Digital Video Recorders: Are Consumers Buying Them?

In the twelve months since TiVo and Replay Networks first unveiled their digital video recorders (DVRs), the consumer electronics industry has come to recognize DVR technology as a necessary piece of the interactive television puzzle. Consumers, on the other hand, have yet to embrace DVRs, due to their high retail prices and unfamiliar features.Ongoing research by TechTrends, Inc. suggests that while most consumers are very interested in DVR features such as program pausing, ad skipping and personal channels, only 17 percent would be comfortable making a purchase without first seeing a product demonstration.At the 2000 International CES, several new products were unveiled. Not only did both TiVo (NASDAQ: TIVO) and Replay Networks announce strategic partnerships with major industry participants, such as Sony (NYSE: SNE), Sharp, AOL (NYSE: AOL), DirecTV and Liberate Technologies (NASDAQ: LBRT), but a new competitor entered the ring. Microsoft's WebTV unit (NASDAQ: MSFT) showcased its WebTV Plus, a new set-top box that combines EchoStar's DISH satellite service with Internet access and DVR functionality.""As the DVR market becomes more crowded, consumers are likely to get confused by the growing number of available product offerings,"" said Laurence J. Bloom, TechTrends' Director of Research and Consulting. ""The challenge for manufacturers of stand-alone and integrated DVR devices is to educate the consumer. They need to devise new strategies for store merchandising, including the placement of in-store representatives who can demonstrate products and answer questions.""Another major challenge for DVR makers is price. Not surprisingly, the current price points of today's DVRs are limiting mass-market acceptance. While 86 percent of informed consumers would consider buying a DVR in the future, most are unwilling to pay more than $299 for the product. ""Based on our research, we believe that $299 is the threshold at which consumers will widely adopt DVRs,"" said Mr. Bloom.TechTrends has also found that 58 percent of consumers would be less willing to purchase a DVR if their PC offered the same features. Another key finding is that 55 percent of respondents are more likely to purchase a DVR if it were combined with a satellite receiver, compared to only 12 percent for a DVR-cable box combination. TiVo's relationship with DirecTV and WebTV's relationship with EchoStar address this consumer desire.These research findings come from the responses of more than 1400 consumers who were surveyed as part of TechTrends' new study, ""The Digital Television Revolution: Success Factors for the Emerging Digital Video Recorder Market."" This study is the most comprehensive market study to date on the DVR market. It investigates and analyzes the competitive landscape, technology trends and consumer demand for current and next generation DVR systems, including services, features and software solutions.About TechTrends, Inc.TechTrends, Inc. is a global provider of market intelligence and strategic solutions to companies in the interactive consumer products and technology sectors. Our goals are to identify key technology trends, understand their effects on existing markets, and provide valuable information to satisfy our clients' marketing and product development needs.TechTrends has three separate research practices: Consumer Electronics, Interactive Entertainment and High-Tech Toys. Our Consumer Electronics practice continuously monitors and investigates critical issues for market participants, including competitive factors, new technology applications, and consumer opinions and buying behavior. Research areas include interactive television, smart home technologies, and Internet appliances such as mobile PCs and Web phones.

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