherGuy]

That was partially my point. (I am not a businessman) However, it does not take a businessman to understand the adage of not letting ones reach extend ones grasp. Their has to be some way (business model) for niche companies to provide products to smaller markets. Why does every technology company spend themseleves at the level that it would take the same kind of market penetration as TV's and Toasters in order to break even? Maybe the model would be to crank these things out of a "garage" until one can produce enough honest profit to deserve the amenities given to a proven company with a proven product. (Like I said -- I am not a businessman, but I do know software development for fortune 500 companies -- and we learned years ago that the "If we build it, they will come" is a very risky approach.

Re:OT: Re:Hi-fi buys lo-fi

[hudsonhawk]

While their sub has a lot of gee-whiz cool to it (a 12" cube! that's so cool!) they're amps and preamps, imho, are mediocre, considering what they cost. If you're looking for high-end home theater amps / preamps, look no further than B&K. If you're looking for just a high-end audio system, for the same price as the Sunfire stuff, you could get yourself into some entry-level Audio Research and Conrad-Johson eletronics.

But I've never been a fan of that all-flash, no substance Carver / Sunfire sound. To each his or her own.