06.26.2009 01:10 PM
Broadband Trumps VOD Trumps DVRs


NEW YORK:  Broadband access will outpace the two other prevalent video time-shifting platforms, according to Media marketer Magna Insights. Around 69 percent of U.S. households will have broadband access by 2014, Magna prognosticates in its On-Demand Quarterly. Fifty-four percent are expected to have video-on-demand service, while 41 percent will have digital video recorders.

At the end of 1Q09, around 71 million of the nation’s estimated 118 million households—60 percent—had broadband access. The total comprises around 95 percent of all Internet access, with the remainder served by slower connections. In five years, around 86.5 million of the nation’s then 124 million households are expected to have broadband—69 percent. By that time, Magna says, only 1 percent of ’Net households will be using slower, narrowband connections.

By comparison, around 31 million—26 percent of all households—have DVRs today. Around 43 million or 36 percent have access to VOD. In five years, 41 percent of all households are expected to have DVRs, while 54 percent will have VOD capability.

All technologies represent the capability of time-shifting, though broadband is limited to what programmers make available on the platform. VOD is similarly positioned, while digital-video recording is less discriminate. DVR penetration has been marked by five years of litigation between TiVo, a pioneer in the field, and EchoStar. A court recently ordered EchoStar to disable the DVR function it provides for around 7 million subscribers, but the order was temporarily stayed.

Set-top boxes now comprise most DVR technology, but a court ruling in May freed up networked DVRs. Unlike set-top DVRs where shows are stored on localized hard drives, network DVRs pull content form centralized storage. Cablevision fought Hollywood for nearly three years over network DVRs. The reported compromise is that network DVRs would not allow fast-forwarding through commercials.

While Magna says the network DVR will contribute to the growth in overall penetration, it will be “minor.”

“It is unclear if network DVR will turn out to be either a superior product compared to set-tops with DVRs, and most likely will not be cheaper to consumers as long as MSOs lack a competitive reason to constrain pricing,” Magna’s report stated. The once-feared impact on revenue may be overblown as well, it said. “Programmers may be incentivized to work with Cablevision to deploy new forms of sponsoring time-shifting—more easily enabled with ad-insertion at the head-end rather than at the set-top.”
  — Deborah D. McAdams



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