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PVRs Could Fuel Satellite TV Subscriber Gains

By | June 2, 2003

      NEW YORK–Technological advances such as personal video recorders (PVRs) and high-definition television (HDTV) programming will help to drive the growth of satellite television in the United States. That is the view of industry experts who offered their opinions during the recent SkyForum conference here.

      The focus must be placed on enhancing the lives of viewers who typically lack much interest in what makes something work, said Rob Zitter, senior vice president of technology operations for content provider Home Box Office, an AOL Time Warner [NYSE: AOL] subsidiary.

      PVRs and bundling video and broadband services could help satellite TV providers to compete with cable, Zitter said. “Bits on a pipe can be a phone call or data,” he added.

      PVRs enable viewers to watch content whenever they want, said William Mengel, Thomson’s director of research and innovation, emerging technology projects. He noted that PVR sales and more networking capabilities are on the rise.

      Mike Ramsey, co-founder, chairman and CEO of TiVo [Nasdaq: TIVO], said he thinks this year will be a significant growth period for PVRs. A key reason is that satellite and cable service providers will continue to push the units “out the door.”

      Ramsey also expressed the view that PVR sales could jump if retailers market the product as upgraded VCRs (video cassette recorders) that are simpler, more powerful and loaded with enhanced capabilities.

      Founded in 1997, TiVo is the creator of television services for PVRs, also known as digital video recorders (DVRs). TiVo has amassed a subscription base of more than 700,000 and reported net revenues of $111 million at the end of April.

      EchoStar Communications [Nasdaq: DISH] manufactures its own PVRs and believes in the product, as well as the value it brings to its subscribers, said Michael Schwimmer, EchoStar’s senior vice president of programming. Satellite TV providers like PVR users because they are less likely to drop service, he added.

      In addition, the recording and pausing capabilities of PVRs helps users obtain more value from premium programming. “The train is coming,” Schwimmer said. “It is just a matter of whether you get out of the way or let it hit you.”

      Que Spaulding, president of distribution at Starz Encore Group, said word of mouth advertising could help to lift PVR sales into an “exponential growth path.”

      PVRs also may spur advertisers to begin embedding their products into the programming itself rather than relying on commercials that viewers can skip by fast-forwarding with their devices, he said.

      Gene Falk, senior vice president of digital media for Viacom [NYSE: VIA] subsidiary Showtime, added that he and his colleagues are big believers in PVRs.

      HDTV also should be a driver for increased satellite TV subscriber gains, the industry experts said.

      The major networks increased HDTV offerings by over 50 percent in the last year. Consumers need exposure to HDTV to drive the market, said Martin Franks, executive vice president of CBS Television. “I think all of us who are in this business see it as a marathon and not a sprint,” he said.

      –Paul Dykewicz

      (Rebecca Baer, TiVo, 408/519-5225)

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