Personal Video Recorders (PVRs) should soon begin to grow in popularity, due in part to two key trends: they offer greater viewer choice and they give a growing population of aging consumers a new way to cope with some of the annoying changes in their lifestyles.
Just as digital satellite systems found a ready market of consumers looking for greater programming choice in the mid-to-late 1990s, PVRs will expand that benefit further in the 21st century.
PVRs stand as DBS's de facto answer to cable's much-touted (but endlessly delayed) video-on-demand (VOD) services. Though headed for cable platforms as well, PVR services tend to work better for DBS than cable today because in order to most efficiently record on a PVR hard drive, the signal must be in digital form, and much of cable's present-day "digital service" is still partially analog.
What PVRs promise is the ability to choose what to watch and when to watch, even if you're not there during the original broadcast.
As PVR devices become less expensive, as cable services shift all of their channels to digital, and as digital cable boxes begin selling at retail, PVRs will come closer to offering American consumers "affordable choice."
Regarding the benefits of PVRs to the aging, PVRs show enormous promise because they permit a greater number of older (and longer living) Americans to listen over and over again to something they either didn't hear clearly the first time or enjoyed so much they wanted to see it again or replay it for someone else.
This is one of the truly great benefits of hard drive video recording. As the hearing of aging Americans steadily deteriorates, PVRs allow listeners to instantly play and replay something they missed (or something they liked).
That benefit also extends to younger demographics, such as parents of young children or those living in noisy environments. The implementation of a button on a TiVo, Canal+Plus and/or Ultimate TV remote control device affords a chance to see and hear again commentary that was drowned out in a noisy environment.
This benefit actually extends to viewer choice, as well. With a PVR, people — especially the aged — can immediately choose to listen to a given program segment as many times as they like. This, in turn, improves the quality of life of seniors who find that they have more time to watch television.
As for the specific opportunities offered to retailers as these trends develop, The Carmel Group estimates that by year-end 2008, the core of America's CE dealers will have moved close to 30 million PVRs through their doors, mostly in the form of DBS and cable set-top boxes (STBs).
The better part of this STB market will begin benefiting CE dealers closer to the year 2005, when cable will begin to have to make its STBs available for purchase at retail. Integration of PVR content and capabilities into existing devices will become the norm, allowing a new generation of TV users to advance beyond simple VCRs.
WebTV, ReplayTV, and TiVo were the segment's first-generation pioneers, followed more recently by companies and services such UltimateTV by Microsoft, Metabyte's MbTV, News Corp.'s NDS service XTV, and similar hard drive offerings by Philips, Scientific Atlanta, Canal+Plus and others.
Though the future of the PVR is bright, many obstacles remain. In fact, in order for our predicted 15 million PVR subscriber base to be reached by year-end 2005, three criteria must be satisfied. Shortfalls in any one could threaten the overall business model for the PVR industry.
First, major cable operators must begin supporting and deploying some kind of PVR service on their networks before year-end 2001. We believe that likely candidates to first announce a PVR strategy include AT&T, Time Warner, Comcast, Cox Communications and Charter Communications.
Second, PVR providers must allow their service to interject e-commerce capabilities within the next 12 months, at the latest, allowing TV viewers to retrieve information from their PVR service via the Web. Without at least some sort of basic Internet access, the PVR technology could not be considered a robust, interactive service.
Third, full integration of PVR technology into DBS and cable set-top boxes must be achieved. The first-generation PVR set-top boxes from WebTV, TiVo and ReplayTV have been sold as standalone devices, and have been designed more as marketing items to "spread the word" to the public.
The Carmel Group believes that standalone set-top boxes, excluding video game consoles, are marketable only to early adopters and not to the mass market. For the PVR to truly become a mass-market product, the technology needs to be fully integrated into a majority of all new DBS and cable boxes.