The number of households in the United States with digital video recorders (DVRs) is set to rise from the the current customer base of approximately 1 million to 15 million in 2007. However the Leichtman Research Group, which has produced a new report on the digital video marketplace, downplays the impact of the new technology and claims that widespread adoption is unlikely in the near future.
The research found that while 25% of consumers are interested in getting TV programs on-demand, only 5% would be willing to pay for a DVR device in addition to a monthly fee. “While DVRs are causing a stir within the media and entertainment industry, the general public has yet to show a strong interest,” said Bruce Leichtman, president and principal analyst for the Leichtman Research Group.
The report points out that despite having been marketed and available for three years, only 350,000 stand-alone DVRs have been sold in the United States. In addition, direct broadcast satellite (DBS) providers have issued about two-thirds of a million set-tops deployed with DVR technology. According to Leichtman, DBS providers will continue to lead the way in DVR development, with a 60% share of the market in five years time.
Cable television operators are believed to be experimenting with DVR technology but network-based video-on-demand is generally seen as a better means of satisfying the customer base of 15 million digital cable households. The report also highlights a potential conflict of interest with operator-owned programming ad revenues and local advertising insertions that can be bypassed by DVR technology.
“With limited demand for DVRs as a stand-alone product and service offering, the potential growth for the category will be supply-side driven, resting firmly on the shoulders of the cable operators who may not be motivated to rapidly deploy DVR technology,” concluded Leichtman.
