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Will TiVo Destroy Ad-Supported TV?
windowpain writes "According to a column in Television Week, the increasing popularity of digital video recorders will actually cause a decline in ad revenues in the next few years. 'The rollout of DVR-type technology ... will reach critical mass with 11 percent penetration of U.S. television households by 2005 and 15 percent by 2006...As a result, five-year earnings growth for TV station groups could fall from as much as 10 percent to as low as 4 percent.'
Why?
DVR users skip at least two-thirds of commercials and the 'collective impact represents a threat to revenue and cash flow growth that cannot be offset ... Fifteen percent DVR penetration implies that 9.1 percent of all ads would not be watched and that advertisers would be overpaying by 9.1 percent, or $6.6 billion as calculated from projected 2006 total ad revenues of $72 billion.'
And another business model goes down in flames."
Very good point. In the years since I first got my beloved TiVo, I've grown to really appreciate it when shows are screened at weird times like 4am or 1pm when I'm at work. That way they don't clash with other stuff, and my housemates aren't going to stop the recording (KILL KILL KILL!). A year or so ago I went to a shitty conference in the hell-hole that is Cannes. One of the very few interesting seminars was a discussion involving someone from TiVo, another from the BBC and one from the advertising dept of Proctor & Gamble. The BBC guy was saying how PVRs were making them more likely to do things like repeat whole series in the middle of the night. The woman from P&G actually said she was a big fan of PVRs, as she thinks the 30 second commercial is a terrible format. This coming form one of the world's biggest TV advertisers. She said PVRs encourage new, more imaginative forms of advertisiong. She was essentially saying that they only have the ad format because everyone else uses it and they cant concede any ground in such a comptitive market.