This is just new packaging for that old classic Video On Demand (VOD). Unless the TiVo and Replay patents are very broad, they likely don't cover offering this as a service in this fashion.

If they've done their job right, this is just a service that is delivered through your existing cable box. In that case, for many people there is no upfront cost - they just start paying the monthly fee. That can be a huge attraction over the several hundred dollars needed to install a PVR.

The technical concerns expressed are those of VOD. But there is a middle ground, which may be AOLTW's target in the background. Launch a VOD service to get the market rolling. Then, gradually move to a store-and-forward system, which stores most of the material locally, but - like VOD - remains under control of the cable head-end.

The business problem has always been a chicken-and-egg; how do you invest in the big tech before people sign up en mass? This way, the start up is VOD - well understood now, but not scalable. But by casting it this way, you seed the market for something that IS scalable - StoreAndForward. If you have the market seeded, you can develop your tech knowing that you have a large initial market.