A key factor to this expansion is the integration of DVRs into cable and DBS set top boxes: 55 percent of DVR homes had it as part of their cable box and 40 percent had a DVR within their DBS box.  Just 5 percent had a standalone DVR.  And as households recognize the convenience DVR offers, a growing number are becoming multi-DVR households.  25 percent of homes had two, while 5 percent had three or more.

“DVRs are changing the way Americans watch TV. Despite the competition for viewers’ attention from the Internet, video games and other media, TV viewership continues to rise.  As with other vehicles, convenience is key – allowing people to consume content when they want.  DVRs are a relatively inexpensive and useful tool for viewers to do that,” said Pat McDonough, Senior Vice President, Planning Policy & Analysis at Nielsen.

So what are people recording and when are they finding the time to playback recorded programs? Most playback is occurring during primetime, early fringe and late fringe.  Playback during the day was highest on Saturdays and Sundays as viewers used the weekend to catch up on their favorite programs and movies.  Programs recorded between 8 p.m. and 9 p.m. were played back within the same day more than those airing at 10 p.m., which could impact live viewership of programs airing at 10 p.m. and later.

Of Nielsen’s 56 Metered Markets, the top ten for DVR penetration are:

Download a full copy of Nielsen’s DVR report, including more detailed information about playback, impact on program loyalty, demographics and possible implications for networks here.

During this period, households with broadcast only (i.e., no cable or satellite service) TVs declined from 11.5 percent to 10.9 percent while cable or satellite service has increased slightly from 88.5 percent to 89.1 percent.  This increase may be related to the upcoming transition to digital television that was originally set to take place in February 2009.

Satellite service grew modestly as well, from 28.0 percent to 28.8 percent.  Cable or satellite service with pay channels, such as HBO, Showtime and Cinemax, has grown steadily over the five quarters, from 47.0 percent to 49.4 percent.

Digital Video Recorders (DVR) have grown in popularity over the last five quarters, with 28.9 percent of households owning a device, up from 21.3 percent in Q4 2007.  20.2 percent of homes have one DVR, while 8.7 percent have two or more devices. Homes capable of receiving high definition television jumped from 12.9 percent on Q4 07 to 23.4 percent in Q4 08.  Video game console ownership increased from 37.8 percent to 39.0 percent, while homes containing personal computers with internet access increased from 70.9 percent to 73.8 percent.  More than 54 percent of households had one or two TVs, 24.9 percent owned three TVs while 20.8 percent owned four or more sets.

“At this point, we have no indication that economic factors are causing homes to cancel their cable subscriptions or cut back on DVR, HD, gaming or Internet capabilities.  These segments have remained steady – or in some cases, increased – over the five quarter period we studied,” said Pat McDonough, senior vice president of Planning Policy & Analysis at Nielsen.  “That said, one factor that may be masking any economic component is the digital transition.  It may have been necessary for some homes to invest in new equipment to prepare for the conversion.”

In terms of device usage, Nielsen found no significant increases or declines in TV viewing, DVR playback, DVD playback or video game console use, suggesting that the economy has had no measureable impact on these activities.

According to a separate Nielsen survey, the Home Technology Report, consumers continue to purchase new technologies for home entertainment.

The Home Technology Report telephonically surveyed 1,433 people in Q4 2008.

The difficult economic conditions have forced most Americans to think about how they spend their money, so it is little surprise that 63 percent of those surveyed said that they had changed their spending habits.  26 percent said that they had cut back TV-related spending, primarily by purchasing fewer video on demand and pay-per-view movies/events (16%) or making fewer purchases and rentals of DVDs (19%).  11 percent of people surveyed said that they had altered their cable/direct satellite subscription package in some way, while 3 percent said that they had cancelled their subscriptions altogether.

Overall, more men and women aged 18 to 34 said that they had cut back on TV-related spending, and that same age group also cancelled their cable/satellite subscriptions at higher rates than other age groups. Households with kids changed their spending habits slightly more (66%) than the group as a whole, as did African-American, Asian and Hispanic Households (70%, 75%, 77%, respectively).  Hispanics also cancelled their cable/satellite service at a much higher rate than other groups, with 13 percent of those households ending their service versus the overall average of 3 percent.

“While some kinds of discretionary spending, such as travel and car and clothing purchases, have taken a significant hit, TV-related expenses have been spared significant cuts at this point.  Consumers may reduce the number of movies they rent, or perhaps downgrade their service, but overall it appears that TV continues to be almost a necessity rather than discretionary,” said Pat McDonough, senior vice president of Planning Policy & Analysis at Nielsen.

To read more about this and other related data, click here for Nielsen’s SportsQuest^TM Survey.

Could the dire economic conditions also be changing the way Americans watch TV?

Yes and no, according to a Nielsen report released Friday, which found that Americans are watching more cable news this year than they did last year. Between September 15, 2008 and October 19, 2008, tuning to cable news networks almost doubled, versus the same period last year, according to Nielsen.

U.S. homes with the highest household incomes ($100,000+/year) — who likely have the largest investments — showed the greatest percentage growth in cable news viewership over last year (+125%).  Among households with the lowest annual incomes (less than $20,000), cable news viewership in September and October showed the smallest growth from the same period in 2007 (+38%).

A caveat: the presidential race is likely drawing more cable news tuning in 2008.  As such, growth in cable news tuning cannot be attributed solely to viewers’ interest in the economic crisis.

Meanwhile, despite shrinking household budgets and widespread belt-tightening, Americans are not downgrading from cable and satellite TV plans to less expensive broadcast only TV service.

As of September, 1.4% of homes that received cable or satellite service in September 2007 had downgraded to broadcast only service.  That percentage of down-graders remains unchanged from last year, when the U.S. economy was still relatively healthy.

View the full report.