Report: DVR Homes Up to 24.7M by '07

Digital video recorders will reach 24.7 million homes by the end of 2007, up from 3.2 million homes at the end of this year, according to a new study by the Yankee Group, indicating huge rolling demand for the relatively new service.

Cable operators have been aggressively rolling out DVRs, both to match holiday sales by satellite providers DirecTV Inc. and EchoStar Communications Corp. and to blunt what's expected to be a heightened marketing push by News Corp.'s Rupert Murdoch once he takes control of DirecTV.

"Aggressive pricing resulting from News Corp.'s acquisition of DirecTV and DVR services such as Highlights-on-Demand for [National Football League] Sunday Ticket [out-of-market pay-per-view] subscribers will drive DVR penetration on the [direct-broadcast satellite] platform," wrote Yankee Group Adi Kishore.

Two weeks ago, during analyst briefings in New York, Time Warner Cable said it had 338,000 DVR subscribers as of the end of November. That gave it a monthly run rate of 44,000 boxes in the fourth quarter, compared to the third-quarter run rate of 33,000 boxes per month.

Comcast Corp. is rolling out Scientific-Atlanta Inc.-made DVRs in its S-A markets, with plans to deploy Motorola Inc.'s single-tuner HDTV box in the first quarter, said cable unit executive vice president of sales, marketing and customer service Dave Watson.

"With Motorola, we're finishing the development work," he said. "In the first half of 2004, you will see broader launches. We think the timing is fine."

Next summer, Watson said Motorola is expected to have its dual-tuner DVR ready.

Kishore said he expects a growing number of cable operators will join Time Warner Cable and Cox Communications Inc. in offering integrated DVR set-tops.

Charter Communications Inc. expects to begin deploying its Digeo Inc./Moxi DVR set-tops in February.

Plans by consumer-electronics manufacturers to add integrated disk drive technology to DVR players, TVs, video-game consoles and other devices will add to DVR's growth prospects, he said.

Yankee estimates that by year's end, DBS will have 1.6 million DVR set-tops deployed, compared to cable's 500,000. The two platforms will stay neck and neck through the years.

By 2007, Yankee expects cable to have 10.9 million DVRs deployed, compared to 9.9 million for DBS and 8.5 million stand-alone units. Those numbers add up to more than 24.7 million because Yankee believes some homes will have DVRs on more than one platform.