Banc of America Securities cable analyst Doug Shapiro warned last week that Cablevision Systems Corp.'s plan for a network digital video recorder could be bad news for broadcast and cable programmers.
Cablevision announced plans on March 27 to test a network DVR — a service that would be housed within its own servers and allow customers to record and play back shows — in about 1,000 homes.
In a research report the following day, Shapiro wrote that while the digital video recorder threat has so far has been overblown, a network version could accelerate the proliferation of DVR functionality — every digital cable subscriber could potentially have access to the service. That could have a domino effect on the rest of the multichannel industry — DirecTV Inc. and EchoStar Communications Corp. would be forced to further subsidize their DVR offerings to keep up with cable — and penetration rates could approach 100% by 2010, more than three times Shapiro's original forecast.
The biggest threat to programmers is the ability for customers to skip commercials, which could impact advertising revenue. But Shapiro wrote that another technology — Time Warner Cable's “Start Over” service, which doesn't allow ad skipping — could be their saving grace, in that it could halt that effect.
“By contrast, Cablevision's approach, should it survive likely legal challenges, would speed and broaden DVR adoption with no safeguards for programmers,” he wrote.