Is It the End for Home VCRs?

Oct. 31, 2005 — -- One of the oldest holdouts of 20th century analog video technology in the living room -- the tape-eating video cassette recorder -- may finally be on its last legs.

According to the Consumer Electronics Association in Arlington, Va., only 1.3 million stand-alone VCRs will be sold this year in the United States. Next year, fewer than 500,000 will be sold, says Sean Wargo, director of industry analysis for the CEA.

"These are the laggards," says Wargo. "The ones who own a VCR because they have lots of videotapes, and if it breaks, they replace it, rather than replace all that content."

But Wargo and others believe these VCR holdouts with their VHS cassette tapes are an ever-shrinking minority swimming against the overwhelming current of digital video technology.

"The reasons to buy in on VHS are declining," says Wargo. "The last hold for VHS is for affordable recording."

That is the one last barrier that consumer electronics makers will be attacking with relish during this year-end holiday season.

So-called "digital video recorders," or DVRs, which record TV programs onto built-in computer hard drives, are being aggressively marketed by the likes of pioneering firm TiVo. But they are also being pitched by cable- and satellite-TV companies as an added convenience of their digital video services.

By ditching the tape, DVRs can offer a slew of capabilities -- including the ability to "pause" and instantly replay live-broadcast TV programs -- that proved attractive to early techie consumers. And unlike VCRs, DVRs can automatically record programs using a simple on-screen guide -- typically provided for a monthly service fee ranging from $4 to $13. By merely clicking on the electronic listings, users can set the tape-less machines so it never misses recording a favorite program.

"There really is no reason for VCRs to continue," says Edward Licthy, vice president of corporate development for TiVo in Alviso, Calif. "From a recording standpoint, TiVo fulfills an ease-of-use standard that no VCR ever could."

But DVRs aren't the only digital recording devices that are hoping to take the home recording title away from the 28-year-old VCR technology. An increasing number of consumer electronics makers are also pushing new DVD machines that digitally record video onto blank discs.

DVD recorders typically require users to program the machines to record the desired TV shows -- in most cases, just like a traditional VCR. While that may certainly give a certain edge to DVRs, proponent say their machines have advantages, too. Namely, once a program is recorded onto a blank DVD, the disc can be removed and -- usually -- played on almost any current DVD player.

"People want digital recording because they've had great experiences with DVDs which have superior picture and audio qualities," says Tony Jasionowski, group manager of Strategic Planning and Development for Panasonic. "People have handled the original audio CDs, then pre-recorded DVDs … so they're comfortable with handling [recordable] discs."

What's more, DVD recorders have become increasingly affordable. While many models on store shelves today average around a few hundred dollars, some off-brand makers will be pushing new low-cost models. For example, Lite-On, an equipment maker in Taiwan, plans to have a DVD recorder that will cost less than $100 by the end of November.

"People are looking at the prices and they're seeing very low prices for VCRs or DVD players," says Jasionowski. "And then they go and see the typical DVD recorder where the off-brands have a starting price of $99 … It's a definite attractor. People are looking at the new digital technology."

Unfortunately, just "looking" rather than outright buying might be -- for now -- how many consumers are reacting to digital recording technology.

According to CEA's Wargo, despite the heavy marketing campaigns by TiVo and others over the last few years, DVR technology is just now reaching 5 percent of U.S. homes.

"DVRs are a new concept that in the beginning years were not described well," says Wargo. "So, they're growth has been slow compared to DVD."

However, familiarity with DVD is no guarantee of success for the new, cheap DVD recorders either, he warns. That's because, unlike tape-based VCRs which conform to one (VHS) standard, there are several "flavors" of blank DVD recording standards -- some of which may not be supported in older DVD players.

Worse yet, while DVD recorder makers struggle to build "multi-format" DVD recorders and players, another format fight is simmering in the background. Hollywood studios and electronic makers are still bickering over two new, incompatible formats -- Blu-Ray and HD-DVD -- that are being developed to handle the more complex high-definition digital TV signals that U.S. broadcasters have been steadily adopting.

"We honestly don't know what's going to happen in the HD-DVD versus Blu-Ray fight," says Christina Hsing, marketing manager for Lite-On in Freemont, Calif. "We're trying to prepare for both, but the technology really won't be mature enough until maybe two years from now."

The impending switch over to digital TV signals won't be worry-free for DVR technology either. Like recordable DVDs, nearly all current DVRs can't handle the amount of digital data produced by HDTV broadcasts -- meaning DVR users today will have to invest in new recording machines as well.

What's worse, even if consumers become immediately enamored of digital video recording technology, they still might not get a chance to use it in the future. That's because of the so-called "broadcast flag," a part of the HDTV digital standards that would enable broadcasters and content creators to set how long a show may remain on a DVR's hard drive or even if it can be digitally recorded at all.

Wargo says the CEA and the industry is trying to work the entertainment industry to find balance between protecting digital content yet still allowing consumers' right to record programs under non-infringing "fair use" basis. But the final resolution -- which will need approval from U.S. lawmakers and regulators -- is probably still months away.

"It's only going to get worse before it gets any better," says Wargo.