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Cable TV operators are eyeing their next move with digital video recorders -- next-generation machines that transfer recorded content onto DVDs for easy storage and playback.
Cable firms face a tougher choice, since they are also content providers. To protect content from widespread piracy, cable operators are leaning toward providing DVR-DVD machines that play back programs only on the same set-top box.
DVRs -- a field pioneered by TiVo (NasdaqNM:TIVO - News) -- lets viewers record, pause, rewind or replay live broadcasts by recording the shows onto a hard-disk drive.
Cable operators Comcast (NasdaqNM:CMCSA - News) and Time Warner (NYSE:TWX - News) have followed TiVo into the field, leasing millions of DVRs to their customers.
Their models are combined with digital set-top boxes that provide cable programming.
DVR technology is evolving fast, though. TiVo and other consumer electronics firms now sell DVRs that combine a hard disk with a DVD burner.
These devices let consumers archive programs first recorded on a hard drive to DVDs.
Analysts say the DVR-DVD devices are becoming popular because even high-end DVRs can't record too much content in the emerging high-definition format.
But cable operators would take a big risk if they plow ahead with DVR-DVD machines that play back only on their set-top boxes, one analyst says.
"They'll regret it if they do," said Josh Bernoff, analyst at Forrester Research.
He says consumers want to use DVR-DVD machines to create libraries of their favorite shows. Most consumers want to play back shows on any TV in homes, he says.
"The only purpose of burning things to a DVD is to have an archival copy," he said. "Let's say you move from a Comcast market and give up your cable service. You might not be able to play those DVDs wherever you move. That seems really strange."
Cable TV firms declined comment on their DVR plans.
In April, set-top maker Scientific-Atlanta (NYSE:SFA - News) said it would introduce a new machine with built-in DVR-DVD recording.
It's due out late this year. It's one of the two main providers of DVRs to cable firms, and Time Warner is a likely customer.
The new device, the MCP-100 set-top, will feature content protection controls that cable operators can activate. Sara Stutzenstein, a Scientific-Atlanta spokeswoman, said it's up to cable operators to set any restrictions on how recorded content can be played back.
Analysts say cable firms believe DVR-DVD machines with limited playback options might be acceptable to some consumers. One reason is some consumers prefer leasing DVR devices from cable firms rather than buying them from TiVo or consumer electronics firms.
Time Warner Cable has almost 1 million customers that lease DVRs. Comcast has 625,000, analysts say.
In addition, consumers that lease DVRs can upgrade as technology improves.
Consumers that already own DVRs will have to buy new models if they want built-in DVD burners. Those new models cost a few hundred dollars.
Current DVRs worry many in the TV business. The devices let viewers easily skip past commercials, posing a threat to advertising revenue. In 2004, advertising provided 32% of the cable industry's $57.6 billion in revenue.
Piracy is another big issue.
Forrester's Bernoff says cable firms might delay DVR-DVD plans until they see what satellite broadcasters will offer in this regard. DirecTV and EchoStar declined comment on their DVR plans.
In early 2003, EchoStar (NasdaqNM
ISH - News) became the first pay-TV company to offer subscribers DVRs.
DirecTV (NYSETV - News) followed.
Time Warner Cable and Comcast followed even later, but they've become aggressive in marketing DVRs in the past 18 months.
Cable TV operators are eyeing their next move with digital video recorders -- next-generation machines that transfer recorded content onto DVDs for easy storage and playback.
Cable firms face a tougher choice, since they are also content providers. To protect content from widespread piracy, cable operators are leaning toward providing DVR-DVD machines that play back programs only on the same set-top box.
DVRs -- a field pioneered by TiVo (NasdaqNM:TIVO - News) -- lets viewers record, pause, rewind or replay live broadcasts by recording the shows onto a hard-disk drive.
Cable operators Comcast (NasdaqNM:CMCSA - News) and Time Warner (NYSE:TWX - News) have followed TiVo into the field, leasing millions of DVRs to their customers.
Their models are combined with digital set-top boxes that provide cable programming.
DVR technology is evolving fast, though. TiVo and other consumer electronics firms now sell DVRs that combine a hard disk with a DVD burner.
These devices let consumers archive programs first recorded on a hard drive to DVDs.
Analysts say the DVR-DVD devices are becoming popular because even high-end DVRs can't record too much content in the emerging high-definition format.
But cable operators would take a big risk if they plow ahead with DVR-DVD machines that play back only on their set-top boxes, one analyst says.
"They'll regret it if they do," said Josh Bernoff, analyst at Forrester Research.
He says consumers want to use DVR-DVD machines to create libraries of their favorite shows. Most consumers want to play back shows on any TV in homes, he says.
"The only purpose of burning things to a DVD is to have an archival copy," he said. "Let's say you move from a Comcast market and give up your cable service. You might not be able to play those DVDs wherever you move. That seems really strange."
Cable TV firms declined comment on their DVR plans.
In April, set-top maker Scientific-Atlanta (NYSE:SFA - News) said it would introduce a new machine with built-in DVR-DVD recording.
It's due out late this year. It's one of the two main providers of DVRs to cable firms, and Time Warner is a likely customer.
The new device, the MCP-100 set-top, will feature content protection controls that cable operators can activate. Sara Stutzenstein, a Scientific-Atlanta spokeswoman, said it's up to cable operators to set any restrictions on how recorded content can be played back.
Analysts say cable firms believe DVR-DVD machines with limited playback options might be acceptable to some consumers. One reason is some consumers prefer leasing DVR devices from cable firms rather than buying them from TiVo or consumer electronics firms.
Time Warner Cable has almost 1 million customers that lease DVRs. Comcast has 625,000, analysts say.
In addition, consumers that lease DVRs can upgrade as technology improves.
Consumers that already own DVRs will have to buy new models if they want built-in DVD burners. Those new models cost a few hundred dollars.
Current DVRs worry many in the TV business. The devices let viewers easily skip past commercials, posing a threat to advertising revenue. In 2004, advertising provided 32% of the cable industry's $57.6 billion in revenue.
Piracy is another big issue.
Forrester's Bernoff says cable firms might delay DVR-DVD plans until they see what satellite broadcasters will offer in this regard. DirecTV and EchoStar declined comment on their DVR plans.
In early 2003, EchoStar (NasdaqNM
ISH - News) became the first pay-TV company to offer subscribers DVRs. DirecTV (NYSE
TV - News) followed. Time Warner Cable and Comcast followed even later, but they've become aggressive in marketing DVRs in the past 18 months.
