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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."
There are other ways to advertise on TV besides commerical breaks, advertisers will just have to adapt.
If people are talking about a show, and saying it's really good, I ussally just rent the first season on DVD, if it's good, me and my girlfriend rent the next, and so on. We've watched all 4 seasons of the Sopranos, as well as the first two seasons of 24, Simpson I don't worry about, becuase i buy those box sets anyway. We also tune in for the occasional Discovery Channel feature, or some good college football, other than that TV is shite, but hopefully I didn't have to tell you that.
Cloud City Digital: DVD Production at its cheapest/finest
Now, I don't like advert breaks and I don't like the rampant commercialism they imply, but seriously: isn't this going to make a lot of TV unprofitable? So what happens now? Will less TV be made? Will good shows magically suceed and only bad shows not get made (fat chance)? Or will the overall proportion of "World's Blankiest Blank" shows increase (seems likely)?
Perhaps DVD box sets are the answer.. but then again, if the only money was in the DVD release, why do TV at all? And anyway, Futurama sells by the truckload and that still got cancelled. I suspect the real answer is "new and insidious advertising methods". Hurrah for FCC-approved "cannot skip" bits, coming soon to a digital TV adbreak near you! And hurrah too for product placement! You must buy Pepsi, because Joey Tribbiani does!
Not that I can see a way to put this genie back in the bottle, admittedly. Ah well, I guess we'll just have to wait and see what whacky adventures come next.
You win again, gravity!
So, 72 BILLION a year just for TV advertising, of which 90% is trying to convince consumers to spend as much as possible on things that they very probably hadn't even imagined they would ever want - and then to replace those with the newer model ever 6 months.
Will anyone really lose too much sleep over this?
Of course there will be a fight - how DARE consumers want to avoid being hearded like so many sheep! the very thought of it.
Would it really be that bad to pay for the entertainment you want, rather than simply being fed the entertainment, and advertising, that they want to give you?
Then again I work in TV, but very rarely watch it. Maybe I'm just plain wrong.
The consumer is currently being screwed for television so cry me a river. Cable television was supposed to be ad free, that's why the consumer would pay. The additional cost of HBO and similar services illustrates that the dream of commercial free television is attainable. Television providers should stop shafting us long enough for us to pay for content we want without commercials, I'm sure that would offset PVR based losses.
vampirical
It really makes me sick watching some of the older shows in re-runs due to the re-editting in order to squeeze in more commercials. Twilight Zone and Warner Bros cartoons come immediately to mind. And forget trying to watch movies on ad-supported stations, damn "Compressed for Time" and "Editted for Content" can bite me.
Jonah Hex
Horror & SciFi Erotic Nudes
Wouldn't PVR recorders tend to watch the commercials for products they are interested in and skip the ones that would obviously not apply?
And if they watched a commercial for a product they're interested in but missed a detail like an address or phone #, they could go back and retreive it.
So overall, it probably won't be as big a loss as is stated.
Now, if only advertisers would make commercials we want to see. Does anyone besides me make a mad dash for the Mute button every time Detrol's "gotta go gotta go gotta go right now" commercial comes on???
So what ? Television can sustain itself without the revenue from advertising ? Then too bad for the broadcasters, but they don't have a protected right to a profitable state of business. I, for one, am looking forward to the death of advertisement.
Maybe we deserve this world ?
Maybe all the super high salaries pseudo-actors in poorly written popular pabulum like "Friends" will have to adjust to reality and will only make as much as people in other professions. Or, worse yet, they might actually have to work for a living.
The execs and everyone else are just scared because they have gotten used to being powerful and able to manipulate the rest of the world and they'll have to adjust to making what amounts to fair pay for the work they actually do.
On the other hand, I like the model PBS uses. I like Nova, the News Hour, and a number of other shows on PBS, so I pledge regularly. The result is well written and well produced TV with quality I can count on every day of the year. Maybe other stations or cable channels will have to count on viewers paying directly in some way.
I know most shows on the major networks would not be worth paying for, but I have no trouble paying for shows as good as Babylon 5, Farscape, or Monty Python.
I am old enough to remember similar prediction in 1980's. Popularity of IR-based remote control units and taping TV programs was also supposed to harm advertising - but it didn't happen. The TV commercials have changed, they are now much more witty and provocative than in 1970's and earlier (a good example of this evolution are the TV ads of Coca-Cola - they were INCREDIBLY boring in 1960's!). It turned out that people are simply too lazy to bother with switching channels or skipping ads on tape. They will also be too lazy to use TiVo. Besides, if you are not lazy, you are not a good target audience for the advertisers - if you are active enough to put some effort into skipping ads, you are probably also active enough to make your own market research and you generally don't buy something just because you saw it on TV.
With things like that happening, they've created the market for TiVos, and helped expand it. If one of two things (or even both) happened, then TV companies would be fine. 1. Commercials need to be entertaining, not boring as hell, and 2. TV programs need to be worth watching and putting up with commercials (even if the commercials aren't entertaining.)
I'm really surprised that they haven't figured this out already given that the Super Bowl has more people watching it for the commercials instead of the game. You'd think companies would realize spending more on a commercial that people will actually watch is worth more than spending less on a bunch noone will watch. As a bonus, people remember fun commercials, and the products better. That has to help create more demand for the product, and isn't that what advertising is all about?
Still, I won't be surprised if this is another industry that'll take the RIAA/MPAA route of trying to get legal protection for their flawed business plan instead of fixing it. Oh joy, I can't wait until congress passes the DMAA (Digital Millienium Advertising Act) making it illegal to skip commercials, and requiring every citizen to watch 2 hours of commercials a week or they lose their cable/satellite connection.
If everyone timeshifts, then concepts like Prime Time become useless; people watch the program they want, not the one shown at 8pm on a Tuesday evening.
But there are major advantages to advertisers too. There is much better market segmentation; you *know* exactly how many, and what type of person watched your advert.
It's not all bad...
--- My dad's political betting
I have a DirecTivo and am part of the 'bad people' who will help destroy annoying commercials. As a solution, please just sell me the channels/shows I want to watch. Why am I paying for fundie nutcases like Trinity broadcasting when all I watch is 6 different channels?
This "one-size-fits-all" method of lots of channels for a large amount of money per month is failing, not just commercials.
I'd rather pay a 20-40 dollar bill that lets me "subscribe" to 20 or so shows with the ability to view *anything* for the first 10 or so minutes (or maybe x amount of episodes). In other words I can channel surf all I want and purchase the stuff I really like. The purchased items would be just like my "Season Pass" items.
Arguably, this dynamic will force networks to produce decent content instead of filler and better ways to squeeze in an extra half-commercial here and there.
TV will have to go through 'napsterization,' the genie is simply out of the bottle. A smart cable or satellite company can lead the way and make lots of money, especially targeting the "Cable is too expensive" crowd who just want Comedy Central and 2 or 3 other channels.
The networks won't like it, but its going to be either this or DRM forced commercial watching.
Exactly! I own a TiVo with my dish (week 2 - still the newest toy in the house).
;-)
Skipping over the commercials works great for stuff that's been recorded, but isn't very effective on live tv (you *could* pause it for 2 mintues then skip over them). About the only time I'll do any skipping on "live tv" is to play catch up if I needed to pause the program for some reason or another (potty break, g/f talking about something, feeding the little one, etc).
Few nice features are the pause and slow motion buttons. They get as much use duing the victoria's secret commercials as the ff button gets during the rest of them
Good judgment comes from experience, and a lot of that comes from bad judgment.
Most advertising is not trying to get you to run out and buy a product today. Late-night TV carries "Call Now!" ads, but this type of advertising is not suitable for product placement. (After all, you're not likely to run out in the middle of the movie to buy a Land Rover!)
Instead, the purpose of most advertising is to create or increase brand equity. The idea is to affect your thinking months or years from now, when you (or someone like you) are actually in the market for a new SUV. If your final choice is between a Land Rover and a Glurnmobile, you will presumably have a sense of familiarity and relative comfort attached to the Land Rover. It's not that you agreed with the points the ad was making, or that you felt particularly attached to the Land Rover at the time you saw the ad - it's that if you keep hearing about Land Rover over and over, through the years you will eventually accept that Land Rover is a longstanding and reputable brand of SUV. But nobody ever heard of Glurnmobile before today, so you will probably want to do a more careful analysis of the Glurnmobile product before you buy it. Which in turn means you're more likely to buy a Land Rover.
Of course, in the automotive market, there are no Glurnmobiles. It's inconceivable that someone could jump through all the investor and regulatory hoops to bring out a new type of car, and not make sure people knew about it. Nevertheless, brand equity still depends on the amount of advertising and the length of time it has been going on. What do you think of Kia vs. Land Rover? What are your reasons for thinking what you think?
Note that human beings are wired to defend their conceptual systems against (whatever they perceive as) assault. If you believe X and someone comes along preaching not-X then you attack them, or at least defend yourself. If you believe X and Y and someone comes along preaching that X implies not-Y, the effect is the same. So: Many Slashdotters no doubt believe that (a) Land Rovers are of higher quality than Kias, and (b) that their own thinking is not affected by advertising. I am saying that the major reason to believe that a Land Rover is better is in fact the advertising, particularly the length of time they have been advertising. This challenges (b) unless you can prove that Land Rovers are objectively better. Therefore it is to be expected that many people will jump in and insist that Land Rovers have variable (blurble) with intermittently assisted (gnashing of teeth).
Instead, consider this: Insisting that you are unaffected by advertising is the same as claiming you have never been had by a troll. This is false: You are a social mammal with fairly predictable responses. This gives the trolls and advertisers their edge. No matter how l33t you may be, there's always a smarter troll (or a better advertiser) who has your number.
-Graham