Is PVR ownership a sucker’s deal?

Renting a Personal Video Recorder (PVR) from your cable provider could cost as much as $1500 over five years. Unfortunately, high purchase prices and short warrantees combine to make purchasing a PVR potentially less attractive than renting. Rogers Cable rents its HD PVR for $24.95 a month, and sells the same PVR for $600. At those rates, buying the PVR begins to pay off after roughly two years. And looking at a five-year ownership scenario, which should be the minimum for home electronics, the purchaser would save $900 over the renter. Seems like a no-brainer, right? It is until you consider that purchased PVRs tend to be covered by a one-year warranty, leaving the owner on the hook financially for any repairs to the unit after the first 12 months. And while PVRs are effectively VCR replacements, they are really computers, prone to power-supply and hard drive malfunctions that you need an expert to fix. In Securities and Exchange Commission fillings, US PVR maker Tivo has identified the average lifespan of a unit at three to four years. Also, as far as Canadian Communications Reports could discern, the only repair shop in Ontario for off-warranty PVRs is in Scarborough. All of this adds up to a poor ownership market for what should be the next big thing in home electronics. David Purdy, Rogers Cable's VP and GM of television services, says the cableco distributes about 70% of its PVRs through rentals and 30% through sales. But he adds that the high ratio of rentals tends to be driven by the fact that cable packages incorporate the rental of a PVR into their price and the anytime-exchange policy on rental units allows customers to upgrade to the latest PVR model as soon as it's available. "Historically cable companies have rented their hardware as opposed to selling it, and that's more legacy, so we're looking to address that and we're looking at all our packages to offer a purchase option in the near future," adds Purdy. "It's very much like a car dealer. Some people like to lease their cars some like to buy their cars, we want to make sure we have both options and that both options are attractive." As for the warranty, Purdy says one year tends to be standard for customer premise equipment (CPE). But that begs the question of how exactly you classify a PVR. It is CPE in that the units sold and rented by BDUs also act as your signal-decoding set-top box, but its functionality is more in line with a VCR, DVD player or computer. The truth may lie in pricing; as HD televisions, DVD players and computers have all come down in price dramatically over the past few years, PVRs have not. Certainly, as the high rental rate would suggest, consumers view PVRs more as a piece of BDU equipment than a home electronic device. This is likely due to the fact that PVRs were first introduced in Canada through BDUs like Rogers and Bell ExpressVu, unlike in the US where Tivo made its name as an independent brand. Although Tivo is now available in Canada, Purdy doesn't see it having a huge impact on the PVR market because the BDU as a distribution channel has become so entrenched. In fact, he says Rogers is looking to add more Tivo-type search and record functionality to its own units, and may partner with Tivo to do so. Even though independent competition may not become a huge factor in Canada's PVR market, Purdy believes prices will fall in line with other home electronics. "I think you'll see prices come down," he says. "As prices we're charged by folks like Scientific Atlantic come down you'll see our retail pricing come down. Second, on the rental side you'll start to see PVRs being incorporated into some of our multi product packaging, or our bundles. So I think on the PVR side you'll see some savings just like you do with any other technology."

Is PVR ownership a sucker’s deal?

Broadcast | March 26, 2008

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