The New Digital Household Is Coming Faster Than You Think, Magna Says

By the end of the decade, the number of digital video recorder users could reach 32 million, according to Interpublic Group's Magna Global USA, although the media company is still uncertain whether these devices will remain enthusiast-oriented or if they will truly have mass appeal.

Nevertheless, the number is going to be significant enough that marketers and agencies will have to find ways to take advantage of this technology, said Brian Wieser, vice president, director of industry analysis at Magna.

"That 32 million by the end of the decade is a huge leap, considering we're projecting 7.4 million DVR users by the end of the first quarter of 2005," Wieser said. And that doesn't take into account the full range of consumer-driven time- and place-shifting devices, such as those offered by PC-based media centers. So the notion of the digital household and what the numbers truly will be is evolving."

The plans for video-on-demand are also somewhat nebulous, he said.

"It depends a lot on what the government is calling for," Wieser said. "If our expectations for the switch-off of analog broadcasting occurs by the end of the decade, as the government is calling for, we believe the vast majority of the roughly 66 million cable subscribers will gain access to VOD-based content."

Additionally, competition from Internet-based video will also affect the dynamics of the overall television marketplace, especially as content is increasingly made available via peer-to-peer, or P2P networks. Magna is forecasting that online households will total 83 million by 2010, of which 80 million will be broadband. This compares with 64 million Internet households and 39.3 million broadband-connected households at the end of the 2005's first quarter.

The report notes that, as a foreshadowing of things to come, in May, the BBC said that by next September, it would allow users to download radio and TV shows to their computers for playback via an "interactive media player" for up to seven days following the transmission. Such options will likely prevent piracy, and Magna is calling on distributor and content owners to explore this model deeply. Furthermore, marketers also need to determine how they can use such easily delivered content for their purposes.

"Advertisers really need to take P2P very seriously, because delivering video content beyond the short webcasting we have now is something that's going to happen," Wieser said. "And right now, P2P is happening, and it's happening without advertising. It will grow, and it's only a matter of advertisers supporting that content. Marketers need to think how they can take advantage of the technology. It's a very simple extension to embed the ads into that content."

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