DVR penetration raising eyebrows


TV RemoteA popular new show of the fall television season is NBC’s “Revolution,” a drama about post-apocalyptic America. Some 9.2 million viewers tuned in to a recent episode. But that number jumped by nearly 5 million when Nielsen added in the people who DVR’ed the show or saw it through VOD or online.

Of the 18.1 million people who watched the season premiere of CBS’ gangster drama “Vegas,” 3.6 million did it hours or days after the episode originally aired, notes The LA Times Wire Service story. It’s not uncommon for more than half of the audience for Fox’s “Glee” to watch the show after it airs on Thursday nights. FX’s “Sons of Anarchy” doubled its audience for a recent episode thanks to DVR. ABC’s “Modern Family” has gained as much as 30% of its audience from DVRs.

“This year is a tipping point for all of us to look at the world a different way,” said CBS CEO Les Moonves.

Although DVRs enable viewers to catch shows they might otherwise miss, if someone is watching a recorded program, it means he is not watching live TV, can skip through commercials and/or not see an ad when it was intended to be seen. Buyers and planners see this and try to creatively follow the eyeballs—but there’s no guarantee when they’ll watch and whether they’ll fast-forward.

“I just don’t think we can put all our eggs in one basket anymore,” said Andy Donchin, Carat director of media investments. “It’s time to see what other media platforms we can use to make up for the people who are not watching our commercials.”

According to Nielsen, 50.3 million of the nation’s 114.2 million homes with a television have a DVR — nearly half of all homes with a TV set. Although DVR penetration is starting to slow, people are using the devices more. CBS research indicates DVR usage has grown 6% this television season compared with the same period last season. Even if half of DVR users routinely skip ads, CBS’ Moonves counters that the other half (those watching ads) is the equivalent of found money. “The DVR increases viewers, and even assuming the 50% skipping commercials, the total number more than makes up for it,” he said.

The networks also are finding ways to make commercial skipping more of a hassle. In the past, a network show might have three commercial breaks of equal length. Now, many shows have four shorter breaks. Viewers who fast-forward often find themselves having to rewind and ultimately decide it’s easier just to watch an ad or two.

“They have been very clever in coming up with different things to try to break the consumer habit of skipping ads,” Francois Lee, an SVP at MediaVest, told the paper.

Currently, networks are compensated by advertisers for commercials watched up to three days after the initial airing of a given show. But as more consumers fill up their DVRs and take their time watching what they have recorded, TV executives want to extend that threshold by a few days.

“We want to be paid for every impression we deliver, and that’s a discussion we should be having,” said Ted Harbert, chairman of NBC Broadcasting.

That may be a tough sell to advertisers. Many commercials are timed to particular events such as a movie premiere or a new product launch, and advertisers may be reluctant to pay for anything beyond three days.

DVRs are primarily used on scripted fare. Sports programming and big award shows such as the Oscars are considered “DVR proof.”

Ultimately the TV industry would like to wean consumers off of DVRs in favor of VOD. The primary reason for that is because fast-forwarding is typically disabled on VOD. As the networks make more of their shows available on VOD — often just hours after their original airing — the hope is more consumers will be willing to endure commercials for the trade-off of not having to worry about constantly programming a DVR.

VOD also can solve the issue of timely commercials. Of course technology exists to replace old ads with fresh ones via dynamic ad insertion.

“This is very expensive product to make, and it will only continue to be made if we find a way to monetize it properly,” NBC’s Harbert said.

For programming executives, the DVR means shows that in the past would have gotten a quick hook because of low ratings can get a stay of execution, as was the case this season with Fox’s “Fringe.”

“You have to take a longer view,” said Fox Entertainment Chairman Kevin Reilly. “We basically have quadrupled our data intake to get a read on how we are doing.”

See The LA Times Wire story here

RBR-TVBR observation: It’s interesting to see how much VOD is preferable to DVR for its guarantee of no fast-forwarding. And we can see why the broadcast networks are complaining about Dish’s AutoHop ad-skipping DVR. It makes ad skipping automatic, rather than forcing the viewer to be a remote control wizard. As technology improves–and networks are willing to pay for it—eventually data will be available as to whether the ad was seen in its entirety or not, and payment will be based on that. Dynamic ad insertion is a solution, but it is more expensive and complicates negotiations. But if the ad was seen, based on being within a program, there is value there—it just has to be quantified.