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."

Comments

I don't get it?

[cablepokerface]

When it's conventionally taped, don't you skip the commercials as well?

Re:Is this a good thing?

[akuma(x86)]

...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.

There are too many ads!

[TecraMan]

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.

Colgate Comedy Hour

[Anonymous Coward]

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.

Re:What, like movies?

[Hard_Code]

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).