DVRs may eat up 15% ad revenue of channels by '07: E&Y

Television channels could lose 12-15 per cent of their advertising revenues once digital video recorders (DVRs) start selling in large numbers in the country by 2007, says Ernst & Young.

DVRs help people record programmes while they are away from home to watch these later. More important, DVRs do not record the advertisements that come between the programmes in order to provide uninterrupted viewing.

A brand new Ernst & Young study called "Fast Forward: Technology Propels Media & Entertainment CEOs into the Future" has made projections about the impact of DVRs on advertising for the US market.

"Some 24.7 million US homes are expected to have DVRs by 2007, threatening approximately 12.5 per cent or about $4 billion of traditional television advertising," the study says.

This could become a reality in India too once DVR prices fall in the world markets, argues Farokh Balsara, media & entertainment practice leader, Ernst & Young India.

"At the moment, DVRs are expensive. But once somebody in China starts making these machines, the prices will fall and these will become mass market products," he said.

Balsara expects DVR sales in the country to reach sizeable levels by 2007. But DVR sales, he adds, would mostly take place in metro markets.

"Like in the US, there are a lot of working couples in the metros. They would like to record the programmes during the week and watch them over the weekend," he said.

Though it might rarely become a semi-urban or a rural phenomenon, DVRs could still impact a large chunk of the market as the four metros of Delhi, Mumbai, Chennai and Kolkata account for 60-70 per cent of the cable and satellite homes in the country.