• by Joe Mandese  @mp_joemandese, March 16, 2006

Digital video recorders, which have been deploying at rates much slower than had long been forecasted, are suddenly taking off, Nielsen Media Research disclosed during its client meetings in Orlando this week. Nielsen, which had been estimating that DVRs were present in only about 8 percent of U.S. TV households, Wednesday revised that projection upward to 10 percent, and said it now anticipates DVRs will reach 18 percent of U.S. homes by the end of the year.

That's a much more rapid uptake of the device, which was supposed to transform the TV landscape, but which had failed to live up to the hype - until now.

During a presentation on Wednesday, Pat McDonough, senior vice president of planning, policy and analysis at Nielsen, said the TV ratings research has suddenly come upon far higher rates of DVR penetration in its sample, causing it to revise its estimates upward.

The disclosure appeared to surprise some of the clients in attendance, said Nielsen spokesman Jack Loftus, who said Nielsen discovered the higher than expected presence of DVRs while it was upgrading its national TV ratings sample.

While still lower than some of the most ambitious estimates of DVR penetration, the Nielsen revision is significant, because it is part of the official universe estimates for the presence of the technology in Nielsen's sample, which is the basis for the TV industry's advertising currency.

The estimates are significantly higher than one Madison Avenue's most respected tracking studies, the periodic "on-demand" study issued by Interpublic's Magna Global unit, which placed DVR penetration at 8.8 percent as of the third quarter of 2005, in its last report issued in December 2005.

"Our long-term forecast for DVR subscribers at the end of 2010 remains at 33 million," Magna Vice President-Director of Industry Analysis Brian Wieser wrote in that report, adding, "We continue to believe that DVR services provided by cable and satellite operators will be offered as premium, incremental-fee services, and that penetration rates will be limited by this strategy."