DirecTV Rolls Out a 100-Hour DVR Set-Top

Cable World, August 25, 2003

Byline: MAVIS SCANLON

For a typical family, the standard digital video recorder just doesn't cut it anymore. For one thing, the typical 30 to 50 hours of storage capacity equates only to about 12 hours to 20 hours of high-quality recording. Record one or two movies and a few TV shows, and the hard drive fills up.

On Tuesday, DirecTV, along with TiVo and Samsung, will formally launch a 100-hour DVR-enabled set-top. That's up from the 35-hour DVRs the company has now. Earlier this month, EchoStar Communications also announced a 100-hour DVR.

"There has been quite the demand for larger storage space," says Laura O'Donnell, VP of product development at DirecTV.

While satellite operators cannot offer video-on-demand - cable's big weapon in the fight for customers - they are aggressively marketing DVRs. That should benefit TiVo, which reported Thursday it added about 90,000 new subscribers and 56,000 DirecTV customers in its second quarter, bringing its total customer base to 793,000. TiVo also upped its forecast for subscriber growth next year, to 550,000 to 650,000 from 450,000 to 600,000.

Until recently, cable operators focused more on VOD than DVRs, but that is changing as some big MSOs such as Time Warner Cable and Comcast push on both fronts. In a strategic shift, TiVo CEO Mike Ramsey said his company would be pursuing agreements with MSOs for TiVo-enhanced set tops.

And, with just 2% penetration of DVRs today, according to figures from the Yankee Group, there is plenty of room to grow. While both VOD and DVRs have advantages, "it's just not a straightforward argument," says Yankee Group analyst Adi Kishore. One reason DVR penetration is so low today, he says, is that they are hard to market - a challenge DirecTV acknowledges.

"We are looking at ways to address the lack of knowledge in the marketplace," explains DirecTV's O'Donnell, noting that the company has stepped up its advertising and promotions recently. "Certainly the people that have a DVR love it and wouldn't give it up for anything. The challenge is to make [other consumers] realize this is not a VCR."

The new DirecTV set-top has been available for a couple of weeks, according to O'Donnell. But it's not cheap. The box carries a suggested retail price of $499, plus the DirecTV DVR monthly service fee of $4.99. And DirecTV customers who want to record from one of the company's many HD offerings will have to wait until the beginning of next year, when the firm introduces an HD-capable DVR receiver.

THE NEXT QUESTION:

*Now that the two major satellite service providers offer 100-hour-capacity boxes, will MSOs be required to do the same thing in order to compete?