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DVRs Expand Capabilities, Lower Pricing for Holidays

21 Sep, 2003 By: Holly J. Wagner

It's all about control.

That's the message from hardware manufacturers, cable and satellite companies this holiday season as all three sectors push digital video recorders (DVRs) with new features, lower prices or both.

DVRs -- set-top boxes that interface with services like TiVo and Replay TV -- combine the best of both worlds for consumers: They offer the selection of video-on-demand (VOD) with all the features of DVD and VHS players. Consumers can record, pause, fast-forward and rewind, and many of the boxes even rewind live TV and skip advertisements (much to the chagrin of TV networks, which are still fighting that feature in court).

Research that Instat/MDR published in March indicates that DVRs have been slow to get a foothold and that demand is strongest in North America. But owners have “an extremely high satisfaction rate,” with 83 percent indicating they are “extremely” or “very” satisfied with their DVRs.

Market leader TiVo -- which typically gets the biggest increase in subscriptions around the holidays -- rolled out its Home Media Center upgrade in April. The device networks with the user's home computer so the user can control MP3 playback and digital photo display via the TV, remote scheduling using an Internet connection and the ability to transfer programming between two or more second-generation DVRs.

Hardware manufacturers have begun offering DVRs paired with other devices, a direction that appears wise in light of InStat's research. It indicates that DVD-player–DVR combination machines are a promising area for growth, and unit shipments will reach 2.5 million by 2005.

Pioneer recently began offering two DVRs with onboard DVD recorders. Both models accept DVD-R and DVD-RW discs, which should help their popularity with consumers by eliminating any confusion over the competing recordable formats. The downside is these boxes ain't cheap: A model with an 80GB hard drive costs $1,199, and another with a 120GB hard drive costs $1,800. Both include 181-channel cable tuners and basic TiVo service.

Partnerships with satellite and cable TV providers are driving growth in the DVR sector, with InStat predicting that worldwide shipments of DVR/receiver set-top boxes will grow from 1.5 million last year to 11 million in 2005.

To expand its reach, Echostar's Dish Network announced Aug. 25 that it would give new subscribers a free Dish Player 510 ($299 after Jan. 31, 2004) with a 100-hour onboard hard drive. The promotion includes the set-top, a satellite dish, a remote control and free standard installation. The unit's features include slow-motion instant replay, which should appeal to fans of sports and MTV's “Jackass.”

Its chief competitor (and merger target), Hughes' DirecTV, has a contract to resell TiVo to its customers. TiVo has begun offering DVR receivers, ordinarily priced at $249 and up, for $199 and up to new customers who sign up for minimum yearlong commitment with the service. Using DirecTV, there is an additional $4.99 monthly charge for customers who order the most basic programming package DirecTV offers but no additional monthly charge for those with deluxe programming packages.

Buying directly from TiVo, consumers can opt to pay $12.95 a month for the TiVo service or pay a one-time $299 fee for a lifetime subscription.

Samsung recently launched a DirecTV/TiVo-compatible DVR with a 120-hour hard drive, priced at $499. The storage capacity lets viewers save a lot of programming for a rainy day.

Cable companies have begun to follow suit to keep up.

In May, Comcast started offering Samsung set-tops with built-in DVRs in the Philadelphia market. Time Warner began offering the same service in San Diego in June, and competitor Cox Cable plans to offer it by the end of the year. Cox recently launched an “Entertainment on Demand” service that extends its InDemand pay-per-view functions with DVD-style controls, but does not require a special set-top.

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