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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."
When it's conventionally taped, don't you skip the commercials as well?
How can they tell if you're skipping the ads or not? For that matter, how can they tell that you're even using a Tivo?
Also, why does this not apply to VCR's? I've always fast-forwarded through commercials with a VCR. I don't see advertisement companies crying.
RaGe
We're all just noise on the wires..
...but then again, if the only money was in the DVD release, why do TV at all
Nobody is going to shell out hard earned dollars on DVD box sets of content they have never seen or know nothing about. You could think of the television shows as advertisements for the DVDs. Perhaps this will cause the quality of shows to improve because if the show sucks, nobody is going to buy the dvd. This is a pretty strong incentive.
Or perhaps this will lead to the pay-per-view system dominating the ratings. This has worked for HBO quite well.
The Tivo/DVR watchers are skipping the commercials because for the most part they are annoying. This should be seen as a strong feedback signal to the advertisers that their methods do more to annoy than to inform.
Perhaps Hollywood isn't entitled to the gravy train that has been going on for the past 40 years or so and they might have to *gasp* INNOVATE, like everybody else to maintain a healthy profitable business.
Oh, I'm sorry, that would KILL TV advertising industry, but should I care? I get enough advertising crap all the time anyway. At least with on demand, the tv shows would still make money. The networks would just recoup their cost directly from the consumer instead of advertisers and I'd only have to waste 22 or 44 minutes of my life instead of a 30 minutes or an hour respectively.
Between that and DVD box sets (which I figured I paid almost $1000 last year alone for), I think there's still a profitable world out there for TV production companies.
I would like to see a more direct marketing approact to TV broadcasting. Living in the UK, I often don't see shows until as much as a year after they were released stateside. I then see them on channels like Sky One, which are 25% advert. Alternatively I could download them from the 'net in SVCD quality within a week of release and watch them ad-free. If I could download the shows directly from the studios, in a known quality, then I would be more than happy to pay for this, even with some kind of `only watch 2-4 times' kind of DRM (if I want to watch it more, I can buy the DVD, although I should possibly be given a discount on the DVD if I've paid for it once already), and even if I could only watch it on a closed-platform set-top-box.
I would also be prepared to pay in advance for a second season of a show I liked, so that the creators would have enough funds to extend popular shows, free of the whims of the networks.
I am TheRaven on Soylent News
Or maybe advertisers will just make ads that fool Tivo - ramping up informercials, perhaps?
With the average TV show lasting only 22 minutes * and the rest being filled up with advertisements, the television industry has over time increased the demand for nixing all of the ads. Over 36% of our time is spent watching pure ads alone! If they had fewer ads I bet people just wouldn't bother skipping past them. Instead they would go back to the bathroom/soda/food run & actually watch the ads the other half of the time.
The other route is to start making the ads entertaining again. The ads used to be the only reason I watched with superbowl in the first place.
You americans might even get the chance to enjoy the utopia of ad free television we have with the BBC over here in the UK. Instead of being advertising funded we have a yearly TV 'license' system but absolutely no commercial advertising, and the BBC still manage to produce most of the best TV shows available, and lots of hardware for the broadcasting industry (another source of funding they have).
Business models change all the time. TV is no exception to that. People are slow to react when their moneyspinning model starts to break down - a lot of people have made that point. The broadcasters still have their heads in the sand, but progress is inevitable. I believe technology will not stifle quality because viewer choice is becoming more and more measurable, marketable, and most of all possible : you can vote with your remote on pretty much any type of content, and really pick what you want to watch.
Taking on the start of the article -
The economic shift is beginning, we're still with the early adopters but critical mass is about to happen. This might not be such a bad thing. Those broadcasters that learn first will take these viewers with them, and create themselves a nice market out of it.
Yet the article seems to see doom and gloom, saying quality will be sacrificed, as if the networks care about anything other than their bottom line anyway :
I have a less negative take on this. Hopefully advertisers and broadcasters alike will catch on to the fact that the people don't want to be blasted with adverts. Most of us, given the choice, won't watch them, look at them, or download them as part of web sites. The dot com crash had a lot to do with the realisation that ad supported sites would not flourish; few today make revenue purely from advertising - unless their content is astounding.
So I'd suggest that TV will lose some channels, lose some obscure and niche programming, but just maybe quality will prevail. Because good art, good acting, and good screenwriting will always seek an audience. That audience is getting cleverer, more choosy, and has more tools at its disposal. It can't be that bad if we suddenly choose to really watch stuff we want, and even if we pay a premium for it, that's not so bad. A lot of people have mentioned buying TV stuff on DVD these days, and for me Internet + fixed media (TV on demand) is a much better delivery mechanism than streamed scheduled broadcasting. TV (as defined in the traditional model) will be, and indeed should be, much more centered around live events, sports, debates, etc. I predict that eventually all non-live scheduled content will become time shifted, on demand, and paid for. This model has every chance of success.
Less content on less channels and more stuff paid on demand just shifts the econmics around. It doesn't mean that quality is lost. Most decent programmes these days rely on DVD sales and syndicated sales to other countries to make a profit. The big networks don't make money on them just on broadcast in the US. Arguably the best shows sell best - nobody buys crap on DVD in bulk all around the world, but most of us watch it on TV if we have no other choice.
Conversion Rate Optimisation French / English consultant
Hasn't anyone else been noticing the number of in-show popup animations that push products and other shows during a program instead of during a commercial break? You're not going to see an increase in quality and content, you're going to see an increase in the blurring of advertising and entertainment.
.. and so he went shopping at the GAP!" and " ... so I drank a Coke!"
We started with advertisements that got your attention because they were funny and we're going to end with comedies that have more punchlines that end with "
WARNING: Eurocentric reply
I'm not surprised that PVRs are so popular in the US, with the amount of ads there are on US channels. Maybe it is not such a problem when you get used to it, but to Europeans visiting the US, the intrusiveness of the ads is overwhelming.
We're used to privately held channels which show a lot fewer ads, and still produce good programming. Take a look at Britain's ITV or Sky and the Dutch, German and Scandinavian channels to see fairly high-quality programming with at most 2 commercial breaks in a 30 minute programme, versus the four or more seen on some US channels.
Leaving aside the state/taxpayer-funded channels such as the BBC (which has no ads), the European model shows that reduced advertising still brings in enough revenue for good programming, while being a lot less annoying for the viewer.
It gets worse. I used to watch Transformers as a kid, and while it clearly was tied into the toy line, it was still a decent well written TV series, with only one annoying kid in it. I caught Transformers: Armada the other day and I was stunned. What the hell? It's Pokemon, for crying out loud! There are kids in it that get more air time than the robots, and even Optimus Prime is going on about catching 'minicons'. Talk about an obvious ad. Jesus..
I have a great old recording of Abbott and Costello's "Who's on First?" routine. The funny thing is, they're asking about "the players on this here Colgate team." I believe it was performed for the Colgate Comedy Hour.
The amount of commercial breaks we have now is a recent development. It was a change to go to this model - another change won't kill TV. We'll have end up with the Dr.Pepper Late Late Show, where the host and all guests are always drinking a clearly labeled bottle of Dr.Pepper (or maybe some other Pepsi product).
In-show product shots, product references and product promos were - and can again become - the norm. Ever watch The Price is Right? Those fabulous product descriptions by the smooth voiced announcer who always used the full slogan of the product.
A different advertising model won't kill TV. Bad shows and far better alternate forms of entertainment (we've all seen the growth in video game revenues - especially the online games, which often taken up people's "prime time" evening slot).
No Clue.
What's actually changing is that advertizers are becoming aware of the impact of technology. Their initial reaction is negative but will become positive when they realize the control it will give them, particularly interactive TV. You will have to have viewed the commercial in order to supply the correct prompts to view the rest of the program. Welcome to the future. Welcome to hell.
Italian Job == Mini (BMW) advertisment
Tomb Raiders == Land Rover then Jeep adverstisement
Mission Impossible == Apple advertisment
Top Gun == RayBan advertisement
The African Queen == Gordens Gin advertisement
etc...
The question is, is it subliminal or not (read illegal)? And does it even work? Personally, I've gotten very good at filtering advertising...
I'd say your filter needs updating - it seems a number of ads are getting by and making an impression on you...
Seriously, product placement will probably be the next big wave - since one goal of an ad is to get you to remember the product.
I'm a consultant - I convert gibberish into cash-flow.
No, I used the word intentionally.
Below the threshold of conscious perception. Used of stimuli. is from The American Heritage(R) Dictionary of the English Language, Fourth Edition, and similar definitions are provided by Websters and others.
When most folks see The Italian Job, they don't realise the Minis are there as advertising. They see a neat little car with cool people driving fast - they are not conscious of being subjected to advertising, compared to say TV where they can consciously "switch off" when the ads come on. That's why I say "subliminal". Sure, it's not Coke ads flashing bewteen frames, but many people are unaware that it is happenning.
Technically, you are correct about the legality. The FCC said in 1974 only that it was contrary to the public interest.
Forget thrust, drag, lift and weight. Airplanes fly because of money.
Besides,
Viewers evidentally skip at least 2/3 of commercials anyhow. The Tivo (or ReplayTV) statistics simply make people more aware of that fact.
I know that before I got my ReplayTV, I didn't sit in rapt attention during every commercial break.
Even WITH the Replay, I see enough of a given commercial to know if it applies to something I'm interested in buying, ir is in any way entertaining. I tend to watch a commercial if its of use to me.
Maxi-pad commercials and FTD Florist shilling, I skip.
I did it before Replay, I'll continue to do it.
No one's business model is being destroyed here.
Nothing has changed to any appreciable degree. People are able to make more efficent use of their TV watching time, and still get exposed to commercials. They just don't have to waste time on commercials that would NEVER RESULT IN A SALE ANYHOW.
"Oh my God. This is terrible. This is the end of my Presidency. I'm fucked."; ~ Donald J. Trump
Where I see the industury going in the future is more to the "pay TV" standard, with the price of a channel is included in your package. Some cable companys already include "comercial-less" channels in their various packages. It might even get to the point where if you want the history channels package you'll need to pay $2/month, the news package of CNN, FOX News, and MSNBC will be another $2/month. The stations themselves will have more pay-for-placement and inline ads. The cable companies will have in-line flash-like ads for the various menus (static ads are already there for digital cable). Also, I believe that good story-telling ads will become more important, where people even choose to watch the ads because they are funny, interesting or touching. With on demand tuning you might even be tempted to say "hey, man, play the new Subway ads they're side-splitting funny". Ads which the viewer choose to watch are certainly much more effective.
The grass is only greener, if you don't take care of your own lawn.
When was the last time you saw a TV program or movie where they didn't use a Mac? Even my wife, who understands virtually nothing about computers, goes "Oh look, they're using an Apple" on a regular basis (her knowledge extends to identifying them by the big apple on the side).
Am I the only person who views ads as a valuable barometer of pop culture?
Seriously - I go months at a time without watching TV, but when I do, I'm usually interested in watching ads - to see what's been going on in the world around me.
Also, ads will always have a place in live TV, as someone pointed out above, i.e. sports, news, etc. I think they'll also have a place whenever multiple people are watching TV together, sports or not.
~Will
sig?
What's really unfourtunate is that I might not only watch, but 'want' to watch comercials if they were trying to sell me on the basis of what the product can actually do. But these days that's a rarity, instead companies sell image and hype, with little to no information about what it actually does. And that kind of rot I'm going to skip by whenever possible. Thankfully in a way, there's little enough left on tv that just recording the few shows left I like is little effort - and the freedom to just skip the comercials very satisfying.
Everything will be taken away from you.
Maybe advertisers will be forced to think up *gasp horror* interesting adverts that people will actually want to watch!
That's the rule of Tivo as I see it personally. I find that I will often forget to FF the commercials if they are interesting and/or entertaining enough. But, inevitably, a Carrot-Top or similar ad, designed deliberately to be annoying, comes along. Now I am fast forwarding the rest of the commercial break. Advertisers should start to think of these ads as break killers. Sustaining interest should be of paramount importance, not just to the individual advertiser, but to the programming director as well.
who are those slashdot people? they swept over like Mongol-Tartars.
Then your experience varies GREATLY from mine. Brand names are a premium. Do you know who created the original "oreo" style cookie? It wasn't "Oreo" brand. It was Hydrox. They are the same damn thing. Oreo had better marketing.
The VAST majority of commodities almost by definition, have zero distinguishment in quality due to brand. You know what "Windex" is? It's fucking vinegar. But sure, consumers will buy the anti-bacteria this, and orange-fairy-spirits that, because consumers are stupid and like to feel comfortable that they are buying a socially acceptable product (there is even a product on the market that kills "germs in the air"! GERMS IN THE AIR OH MY FUCKING GOD). Do your Nikes make you a better athlete? Probably not. Is your Abercrombie and Fitch wardrobe any more functional than "generic" clothes you could buy at a store like Target or KMart? The trend is actually reverse - now you pay extra for PREWORN clothing! What a deal! Can you really notice any difference whatsoever between butter and milk brands? Are you sure what you think a product tastes like is really what it "should" taste like, or just what you've grown up to accept as correct? (e.g. How did they know that the cereal tastes correct in the Matrix?).
Feel free to scale your purchases based on quality. That is something to encourage - regardless of brand name. In my experience the case is the opposite - for the vast majority of products the brand name provides NOTHING more than better marketing and more social acceptance among consumer peers. Sure there are some premium brands that are better and get my money, but they are few and far between, and usually not worth the premium even IF they are better (value is the point).
Unfortunately less and less of America knows how to make a meal from commodity ingredients or make/use commodity cleaning agents (vinegar, laundry bar soap, borax, washing soda, etc.) so they will gladly buy a product marked up %500 if it has a pretty label and includes the fashion ingredient of the day ("orange oil" seems to be popular these days). As a corollary, more and more "generic" products are getting nominal "brand names" just to make the consumer feel more comfortable with them - KMart, Target, and many stores now "brand" their generic clothes with some random name even though they are more or less generic...but they know if there is a "brand" name on it people will be more inclined to buy it (oooh, it's not KMart clothes, it's Route 66 - I feel special now).
It's 10 PM. Do you know if you're un-American?
Sometimes it's cool to record the commercials. When my family got their first VCR back in 1984 we recorded the Wizard of Oz off TV. Because we were new to VCR Technology we recorded all the commercials. Now I can sit back and watch 20 year old commercials I haven't seen since I was little. Commercials like "where's the beef" and commercials for Pepsi Free, remember that? I think there's even an old Max Headroom commercial for Coke on there. It's also wierd to hear car dealers saying that you don't have to start making payments until 1985. I know it's a strange point of view but recording commercials can be an interesting trip back in time if the recording lasts for 20 years or so.
---- "Excuse me. Where's the children's gun section?"