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Cable television broadcasting industry

Cable TV Firms Embrace Digital Video Recorders Amid Revenue Concerns

Strategic Insights

— 2 min read

Cable TV providers, particularly Comcast, are rapidly adopting digital video recorders (DVRs) to compete with satellite TV firms and retain customers. However, the proliferation of DVRs poses a threat to advertising revenue, as viewers can fast-forward through commercials. The devices accounted for 32% of the cable industry's $57.6 billion in revenue last year, with Time Warner marketing DVR services with "huge success" and Comcast catching up. Analysts estimate that cable firms will capture almost half of the U.S. DVR market in three years, with 35.7 million households expected to have DVRs by 2008.

Key Takeaways:

  • DVRs are a key differentiator for cable companies, allowing them to compete with satellite TV firms and retain customers.
  • The devices accounted for 32% of the cable industry's $57.6 billion in revenue last year, posing a threat to advertising revenue.
  • Time Warner has marketed DVR services the most aggressively, while Comcast is catching up with its large subscriber base (21.4 million).
  • Analysts estimate that cable firms will capture almost half of the U.S. DVR market in three years, with 35.7 million households expected to have DVRs by 2008.
  • Charter Communications offers DVRs to three-quarters of its customers, while Cablevision Systems has yet to roll out the service.
  • Satellite Firms, particularly EchoStar and DirecTV, still have the biggest chunk of DVR users, with half of the 6.5 million U.S. households with DVRs getting them from satellite firms.
  • Cable companies charge customers between $9.95 and $12.95 monthly for DVR services, with Time Warner charging $9.95 and TiVo charging $12.95.
  • DVRs are a key way for cable firms to hold onto subscribers amid intense competition from satellite TV firms.
  • Analyst Craig Moffett estimates that Comcast will have 1.8 million DVR customers by the end of 2005, while the company charges customers $9.95 monthly for set-top boxes equipped with a high-definition TV and DVR.
  • The cable industry ad revenue jumped 13% in 2004, to $18.8 billion, but cable firms are under pressure to maintain this growth amidst the rise of DVRs.
  • New software technologies may help advertisers reach DVR users, and cable network advertising is expected to grow an average of 8.8% annually between 2005 and 2008.

Statistics:

  • 32% of the cable industry's $57.6 billion in revenue last year came from DVRs.
  • Time Warner had 862,000 DVR customers at the end of 2004.
  • Comcast has 21.4 million subscribers, with 1.6 million using set-top boxes equipped for either high-definition TV tuners or DVRs.
  • 35.7 million households are expected to have DVRs by 2008.
  • Satellite firms have 6.5 million U.S. households with DVRs, with half of these getting them from EchoStar and DirecTV.
  • TiVo charges $12.95 monthly for DVR services.
  • Comcast charges customers $9.95 monthly for set-top boxes equipped with a high-definition TV and DVR.
  • The cable industry ad revenue jumped 13% in 2004, to $18.8 billion.
  • Cable network advertising is expected to grow an average of 8.8% annually between 2005 and 2008.

Sources:

  • "Comcast, on Cable DVR Benefits", REINHARDT KRAUSE, no publication date.
  • John Bernoff, analyst at Forrester Research, no publication date.
  • Craig Moffett, analyst at Bernstein Research, no publication date.
  • Brian Dietz, spokesman for the National Cable & Telecommunications Association, no publication date.
  • PriceWaterhouseCoopers, no publication date.
  • Jenny Moyer, Comcast spokeswoman, no publication date.

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