Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman

Exercise 3

ANALYZING MANAGERIAL DECISIONS: Personal Video Recorders
Personal video recorders (PVRs) are digital video recorders used to record and replay television programs received from cable, satellite, or local broadcasts. But unlike VCRs, which they replace, PVRs offer many more functions, notably the ability to record up to 3,000 hours of programs and easy programming. A PVR consists of an internal hard disk and microprocessor. After the owner installs the hardware, the PVR downloads all upcoming TV schedules to the hardware via a phone or cable connection. Users merely enter the name of the show(s) they want recorded and the system finds the time and channel of the show and automatically records it. Users must subscribe to a cable or satellite system if they wish to record programs off these channels.
Besides ease of programming and much larger recording capacity than videotape, PVRs allow the user to watch a prerecorded show while the unit is recording up to five new programs, pause watching live programs (e.g., if the phone rings) and then resume watching the rest of the live broadcast, view instant replays and slow motion of live programs, and skip commercials. In effect. PVRs, like older VCRs, allow viewers to control when they watch broadcast programs (called "time shifting"). However, PVRs provide much sharper pictures and are much simpler to operate than VCRs, and PVRs allow the user to download the television schedule for the next week.
Two companies that begin selling PVRs and subscription services were: TiVo and ReplayTV. Both firms started in 1997. As of 2013 TiVo had about one million subscribers and ReplayTV had been purchased by DirectTV. Companies are developing new technologies that make it even easier for users to "snip" commercials.
Cable companies now offer a combined cable box and PVR in one unit for a small additional monthly charge. This further simplifies setup and operation, and the user gets a single bill.
What advice would you give the major commercial networks and producers of programming for these networks as more consumers adopt PVRs
Source: J. Gudmundsen (2002), "Video Gizmos Change the Rules," Democrat and Chronicle (August), 5E and 8E; B. Fisher (2003), "TiVo and Replay TV Have Features to Satisfy Any TV Junkie," Detroit News (June 24); R. Reilly (2003), "Great Invention Period," Sports Illustrated (December 22).