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Tech Industry

Great features, doomed devices

Ken Soohoo writes that despite the hype about personal video recorder devices becoming the next big thing in the living room, as standalone devices they are doomed.

    Despite the hype about personal video recording devices becoming the next big thing in the living room, as standalone devices they are doomed.

    That's because two groups are working quickly to make them obsolete: On one side, you have the cable and satellite TV service providers; on the other, the consumer-electronics manufacturers--and all of them are delivering DVD players and set-top boxes that incorporate video recording features.

    With so many devices already competing for space in the living room, convincing consumers to buy a new and separate device for a single task is difficult, expensive and slow.
    With all the industry buzzwords now circulating, it's useful to take a moment to distinguish between the two key feature sets: digital video recording (DVR) and personal video recording (PVR). The industry currently uses the two terms interchangeably, but there are important distinctions:

    Digital Video Recording features provide VCR functionality. The user can enter dates and times to digitally record chosen programming or even pause live TV. The device is not connected to a network outside of the home.

    Personal Video Recording features have all the functionality of DVR, along with additional software for recording choices. For example, people have the ability to record all episodes of "Law and Order" this week or to record all basketball games next Tuesday. A PVR-enabled device must also connect to a network outside the home to access TV schedule information via an electronic programming guide (EPG).

    Independent PVR companies have proven that demand exists for these features. But as they struggle to penetrate the mass market, they face a number of economic and behavioral hurdles

    With so many devices already competing for space in the living room, convincing consumers to buy a new and separate device for a single task is difficult, expensive and slow. High hardware prices and required ongoing service fees have made most consumers reluctant to embrace PVRs.

    Cable and satellite TV service providers, along with consumer-electronics manufacturers, are overcoming these hurdles using two key strategies:

    Every major consumer-electronics vendor is making a version of a DVR-enabled device.
    One strategy has been to combine DVR and PVR features into devices that consumers are already comfortable using. For consumer-electronics manufacturers, that device is the DVD player; for cable and satellite TV service providers, it is the set-top box.

    A second strategy is to offer different features and purchase options. Consumer electronics manufacturers specialize in bringing new technologies and features on standalone devices and at reasonable prices for a mass market. So it is that in offering DVR features at premium DVD player price points--with no ongoing service fees--they can target consumers who prefer to pay a onetime cost for basic video recording features.

    Cable and satellite TV service providers have business models built around ongoing services fees and connected devices. They are offering subsidized set-top box hardware with PVR features as part of an overall premium service package. Their model targets consumers who are comfortable paying for another set of services by simply adding to an existing monthly bill.

    These industry groups wouldn't face any great technical challenge bringing DVR and PVR features to market. What's more, the economic advantages of doing so on existing devices and networks are quickly apparent.

    The high cost of licensing EPG information and maintaining access to a network will likely keep consumer-electronics manufacturers squarely in the DVR market for the foreseeable future. But cable and satellite companies, who have years of experience working with EPGs, are well-equipped to create PVR software.

    Consumer-electronics manufacturers and TV service providers also have extensive experience marketing devices and services to their respective consumer groups, as well as powerful relationships with retail channels. My bet is that more consumers will soon be offered more relevant DVR and PVR products through traditional channels.

    Indeed, every major consumer-electronics vendor is making a version of a DVR-enabled device. All have targeted DVR as a critical item on their strategic roadmaps, and each week, some cable or satellite company seemingly announces an upcoming PVR service and device. These two technologies will soon reach many more living rooms, furnishing one example of the new digital features consumers can expect on their favorite entertainment devices.