DVRs--are they hot or not?

Not as hot as expected, according to a new report, which says the sharp increase in digital video recorder shipments many had predicted won't come to pass.

Although the digital video recorder market is growing steadily, the sharp increase in shipments many had expected won't come to pass, according to a new report.

In a report due out later this week, research firm The Yankee Group says DVR products will find their way into 1.8 million U.S. homes by year's end. That number will grow to 19.1 million homes by the end of 2006--last year, the firm had put that estimate at 18.6 million homes.

When DVR technology began appearing in the late 1990s, the hype was enormous, with at least one analyst predicting DVRs would be the "hottest electronics category in history."

But the new figures are still a far cry from those racked up by DVD (digital video, or versatile, disc) players, which are expected to sell 15 million to 20 million units this year. In fact, it's DVD players that have become the most popular consumer-electronics product ever.

DVRs are similar to VCRs, but instead of recording shows on a tape, they store them on a hard drive. Companies such as TiVo and ReplayTV owner Sonicblue offer subscriber services that keep track of favorite shows and automatically record them when they air. The Yankee Group's report includes standalone DVRs, along with DVR features built into cable set-top boxes, consumer-electronics devices and satellite TV set-top boxes.

Helping promote the modest growth of the market is the integration of DVR capabilities into consumer-electronics products, such as DVD players, televisions and gaming consoles.

"With (consumer electronics) makers involved, and their experience in educating customers, they can help explain the value of the device and service," said Aditya Kishore, a Yankee Group analyst. "The largest hurdle remains explaining the value of DVRs. Many are still saying, 'We don't need this, we have a VCR.'"

Satellite TV subscribers remain the largest segment of the DVR market. More than half of the homes with DVR are signed up with satellite TV networks, such as DirecTV and EchoStar.

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