"11.4 Million PVRs Shipped Worldwide in 2004"

You may use this content, but please cite my ideas as (c) 2005, Dr. Bruce Klopfenstein. The following direct quote can not be attribued to me; it comes from In-Stat:.

"Consumers are becoming increasingly familiar with the concept of time-shifting their television programming, and both pay-TV service providers and Personal Video Recorder (PVR) product manufacturers are reaping the benefits. Demand for PVR products increased tremendously during the past year, as unit shipments rose from 4.6 million in 2003 to over 11.4 million in 2004. Leading the surge in unit shipments were products designed for satellite TV subscribers and for consumers wanting a DVD recorder with an integrated hard disk drive."

Source: In-Stat: TV Time-Shifting on the Rise: Worldwide PVR Unit Shipments More Than Double in 2004
Pub Time: 2005/05
http://www.gii.co.jp/english/cg30049-tv-time-shifting.html, accessed 16 June 2005

IP TV Forecast

You may use this content, but please cite my ideas as (c) 2005, Dr. Bruce Klopfenstein..

"Broadband IP TV revenue is forecasted to grow from $635 million in 2004 to more than $7 billion in 2008 according to firm Research and Markets." This quote comes from an article published in Designtechnica.com, but it is most likely taken from a press release issued by Research and Markets, a reseller of market research reports with its main office in Dublin, Ireland. (If I'm wrong on that, I hope the friendly folks at Research and Markets will let me know.) Oh, by the way, Designtechnica.com got it wrong. Research and Markets is offering this report from March 2005 for sale, it is not the author. After some serious searching, it appears that MRG Multimedia Research Group is the author of this report.

Meanwhile, here's another lesson in forecasting. So what if some research report claimes IP TV revenues are going to be $7 billion in 2008? That information in and of itself is almost as useful as saying "the cumulative total of precipitation in Columbus, Ohio from 2004-2008 will reach 170 inches." Why will the total be $8 billion? Why not $45 billion? Does 2008 reflect an inflection point in the growth of IP TV revenues or does the forecaster have a "straight line" growth forecast from 2004 through 2008?

And here's what really matters to consumers of market research forecast studies: what are the key, explicit assumptions involved in making this forecast?

Separating the Wheat from the Chaff in iTV Forecasting

You may use this content, but please cite (c) 2005, Dr. Bruce Klopfenstein..

I see today that

NVIDIA Corporation, a worldwide leader in graphics and digital media processors, today announced its NVIDIA PureVideo Decoder has been approved by TiVo Inc. for playing content using the TiVoToGo(TM) feature. New this year, the TiVoToGo feature allows TiVo(R) subscribers to transfer recorded television programs from their TiVo Series2(TM) DVR to their PC for viewing anywhere, anytime. Watching a program on a PC that has been recorded on a TiVo DVR requires the use of an MPEG-2 decoder, such as the NVIDIA PureVideo Decoder, which employs sophisticated algorithms to decode and enhance television content.

Source: SANTA CLARA, Calif., June 15 /PRNewswire-FirstCall/

While this isn't the greatest example, it reminded me of another common pitfall in forecasting the adoption and diffusion of new media such as interactive television. These announcements of corporate partnerships may sound more stunning than the one that brought me here today, but that's not my point. My point is announced corporate partnerships mean little, if anything of importance to the prospects for the companies' futures. Thus, it means little for the innovation's prospects.

RCA introduced its Selectavision Videodisc player as an American response to the Japanese VCR invasion (yes, the VTR technology was created in the USA but it was sold, cheaply, to the Japanese). RCA backed the introduction of the Selectavision with millions and million of dollars in promotions. Although their video catalog was pitiful, you can bet that each time new titles were added in the Selectavision format, they were trumpeted by the company. I'm sure this was true as well for "future releases" and "agreements with Hollywood studios." None of that mattered. What did matter is that the Selectavision player was not foolproof, it cost more than a VCR, and there were literally thousands of more titles available in cassette tape format than there were ever made available as RCA discs. The company pulled the plug in 1984 at a reported loss of nearly $600 million.

From my 25 years' experience following the new media industries, I think it's fair to say a deal not done might have some meaning, but most done deals do not a success guarantee.

DVR Diffusion vs. Recent Communication Technologies

You may use this content, but please cite (c) 2005, Dr. Bruce Klopfenstein..

This is the kind of information forecasters should be noting. While I would not expect DVRs to diffuse as rapidly as DVD players, the growth of DVD players probably represents the most "optimistic" or fast growth scenario for DVRs.

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DVR Forecasts as of May 2004

You may use this content, but please cite (c) 2005, Dr. Bruce Klopfenstein. This specific content is courtesy of Brandweek and can not be attributed to me.

DVR household-penetration projections 
                        (millions)
                  2004  2005  2006  2007
Jupiter Media      9.3  20.9  33.7  45.9
Yankee Group       7.8  13.0  19.1   NA
Forrester Research 9.6  17.8  27.4  38.9
Deutsche Bank      7.4  14.4  24.0   NA
Morgan Stanley     6.6  12.3  20.5  32.6

NUMBERS IN MILLIONS; 
SOURCE: STARCOM MEDIAVEST GROUP

Source: Brandweek, 5/3/2004,
Vol. 45 Issue 18, pSR28, 2p 

Commercial Forecasters Continuing Erroneous, Conservative DVR Forecasts

You may use this content, but please cite (c) 2005, Dr. Bruce Klopfenstein.

I have studied the commerical market research industry, and given the choice between selling a report called "More of the Status Quo" versus "The Sky Is Falling," it's easy to see why so many market projections (especially early ones) are overly optimistic. It is with some irony, then, that I find myself critical of most commecial market projections for DVRs as being far too conservative. It's easy to find these reports because firms like the Yankee Group, Forrester Research, Paul Kagan Associates, and others because they freely release key findings on PR networks such as prnewswire.

Here's a very recent example: New analysis from Frost & Sullivan
(http;//www.IT.frost.com), World Broadcast and Network
Digital Video Recorder (DVR) Markets, reveals that revenue
in this market grew at over 10 percent in 2004 and is
projected to reach $82.7 million in 2011. Source: CD Computing News, Jun2005, Vol. 19 Issue 6, p3. My observation: outrageously conservative, again. An earlier forecast by Forrester Research predicted nearly half of American households will have a DVR by 2009 (Source: USA Today; 05/17/2004).

Another example that I find to be exceptionally conservative, although in its "defense" it is an old report (March 2004):

"Worldwide DVR shipments reached over 4 million in 2003, fueled by strong demand in the United States and Japan," says Greg Ireland, senior analyst in IDC's Consumer Markets program. "Over the next five years, we expect shipments to increase at a compound annual growth rate of nearly 50%, to reach over 28 million in 2008."

Source: IDC Research Group
Publication Date: March 2004 retrieved http://www.electronics.ca/reports/devices/dvr_market.html on 16 June 2005 (correct)

Advertisers Hate-Love Relationship With iTV

You may use this content, but please cite (c) 2005, Dr. Bruce Klopfenstein.

Facing change, television advertisers have reacted strongly (as they usually do) to the advent of interactive TV, most notably in the form of digital video recorders (DVRs) like TiVo. (You can check out the excellent PVR Blog for current updates.) Here are some of the reactions TV advertisers have thrown at PVRs:

• Messing around with show times (I can tell you from experience that SpongeBob Squarepants runs over the "normal" end of show causing TiVo to cut off the end...another great way to simply tick off viewers)
  
• "Forcing" viewers to see ads:
  
  • TiVo has announced plans to insert advertiser-supplied logos that will be seen while TiVo users fast forward through a commercial pod
    
  • TiVo is also allowing viewers to respond to ads (I told you TiVo was on the interactive TV spectrum)
    
  • TiVo has "handicapped" its own machine, limited the speed users can fastforward to a speed that just happens to be slow enough to let messages register with viewers who are, after all, paying greater attention to the screen while they try to stop just in time for the show to resume. (ReplayTV allowed viewers to eliminate commercials much more easily, and they were taken to the copyright woodshed for doing it. They've survived, barely.)
    
  
  
  

The bottom line for advertisers is that there is a revolution happening in television, but (no value judgements here) advertisers will adapt as always to the new technologies. The history of media in the U.S. is advertiser subsidized, and no one is suggesting that this will go away any time soon. I'd argue that commercial services like mlb.com will learn over time that they are better off giving away the content free in return for easily inserted advertising than they are getting baseball zealots to pay for the service.

New analysis from Frost & Sullivan
(http;//www.IT.frost.com), World Broadcast and Network
Digital Video Recorder (DVR) Markets, reveals that revenue
in this market grew at over 10 percent in 2004 and is
projected to reach $82.7 million in 2011. Source: CD Computing News, Jun2005, Vol. 19 Issue 6, p3. My observation: outrageously conservative, again.