Personal Video Recorders (PVR)

Enrique Dans. Professor. IE Business School

5 January 2007

PVRs free TV viewers of time constraints, allowing them to fast forward through advertisements. But if no one is watching TV, why would anyone advertise there?

What are PVRs?
The Personal Video Recorder, or PVR, is the domestic appliance most appreciated by the 15 million North Americans who own one. That’s because PVRs eliminate the time constraints imposed on viewers by traditional television programming. Just imagine you can see what you want, when you want and without advertising breaks; you are able to pause, rewind or fast forward to your heart´s content. It works like a video, but without the complex processes and quality loss that comes with analogical television.

The PVR is equipped with features that make consumers wonder how they could ever have watched television without this device. But not everyone is thrilled with it. We now must broach the subject of how to finance television channels with advertising that viewers don´t want to see? How will a sector financed by expensive advertising that is targeted at a certain demographic group evolve if this same segment of the population can skip, at will, those very same advertisements? The PVR poses a real problem for the TV industry because its users pass on almost 70% of the advertising that is broadcast. This bodes ill for future investments in advertising and is likely to exert downward pressure on TV ad prices.

How does the PVR work?
Using a programme guide accessed through either the appliance itself or over the Net, the user clicks on the programme he wants to record and decides whether to record it only once or on a regular basis. For example, I can record the full season of CSI, House and any news programmes broadcast by my favourite channel, together with the occasional film, and no longer have to worry about whether it is Monday or Tuesday night. Nor do I have to rush through dinner to get to the sofa on time. The PVR stores the programmed recordings on its hard disk and allows me to temporarily halt a television programme in order, say, to go to the bathroom or answer the telephone, and then continue watching when I get back.

It is a dynamic market, open to many innovations such as the dual tuner for recording two channels at the same time, and it is dominated by one company, TiVo. The pioneer in Spain is InOutTV, which offers a model similar to that of TiVo. However, TV channels have resorted to a legal loophole that they say includes an "implicit contract" requiring viewers to watch advertising. This implicit contract has impeded innovations, such as the automatic detection of advertising or sharing among users. However, these features are available to many technologically-advanced users--known as the DIY ( Do- it-yourself) population—who are capable of setting up their own PVRs, using a computer, a video card and programmes they can download from the Internet.

Channels strike back
TV channels have reacted in various ways, from launching devices that limit zapping to directly integrating advertising into programme content. Whatever the case, it is clear that both television and its users are evolving. We are now witnessing a change that will affect how everybody watches television in the near future.

And what will come next? The answer is a critical review of an entire business model.

http://www.enriquedans.com

Video

Dean Martha Thorne discusses her thoughts on the Pritzker Prize 2017

See video
Follow us
IE Focus Newsletter
IE Agenda
Most read
IE Business School | María de Molina 11, 28006 Madrid | Tel. +34 91 568 96 00 | e-mail: info@ie.edu

Contacto

IE Business School

María de Molina, 11. 28006 Madrid

Tel. +34 915 689 600

info@ie.edu