Digital video recording (DVR) is quickly becoming popular with American TV viewers. Some 7 million households subscribe to DVR services like TiVo, and analysts predict that the number will be closer to 18 million by the end of 2006. The recent partnership between TiVo Inc. and Comcast Corp., the world's largest cable operator, is expected to be a major force driving this growth.

The new partnership places TiVo's pioneering DVR service into Comcast cable set-top boxes, enabling cable subscribers to record and watch their favorite programs while zapping unwanted commercials at the touch of a button. TiVo's computer servers make it easy for customers to record and play TV programs without the hassles of videotape. Users may pause live TV, do instant replays, and begin watching programs even before the recording has finished.

Some advertisers see TiVo as an enemy due to its popularity as an ad-skipping device--yet DVRs might actually help advertisers in other ways. TiVo has the ability to gather detailed information about a customer's viewing habits. As more viewers make use of digitally recorded programs, TiVo will gather a wealth of information on audience viewing habits and demographics. So while DVR technology undermines traditional commercial television, it may create important new opportunities for advertisers.