Digital Video Recorders Coming Soon to a Living Room Near You?

Every year, as summer sales for consumer-electronics products drag a little, manufacturers and retailers wonder which products will be the trend-setters in the upcoming holiday season. According to a report just released by International Data Corporation (IDC), the hot niche for 1999 will be a new product category: digital video recorders (DVRs) from companies like RePlay Networks and TiVo.

According to IDC's report, titled "Digital Video Recorders: The Next Big Thing?," the benefit for consumers is monumental, "enabling a fundamentally better viewing experience." The report points out that "as US households already spend an average of 4.5 hours per day watching TV, an improved viewing experience is easy to appreciate and will appeal to almost everyone. IDC believes this universal appeal will lead to fast growth, with DVR-enabled products achieving more than a million unit shipments during its second year on the market, and over 10 million unit shipments in 2004."

IDC's Kevin Hause says that "DVR devices are on a constant, individualized programming hunt---finding and recording your favorite types of shows 24 hours a day, seven days a week, and across numerous channels. This enables consumers to get significantly more value out of the 60+ channels they already receive, and it might be the only thing that will give them control of the much-discussed 500+ channels of the future."

IDC claims that one key factor in the growth of the DVR market will be the integration of DVR functions into other devices, such as set-top boxes. According to Hause, "As consumer-electronics companies pursue ways to differentiate their products, DVR features will appear in a broader range of products. DVR capabilities are especially compelling in products that share some common technologies and components, such as satellite set-top boxes and digital TV converters." He also says that DVR products will mirror the rapid adoption of DVD players "due to broad consumer interest and little required infrastructure."

The robust growth outlook for DVR-enabled devices and the resulting changes in consumer viewer habits also hold implications for network programmers and advertisers, who must contend with wider use of time shifting and fight against commercial skipping. "While sponsorships, targeted spots, and more interactive commercials might offer new advertisement opportunities to these new vendors, a backlash is likely from the companies who currently generate revenues from ad sales," Hause says.