A report, about to be released by analyst Kagan Media Appraisals shows that hard drive-enabled set-top boxes and the personalised services they make possible will give the cable industry increased revenue streams, greater customer retention (reduced churn), and lower infrastructure costs thanks to a more efficient use of limited bandwidth.

Titled "The Future of Local Data Storage in Set-top Boxes", the report deduces that putting hard drives in cable TV set-top boxes will turn into a money-maker for cable operators. "Cable Multiple System Operators (MSOs) that include PVR services will be among the early winners in the emerging video-on-demand and subscription video-on-demand markets. Other near-term possibilities range from audio services to enhanced advertising to gaming. Music is a killer application for adding revenue. Music service bundling opportunities alone can increase annual revenues by more than $100 per subscriber," the report notes. Says Kagan World Media senior analyst Ian Olgeirson, "The introduction of local storage connected to a two-way multimedia distribution network creates broad opportunities to add numerous services and the accompanying subscription fees."

The new services will reduce customer churn, enticing consumers to stay with their cable service provider, the report says. Kagan report states that Personal Video Recorder (PVR) technology will pay for itself in reduced VOD infrastructure costs. "PVRs can provide a valuable complement to the deployment of VOD, and help limit strain on the system's capacity," says Kagan chief content officer Larry Gerbrandt.

"Customers will increasingly store personal content such as photographs, home video and music collections on the hard drive in their cable set-top box - so they'll have a greater personal interest in the device itself. This can further reduce churn," says Gerbrandt.