Personal TV Companies Continue To Price Themselves Out Of The Market

New Research Raises Questions About The Future Of Personal TV Providers And Digital Video Recorder Vendors

2-Mar-01

Findings from a new study by TechTrends, Inc., ""Opportunities In Interactive TV Applications And Services: An Analysis Of Market Interest And Price Sensitivity,"" suggest that U.S. providers of personal TV services such as TiVoÆ and Microsoft will continue to struggle in the future, as consumers resist high monthly service fees. Another report by TechTrends, ""Interactive TV And Home Control Set-Top Boxes,"" reveals that current prices for digital set-top boxes remain too high for most consumers. As a whole, TechTrends' research now indicates that current market prices for digital video recorders (DVRs) and personal TV services are too high to achieve widespread success.Since its debut in 1998, the DVR category has experienced only moderate success. Even with a 60 percent decline in hardware prices by DVR manufacturers such as Philips Electronics and Sony Electronics, DVRs have yet to capture a sizable portion of the consumer electronics market.DVR pioneers TiVo and ReplayTVÆ have each employed very different pricing strategies to market very similar products. TiVo's 30-hour DVR unit sells for $400, compared to $600 for a similar ReplayTV model. TiVo charges users $9.95 per month or $199 for a lifetime service subscription, while ReplayTV had decided to incorporate the cost of lifetime service into its hardware.TechTrends believes that TiVo's lower hardware prices are the principal reason that the company's DVRs have outsold ReplayTV's by more than three-to-one, resulting in ReplayTV's restructuring and pending acquisition by SONICblue. In fact, TechTrends' research has found that less than three percent of consumers would pay more than $300 for a set-top box that supports time-shifting and personalized TV services, as well as several other leading ITV applications.Despite TiVo's lower hardware prices, the company will still face tremendous challenges in convincing consumers to pay its monthly fee. According to TechTrends' new report, only six percent of all consumers would pay more than $9 per month for a service that offers both time-shifting and personalized TV channels.""Only one-half of one percent of consumers will spend more than $300 to buy a fully-loaded digital set-top box and pay more than $9 per month for a personal TV service like TiVo's,"" said Todd D. Wiener, Managing Director. ""Fewer consumers are likely to pay over $400 for a device that supports only two ITV applications.""According to these findings, TechTrends concludes that the total available market for personal TV providers is currently fewer than 500,000 households, approximately three times TiVo's current subscriber base of more than 150,000. TechTrends believes that providers will continue to experience limited revenue from this market until hardware and service prices decline enough to ignite mass market demand.About This ResearchPublished in February 2001, ""Opportunities In Interactive TV Applications And Services: An Analysis Of Market Interest And Price Sensitivity"" evaluates consumers' degree of interest and price sensitivity for popular ITV services, including video-on-demand, time-shifting, Internet on TV, personalized TV channels, video games and digital photo printing. This study examines consumer demand by eight variables, including age, gender, number of TV sets and set-top boxes, Internet access, and TV and Internet usage. This 41-page report, with 64 charts and tables, is now available for $1,395.Published in November 2000, ""Interactive TV And Home Control Set-Top Boxes: A Segmentation Analysis Of Consumer Demand, Price Sensitivity And Buying Intent"" examines how much consumers will pay for digital set-top boxes that 1. enable a number of ITV applications, or 2. control household systems and appliances. The study also analyzes which consumers prefer to lease set-top boxes and which prefer to purchase them online or at retail. Consumers are examined across 12 variables, including demographics, TV set and set-top box ownership, types of cable or satellite TV service and Internet access, and TV and Internet usage. This 24-page report, with 38 charts and tables, is available for $595.For more information about TechTrends, Inc., visit www.techtrends.com.

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