TiVo and Replay DVRs: Are Consumers Buying Them?
The results? Decidedly mixed.
The report states that "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 also suggests that, while most consumers are very interested in DVR features such as program pausing, ad skipping, and personal channels, only 17% would be comfortable making a purchase without first seeing a product demonstration.
That manufacturer interest in the DVR market is heating up was demonstrated earlier this month at the 2000 International CES, where several new DVR-related products were unveiled. Not only did both TiVo and Replay Networks announce strategic partnerships with major industry participants—such as Sony, Sharp, AOL, DirecTV, and Liberate Technologies—but a new and formidable competitor has entered the ring. Microsoft's WebTV unit showcased its WebTV Plus, a new set-top box that combines EchoStar's DISH satellite service with Internet access and DVR functionality.
Laurence J. Bloom, TechTrends' director of research and consulting, finds that, "as the DVR market becomes more crowded, consumers are likely to get confused by the growing number of available product offerings. The challenge for manufacturers of standalone 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 identified by TechTrends for DVR makers is price. Not surprisingly, the researchers found that the current prices of today's DVRs are limiting mass-market acceptance. Bloom states that "while 86% 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."
TechTrends has also found that 58% of consumers asked would be less willing to purchase a DVR if their PC offered the same features. Another key finding, according to TechTrends, is that 55% of respondents are more likely to purchase a DVR if it is combined with a satellite receiver, compared to only 12% for a DVR/cable-box combination. TiVo's relationship with DirecTV and WebTV's relationship with EchoStar appear to address this consumer desire.