DVR Makers Cater to Cord-Cutters

Digital video recorders, once considered an indulgence largely fit for pay TV subscribers, are rapidly expanding to include models that are tailored specifically to suit the needs of so-called “cord-cutters,” or consumers who get their video fix via over-the-air signals and/or from broadband-fed, over-the-top sources.

At least three companies — TiVo, Channel Master and Simple.TV — have either crafted new models for the cord-cutting crew or centered their businesses on this small-yet-growing batch of consumers.

Among that group, TiVo last week said it would test those waters with a “limited edition” model, the Roamio OTA DVR, which supports an HD antenna, broadband connectivity and the ability to work with the TiVo Stream, a Slingbox-like sidecar device that can stream live and recorded TV to smartphones and tablets in or out of the user’s home. The new OTA model doesn’t contain a CableCard slot, but does come equipped with four tuners and 500 Gigabytes of storage.

TiVo will start selling that model in mid-September for $49.99, plus $14.99 per month for the service (with a one-year commitment) in all major markets, plus about 500 Best Buy stores in “select” markets.

This isn’t TiVo’s first product to support over-the-air TV. Its entry-level TiVo Roamio, which contains a Cable- Card slot, is compatible with HD antennas. That model sells for $199.99 and is currently being touted online as TiVo’s “best seller.” TiVo estimates that about a third of its new retail customers already buy a Roamio for use with an antenna.

But TiVo decided to release the new CableCard-free model after observing the attention and interest that was heaped on Aereo, the cloud-based broadband TV/DVR service that was shut down in June after the U.S. Supreme Court ruled that the service violated broadcasters’ copyrights.

“We really were surprised by how much consumer press that [Aereo] option got and how much discussion there was about that approach no longer being considered legal,” Tom Rogers, TiVo’s CEO, said. “As cable operators know, there’s a minority segment who will take their broadband service and may not take their video offering, but those are people who still have a need for a DVR. So this [new product] allows the broadband/over-the-air subscriber to take advantage of TiVo in a different way.”

TiVo’s not alone in targeting this segment. Channel Master sells a line of subscription-free “DVR-Plus” products that work with OTA antennas and come with a 14-day channel guide and broadband connectivity. Its new high-end $399 model has two tuners and 1 terabyte of storage, while its original 16-Gigabyte model fetches $249.99.

Channel Master wouldn’t reveal sales figures, but company CEO Coty Youtsey said in an email that purchase patterns are “just about evenly split” among the two models. He said he views the company’s subscription-less model as a differentiator.

“The No. 1 attributed item that is driving sales, and we hear this very often from our customers, is the absence of a monthly subscription fee and/or a contract of any kind,” he added. “For people who are paying for Netflix, Amazon and other OTT services, and then you add a monthly fee for the DVR service, say $15, at that point the solution becomes unattractive for cord-cutters.”

Simple. TV’s approach is like TiVo’s in that the company sells boxes alongside a subscription service. Its two-tuner, OTA-capable DVR/video server costs $199.99, plus a subscription that runs $49 per year or $149 under its lifetime option. Simple.TV, which focuses on cord-cutters, recently added a feature under its subscription service that lets customers share recordings with up to five authorized users.

Simple.TV CEO Mark Ely said about three-quarters of the company’s customers use an antenna, and more than 90% are also Netflix subscribers.

But it appears that all of these products are fighting over a small slice of the video pie. In a research note issued in August, MoffettNathanson principal and senior media analyst Craig Moffett estimated that cord-cutting had slowed to an annualized rate of about 400,000 homes, a figure that factors in new household formation as well as pay TV subscriber trends.