There was a fun article in Wednesday’s New York Times, in the Freakonomics Blog – TiVo Economics. In it economist Justin Wolfers looks at TiVo (and by extension, DVRs in general) from an economic standpoint. The value of the time saved skipping ads, the value of improved entertainment from selective content, etc, and shows that in the end TiVo makes sense, and cents. This captures the crux of the article:
Average hourly earnings are around $18, suggesting that TiVo saves time that could otherwise have been sold for around $108 per week. We should also add in the benefit of higher quality television — around $11 per week — and subtract the cost of the annoying service charge, which is around $3 per week, yielding net benefits of $116 per week, or $6,000 per year. The net present value of this flow is around $120,000 per person, or perhaps around a quarter of a million dollars per household. Wow.
The value would be even higher over time with a lifetime subscription instead of monthly I’d think – though I’m no economist. It is a light-hearted piece, but he is making a serious point about the value of time and entertainment, and how TiVo can maximize that value for you. Read the full article for a break down of his math and the assumptions he bases it on.
