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POLL: DVR growth to top HDTV, VOD

Apr 28, 2003  •  Post A Comment

The digital video recorder will ultimately be the most successful new TV technology, according to an exclusive TelevisionWeek survey of 100 TV executives. In fact, the executives chose the DVR by a 2-to-1 margin over the second-place finisher, high-definition TV. The DVR, which is offered by companies such as TiVo and EchoStar, permits viewers to pause live TV, fast-forward past commercials and record up to 80 hours of programming without a videotape.

“DVRs will be most successful because they solve a real problem for real people,” said a VP of a TV programming company. “My show gets interrupted or my show isn’t on when I want to watch it-these are real issues that the DVR solves.”The TelevisionWeek survey group included officials from broadcast and cable networks, cable and satellite TV services, advertising agencies, production companies and other TV-related firms. They were asked: “Of the following four new TV technologies-digital video recorders, high-definition TV, video-on-demand and interactive TV-which one will be most successful?” The 100 executives were guaranteed anonymity because many of them have business partners in all four categories, and they could not publicly say that one TV technology was more likely to succeed than another. However, the survey results are revealing because the executives will help decide in which TV technologies their companies invest the most time and money.

That said, here is a closer look at the April survey results:

Most Successful technology?

The digital video recorder (50 percent of the vote): The DVR is in only approximately 2 million homes, despite the enormous buzz for DVR brand leader, TiVo. However, many executives say it’s just a matter of time before consumers realize that the new technology can make their lives more convenient and entertaining.

“Once you use it, you’ll never want to use a VCR again,” said a TV marketing VP.

The executives said that DVR subscribers should dramatically increase by 2004 because cable TV operators are now offering digital recording services. Until now, they noted, DVR growth was largely dependent on retail sales of DVR set-tops from TiVo and ReplayTV. However, many consumers believe the set-tops are too pricey and difficult to install. The cable service, which usually does not require consumers to buy or install new receivers, should eliminate such concerns.

Because of the likely success of the cable DVR, some executives are doubtful that TiVo can survive unless it licenses its technology to cable operators. (TiVo now has a partnership with DirecTV, the nation’s leading satellite TV service.)

High-definition TV (24 percent of the vote): Digital TVs, which deliver HDTV signals, are now in approximately 6 million homes. However, with prices dropping to less than $2,000, HDTV sales have jumped dramatically over the past year. The executives say that HD growth will continue but not as fast as the DVR. Many buyers still are wary because of the price tag and the relative shortage of high-def programming. Some officials said the recent addition of ESPN’s HDTV channel-and other HD sports broadcasts-could boost sales.

“I think HD will accelerate with sports and it can make money for the CE world, so that’s where I vote,” said Seth Haberman, president of Visible World, a company that delivers targeted TV ads. (Haberman gave permission for his response to be made public.)

Video-on-demand (22 percent of the vote): The executives said that VOD, which permits viewers to order and watch movies from home without waiting, will be a hit. However, the technology is currently available only on cable TV. (Satellite TV cannot deliver the two-way infrastructure needed for VOD transmissions.) Consequently, VOD’s long-term success may have a ceiling, although some execs said that the cable industry will push VOD hard.

“The U.S. cable industry certainly sees VOD as the best way today to compete with satellite and a great way to improve ROI [return on investment] on their digital TV investments,” said Ed Graczyk, director of Microsoft TV, the company’s digital TV unit.

Interactive TV (4 percent of the vote).

The technology, which enables viewers to shop and interact with shows on-screen, has been a huge disappointment. Cable and satellite TV operators have placed DVRs, VOD and HDTV ahead of ITV on their priority lists.

However, despite the low survey total, some executives said ITV will one day become commonplace in U.S. households.

“It will take some time,” said one network executive. “The industry still needs to determine what viewers want to interact with.”

Phillip Swann is president and publisher of TVPredictions.com. He can be reached at Swann@TVPredictions.com.