If you own a TiVo, or a Media Center PC, or a PVR from your cable company, you’re part of an elite. A new research report from Accenture says that the percentage of U.S. homes with personal video recorders will increase by 500% in the next four years, but even in 2009 more than half of U.S. homes still won’t have the equipment to record, pause, or time-shift TV. This summary is at Smartmoney.com:

Accenture’s research estimates that around 40% of U.S. homes will have personal video recorders, or PVRs, by 2009. The technology in PVRs allows viewers to store and record television programs on a set-top box, skipping through advertising segments easily.

About 8% of U.S. homes now have PVR technology, resulting in around 2% of ads being skipped.

The author of the report, media and entertainment partner Theresa Wise, calculates that up to 10% of ads could be skipped by 2009, with as much as $6 billion lost.

What I find fascinating about this story is the overwhelming emphasis on advertising, with the subtext that the advertising industry needs to find a way to prevent us ungrateful consumers from skipping their ads. It always reminds me of this scene from A Clockwork Orange:

Of course, the reporter does mention that there are other reasons besides PVRs for the projections that growth in TV ad revenues will shrink:

A combination of fragmenting television audiences, loss of market share by the big networks to cable channels, and the growth of the personal video recorder, will all contribute to a slowing in the rate of growth of the advertising industry.

They forgot to mention the little fact that a lot of people feel besieged with advertising that has no respect for us as viewers and insults our intelligence, and the PVR is just one way to route around it.

Anyway, the rate of penetration for PVRs in U.S. homes today is about the same as cable TV had in 1980. In other words, there’s lots of room for growth if greedy corporations don’t try to strangle the market.

Thomas Hawk posted some excellent comments to a recent post here and then turned those comments into a post on his own blog. He’s absolutely, 100% right. Digital photography is a killer feature that is getting people excited about PCs again. Managing photos, digitally manipulating them, turning them into slide shows, printing… These are activities that people of all ages and all levels of computer expertise can relate to. Thomas has a great suggestion for Microsoft:

Yahoo! got Flickr on the cheap. Microsoft should be developing something like this right now in order to compete in the future. They also have a natural tie in with Media Center. If Microsoft tied in an online photo sharing service with my picture slide shows you would have instant built in content on a PC. These powerful slide shows would add to the wow factor of the product.

Right! Most people think of Media Center and they think of its TiVo-like features. But the ability to play digital music, tune in Internet radio stations, listen to podcasts, and make easy slide shows out of digital photos are equally important. When I show off my Media Center setup for friends, photo slide shows always get the biggest wow. If you just got back from vacation, do you really want to drag everyone into the den to see the photos from your trip? Wouldn’t you rather show them off in the living room on your big-screen TV?

Microsoft, are you listening?

(Oh, and be sure to follow the links in Thomas’s post, especially this collection of top-rated photos at Flickr. His photography is technically first-rate, and he also has an artist’s eye for composing and framing shots. I wish I had his talent!)

When will you be able to plug a digital cable into your PC and record HDTV signals? It might be a lot sooner than you think. Maybe before the end of this year.

I realize that’s not the current conventional wisdom. Last month, Chris Lanier speculated that Windows-based Media Center PCs wouldn’t support high-definition TV over cable until Media Center Longhorn Edition arrives at the end of 2006. His remarks got picked up by Thomas Hawk, by Engadget, and by Ernest Miller at Corante, to name just a few. Chris sees Hollywood circling the wagons and refusing to allow Microsoft access to their encrypted signals:

Part of the reason Media Center doesn’t support anything more than OTA is mainly because of the rights management issues. Sure, the hardware support isn’t currently shipped, but I don’t see that as the big holdup. Media Center is not the “closed box” that Hollywood [wants] it to be. The only reason we can purchase a TiVo or other CE device that will record premium content is because it appears to the industry as a “closed box”. It’s too easy for them to say that Media Center is highly contributing to piracy of TV and films on the Internet because of the PC’s open architecture. Microsoft must make changes to Media Center, and the underlying Operating System that is Windows XP, to be a “closed box” when it comes to recording and viewing digital content. … The solution to this problem of the “closed box” is already being developed, but I don’t think it’s going to fall into place until the Longhorn timeframe.

Interesting theory, but flawed, in my opinion. I will quibble with the assertion that “we can purchase a TiVo or other CE device that will record premium content … because it appears to the industry as a ‘closed box.'” TiVos are eminently hackable, as are Replay TV boxes and MythTV. In fact, many, many people (including me) have opened those boxes and modified them. So far there is no DVR device from any third-party company that accepts a CableCARD and records an HDTV signal. [This statement is incorrect. See update at end of item.] The only devices that can do this are true closed boxes – DVRs specifically designed for cable companies to give to their subscribers, like the Scientific Atlanta 8300HD, which I’ve written about many times.

Then, earlier this week, Chris passed along this news item from Multichannel News:

Cable Television Laboratories Inc. is expected to announce that Microsoft Corp. will build a new class of “unidirectional” devices, meaning PCs that can display secure video programming from cable operators.

Copy protection on incoming content could be applied using Windows digital-rights management on a secure connector, but other methods of DRM are not excluded.

To date, Samsung Electro-Mechanics Co. Ltd., Panasonic Consumer Electronics, LG Electronics Inc. and Digeo Inc. have signed the “CHILA” agreement, which stands for “Cable Host Interface Licensing Agreement.”

Chris thinks this proves that the devices won’t be ready until Longhorn. I think it suggests that these devices could be available sooner than anyone thinks.

The Multichannel News article got one detail wrong. The agreement Microsoft signed is the CableCARD-Host Interface Licensing Agreement. (It’s easier to Google when you get the terms just right.) The missing piece in the HDTV-over-cable-to-PC puzzle is the hardware that receives the signal and sends it along to a consumer device. Any device designed to decode a digital cable signal via CableCARD must be certified to meet OpenCable specifications established by the cable industry. Those specifications define compatibility, quality, and robustness – which is a code word for security and, in the present example, means “resisting attempts to modify CableCARDs or Host Devices to defeat the functions of the OpenCable Specifications or the Compliance Rules.” (If you want to geek out, go read the CableCARD Copy Protection System Interface Specification, the Multi-Stream CableCARD Copy Protection System Interface, and the OpenCable™ Host Device 2.0 Core Functional Requirements, paying particular attention to Section 4.6 of that last document, which defines the HD Copy Control specifications.)

CableLabs is currently preparing for a wave of testing of these “unidirectional digital cable products,” or UDCPs. There’s a good overview of the process here. You can see the hardware test schedule for 2005 at the CableLabs site, in a PDF document that lists August 5 as the TestWave end date for UDCPs and August 19 as the end date for OpenCable products. What’s involved in the testing? See for yourself in this Getting Started document (PDF), which is aimed at manufacturers of devices. These devices use encryption (manufacturers have to order 10,000 certificates at a time, with each device having a unique certificate, at a cost of 7 cents apiece). If the production devices submitted for testing pass the OpenCable tests, they get certified within five days and the manufacturer can begin production.

In the past, PC-based devices have failed the robustness test. But I suspect that this time around, Microsoft is pushing aggressively to have its encryption and rights-management certified. The OpenCable specs allow for submission of New Digital Outputs and Content Protection Technologies. The Multichannel News article says Cable Labs is going to announce the approval of “PCs that can display secure video programming” from Microsoft. The developer’s checklist for this fall’s update to Windows XP Media Center Edition refers to “content protection” and “platform security.” When I add that all up, it seems like a pretty good story.

Is it a coincidence that the OpenCable testing ends in August and the Media Center update is also due in August? Hmmm. If Microsoft can push their Media Center update and associated hardware through the certification process, we could see HDTV CableCARD devices, and maybe even full systems like Shuttle’s CableCARD-ready Pentium M design, up to a year sooner than Longhorn. If they fail, well … wait till Longhorn.

Update: In the comments, Bosteve points out that the Sony DHG-HDD series has been on sale at retail for a few months. There are two models, one with a 250GB drive and another with a 500GB drive. One tuner only. Curiously, this device is listed as “self-verified” rather than “certified” on the CableLabs list. Although they were announced in October 2004, I can’t tell when they actually went on sale. It appears to be relatively recently. Is anyone out there using one of these boxes?