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The British Like to Control TV With Their DVRs, Too

LONDON, Jan. 7 — An announcement from British Sky Broadcasting last week that it had sold more than two million digital video recorders demonstrated the international appeal of a technology that wrests control of television schedules out of the hands of broadcasters and into the homes of viewers.

With digital recorders in more than 20 percent of households that subscribe to Sky, the leading British pay-television company, penetration rates in Britain are comparable to those of pay-TV companies in the United States. While Britain is far ahead of the rest of Europe and other parts of the world in adoption of DVRs, other markets could start to catch up as broadcasters study the results of how Sky develops and markets the technology, which it calls Sky Plus.

“Sky Plus is one of the most interesting, innovative and aggressive DVR rollouts, certainly in Europe, but probably outside Europe as well,” said Ian Fogg, a senior analyst at Jupiter Research in London.

Sky sold about 700,000 digital recorders last year as SkyPlus, introduced in 2001 as a £399 (about $770) premium device, evolved into a £99 ($191) mass-market product. The company’s stated goal — putting the new boxes into a quarter of its 8.3 million households by 2009 — should be passed this year, said Robert Fraser, a spokesman for Sky.

Like other DVRs, Sky Plus allows users to record television shows at a touch of a button, using an electronic programming guide. During playback, viewers can easily fast-forward through commercials, a feature that alarms advertisers and broadcasters that derive the bulk of their revenue from advertising.

Sky said an analysis of audience habits showed that just 12.2 percent of viewing in Sky Plus homes was “time-shifted.” But channels that show movies or entertainment, rather than news or sports, are more heavily affected. Between 9 p.m. and 10 p.m., when British broadcasters generally schedule their most popular dramas, 22 percent of shows were time-shifted, as viewers watched them later or recorded a second program as they watched their first choice immediately. Sky has tried to reassure advertisers, saying that while DVR users might skip some ads (it did not specify what percentage), they end up watching more television over all — 2 hours and 26 minutes of television a day, compared with 2 hours and 7 minutes for Sky subscribers without the DVR — increasing their exposure to commercial messages. While Sky, whose largest shareholder is the News Corporation, generates much of its revenue from subscriptions, it also makes money from advertising, so it has to be careful not to appear to overplay the benefit of skipping ads, analysts say.

Many satellite and cable companies initially were reluctant to embrace DVRs, worried about offending the ad-financed broadcasters whose channels they transmit. That left independent providers like TiVo in the United States to develop the DVR market.

TiVo has had a hard time gaining a foothold outside the United States, however, and its growth has disappointed investors of late. Analysts say this is partly because many consumers have concluded that the DVRs that come with many cable and satellite subscriptions, while less function-rich than TiVo, are good enough.

In Europe, growth in DVRs has been relatively slow, though they are making inroads in Italy, where Sky Italia, another satellite broadcaster in the empire of Rupert Murdoch, is the dominant pay-TV provider.

As digital recorders spread into more homes, television companies are adding features. Sky, for instance, said recently that it would add video-on-demand for Sky Plus customers, helping it to compete with new television-like offerings from broadband providers like BT, the former British telecommunications monopoly. Mr. Fraser said Sky was also looking at ways to send advertising directly to DVRs, possibly through a partnership it recently signed with Google.

Some analysts said DVR providers ought to think twice about forcing advertising on subscribers who are attracted by the ability to avoid commercials. And they may want to think twice about cramming too many functions into set-top boxes.

One of the prime attractions of Sky Plus, particularly for customers who never could figure out how to program their videocassette recorders, has been its ease of use, said Carl Gressum, senior analyst at Ovum, a telecommunications consultancy.

“The lesson of Sky Plus has been, if you want to introduce a new technology, keep it simple,” he said.

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