Entertainment

IceTV's Troubled Ad-Skipping Set-Top Box May Be Its Downfall

The Australian company that fought and won a landmark legal battle against the Nine Network is in financial trouble, after seemingly over-promising on a revolutionary device that would let customers watch catch-up TV without ads.

After its supplier ceased trading, subscription electronic program guide service IceTV has been placed into voluntary administration with cashflow problems — the most recent step in what customers say is a “disaster” launch of the Skippa, a digital TV recorder that attempted to skip ads during free-to-air television programs.

Disclosure: Campbell Simpson worked for IceTV in 2007-2008, in technical support over phone and email.

IceTV was registered as a business in early 2005, and for years its primary offering was the Ice electronic program guide, a subscription service delivered over the internet to a range of supported digital TV recorders. The Ice EPG was (and is) an independently curated electronic program guide for Australia’s free-to-air digital TV services, started when digital TV was in its infancy in Australia — and when free-to-air TV didn’t even have an EPG.

From 2006 to 2009, IceTV was embroiled in a long and drawn-out legal battle with Nine Entertainment over its guide, but after verdict and appeal and counter-appeal, IceTV won a landmark judgment. After the 2009 verdict IceTV continued to offer its subscription EPG, priced around $99 per year before loyalty discounts, and continued development on new features and support for new digital TV recorders — as well as developing its own device.

The IceTV Skippa

In early April this year, IceTV announced the Skippa, a set-top box it had apparently designed in-house and programmed to automatically skip ads in recordings of free-to-air digital TV. Early previews said the Skippa had potential, saying that AutoSkip was “surprisingly good but not foolproof”. Processing a single recording at a time, it scanned recorded files for video and audio cues that signified the start of ad-breaks and effectively cut them out of viewer playback by autonomously skipping them. The AutoSkip feature that gave the Skippa its name seemingly did its job, but it was delivering the initial run of devices proved to be an issue.

The initial shipping of 1000 devices was initially promised in July, but in late July subscribers were told by email that deliveries had slipped to August due to “greater than expected demand”. Pre-order customer Michael Fox created a timeline of IceTV’s announcements, including the point at which pre-orders slipped to late August and when IceTV added a $39 yearly fee to the AutoSkip feature despite previously promising “no annual fees ever“. It later backflipped again, stating the feature would be free to all Skippa pre-order holders for the life of their devices.

In mid-September, IceTV’s CEO Heinz Herrmann emailed customers to claim that that mass production of the Skippa box was on schedule, saying it was fulfilling the earliest pre­orders. “About half of the pre­ordered Skippa volume arrives in Sydney by air freight over the weekend, with the remainder not far behind.” The small number of customers on Whirlpool that received their Skippa set-top box pre-orders in late September shared their unhappiness at the device’s shortcomings including random rebooting, no HDMI-CEC support and software that froze during initial setup.

The consensus was that the Skippa was possibly too expensive for its limited and imperfect feature-set. When some buyers enquired about potential refunds from IceTV, they were told they would have to wait days or weeks for replacement devices or reimbursement.

IceTV In Administration

Yesterday, IceTV customers and Skippa pre-order holders received an email to say that the company had been placed into voluntary administration. In it, administrators TPH Insolvency say that an “urgent assessment” of IceTV finances is underway, and although business apparently continues as normal, the company is intended to be sold to any interested party as soon as possible.

If that doesn’t happen, IceTV will likely become insolvent: “If a purchaser is unable to be found within the immediate future it is highly likely that the Company will be unable to continue trading.” Unsecured creditors — including IceTV EPG subscribers and Skippa orders — are unable to access refunds for their unworking or as-yet-undelivered devices.

The email stood at odds with an email sent only days earlier, saying that Skippa deliveries were on schedule and that enough devices were on hand to fulfil customers’ orders: “We’re pleased to confirm that our backlog of Skippa orders has finally been cleared. Australia Post will be sending tracking numbers on Tuesday due to the long weekend in New South Wales. We’ve had some unexpected delays, both in the factory and with the current strike at Customs. But we have plenty of supply now in our warehouse to fulfill every order.” In the letter from TPH, IceTV apparently only has $15,000 in liquid funds in its bank account, with TPH’s own fees set at $45,000 plus $580 per hour in administration fees.

Customers are understandably unhappy. An early commenter on IceTV’s forum: “I knew this was a fucking scam.” Another: “I should have cancelled months ago, they seemed to be trying to bump more sales without suggesting [pre-orders] never reached 1000”. The Skippa itself was described by one commenter as “a second rate unit at best, with a fuck-tonne of problems”. Some are initiating charge-backs through Paypal and their credit card companies.

In a statement to the SMH, IceTV company director Colin O’Brien said the matter was larger than just IceTV: “The company providing the Skippa box ceased trading at midnight on September 30… as the director I reached an impasse with our supplier where I had no choice but to put the company into administration. Everyone at IceTV is gutted, [and] the staff have agreed to work for another week to try to find a solution.”

Despite the September 30 halt for Skippa provider UEC, the IceTV email on October 2 showed the company still confident of customers receiving devices. TPH Insolvency’s Amanda Lott also told SMH that the Skippa’s manufacturer changed its payment terms with IceTV after ceasing trading, and the new proposal was untenable, forcing IceTV into administration without the operating cashflow to survive and meet its changed obligations to the supplier. The Skippa set-top boxes already in Australia are, at the moment, not scheduled for delivery to customers.

What Next For IceTV

Customers are also speculating that IceTV has been unable to sell the initial 1000-unit order of Skippa set-top boxes, leaving them with a significant financial obligation to supplier Altech UEC, the Australian company organising Chinese production of the PVR — itself now having ceased trading.

As it stands, no new Skippas are reaching customers, and no refunds are being processed. Dozens of pre-order holders on Whirlpool and the IceTV website are utterly shocked and disappointed — a stark change for a company that until now enjoyed strong support from the enthusiast community and maintained a friendly, we’re-all-in-it-together atmosphere in its forums.

A meeting of creditors is scheduled for October 16. A second meeting on the future of IceTV will be made at a second meeting of creditors, some time before 2 November. For now, the supply of IceTV’s primary service — the electronic program guide delivered over the internet to thousands of subscribers, who use it on their personal video recorders and set-top boxes — continues as normal.

Update:

TPH Insolvency says that the IceTV business continues to exist in its normal state for the time being, apart from the hold of shipping on Skippa boxes. With 10 staff and approximately 16,500 customers, IceTV has a long list of unsecured creditors to pay if it moves into insolvency. “The first steps are to keep the service going whilst we seek expressions of interest in the business. The service will continue as normal for the moment however that is subject to the prospects of finding a buyer in the immediate future.

“All orders for Skippa boxes have currently been put on hold given the uncertain future of the company. There is a hold on all supplies on new boxes and new subscribers. At this stage customers who have an outstanding order for the supply of a Skippa Box and suppliers are being considered as unsecured creditors. All creditors will be treated in accordance with the priorities legislated in the Corporations Act.

“We have not had an opportunity to investigate the basis for the company’s financial position or any specific aspect of it. We will be reporting more fully to creditors on this aspect once we have done our statutory review. The report will be released in approximately 5 weeks.”

Gizmodo has contacted IceTV’s CEO Heinz Herrmann, for comment. [IceTV]


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