Feb 12, 2014

Are DVRs Doomed?

While much has been made lately over cloud-based DVR services — from Comcast’s Boston launch to Aereo— there’s another line of thinking that says the DVR may soon be heading the way of the 8-track.

It’s killer? Non-skippable VOD.

While consumers may love their DVRs, no one on the industry side has ever been particularly fond of them. DVRs allow viewers to miss live broadcasts and, more importantly, skip commercials. And even if they’re not skipping commercials, they’re often watching ones that are out of date, their offers having expired, the movie no longer in theaters.

As the networks have come to terms with the whole notion of binge-viewing and making everything available on VOD pretty much immediately, they’ve also come to realize the financial advantage VOD has over DVR.

With VOD, the networks control the interaction. With DVR, it’s the consumer. That means the networks can ensure that their VOD programming has non-skippable commercial slots built into it. And that allows them to continue the current ad-supported television model, possibly even growing it, as VOD also offers the opportunity for dynamic ad insertion— placing current ads in those non-skippable slots, perhaps based on what is known about the consumer, their buying habits, their taste in shows. Which means those VOD slots can become even more valuable than live ones.

And so look to the networks to push the MVPDs who will gladly stick a fork in the DVR. Something they can easily do because other than TiVo, there just aren’t that many independent DVR manufacturers. Most people have DVR through their cable box and if the MVPDs want to kill it off, they pretty much can. Which won’t be that big a deal for consumers if every show is instantly available on VOD. In fact, most people might find VOD a more convenient set-up as they’ll no longer have to worry about recording things or whether the football game ran longer than it was supposed to and knocked everything off schedule.

The catch, of course, is that the networks can’t get too greedy. If they stick to a couple of Hulu-esque 60 or 90 second commercial pods, they will be fine and consumers won’t get all that hot and bothered about the commercial breaks. But if they get greedy and insist on 8 minutes worth of commercials on every 30 minute prime-time show, then I’d look to buy stock in TiVo and anyone else who still makes a DVR.

It’s a tough call too, because there’s such a built-in bias towards greed, towards discounting what the consumer wants.

Once again, time will tell.

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