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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.
I find that skipping the programs to get to the commercials to be more interesting than the other way around.
I have been pwned because my
When it's conventionally taped, don't you skip the commercials as well?
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
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..
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???
Oh God, I hope so.
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.
But there's an ease of use coupled with the ability to record, watch, and fast forward all at the same time that makes TiVo and similar units an order of magnitude more dangerous than VCRs. Most of my friends with TiVos actually wait until about 10 minutes into their television show (20 for full hour shows) to watch, so that they can FF through the commercials. Traditional VCRs can't do that, because they're limited to either recording or playing back, but not both at the same time.
Also, not having to change out tapes means I'm more likely to record more shows. I already do this on my computer. I almost never watch TV anymore. If there's something I'm interested in, I cap it, edit out the commercials, and then watch it while doing my nightly email/websurfing. Not because I want to steal TV programming, but because those commercials take up precious bits on my CD/DVD. Also, it's easy to set up a batch of encodes and walk away.
Now a valid argument in place of yours is that people tend to tune out commercials if they even stay in front of the telly during them. But TiVo si a formalization of this process, which is what scares advertisers. Wasn't it some Turner executive that said that technically it was ok to go to the bathroom during commercials, but that having commercial-skip was pushing it too far?
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.
The question is, is it subliminal or not (read illegal)? And does it even work? Personally, I've gotten very good at filtering advertising...
Forget thrust, drag, lift and weight. Airplanes fly because of money.
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.
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.
The cable companies and television networks will lose out because their business model is ancient. Only in recent years have cable companies slightly innovated with digital cable. But digital cable sucks. Changing channels is laggy, and it's really not *that* much different from normal cable (at least compared to a tivo).
To keep up with stuff like tivo, the cable companies will need to (gasp) compete with it. Come up with something that meets or beats the functionality, convenience, and price point of PVRs. But unfortunately I can picture what the cable companies will do instead: file lawsuits, use shady business tactics, etc. Oh well. While that might hold them over in the short- to mid-term, I think it would eventually catch up with them.
Guess it's time to start having popup ads on TV... I can see it now.... in the middle of a TV show, all of a sudden a chevy truck bursts through the screen.. totally obscuring what you are trying to watch and making this horrid crashing sound.. then it drives back and forth for a bit and finally comes to rest in the upper top corner for the remainder of the show.
Hrmm.. I could swear I've seen this idea some place before!
"When I was a kid"(TM) in the early 1970s, there was much less advertising on television and watching television wasn't as obnoxious as it was. Even network-broadcast movies only had a 2-3 commercial breaks per hour, with long stretches of movie in between.
There's a lot more advertising on TV, and a lot more obnoxious advertising gimmicks. I can't help but think that if TV advertising was the same way it was in the 1960s and early 1970s, the idea of paying for a DVR wouldn't be as appealing as the advertising wasn't as obnoxious, it was more of a fair bargain.
But then there's some questions about content, too -- broadcast television used to make some weighty programming. Now it sucks, and if you want anything interesting, you need to have HBO or Showtime for drama, and Tivo and 400 other channels for anything else.
For example, NBC has adjusted the schedule of their Thursday lineup by a minute or two so the Season Passes won't work. (For example, if you have a Season Pass for "ER" which starts at 9:58p, then TiVo will not automatically record "CSI" which runs from 9p-10p.)
And I recall that one of the networks (NBC or ABC, if I recall correctly -- but I couldn't track down the article) did a study about commercial skipping on TiVo and came to the conclusion that people fast-forwarding through the quick subliminal commercial images that flash on the screen inbetween their shows are just as effected as if the viewer watched the entire commercial at regular speed. The network's thought was that TiVo wouldn't be a problem any more than VCRs were. It's the ReplayTV automatic "skip commercial" technology that the networks had problems with.
(sidenote: in 1999, NBC invested money in TiVo)
I don't see what the big deal is. The networks are already handling TiVo in their own way.
Yeah, they're driving away 18-to-34 year-old males, the demographic segment most likely to own a TiVo.
How? Shitty programming that doesn't interest men. One lame reality show after another. Even the basic cable mainstays are sissifying their shows-- I used to watch Discovery and TLC a lot, now practically all they have are semi-disguised "decorating" shows and junk like "A Dating Story."
The only network with shows I actually watch is FOX, and even they do dumb shit like "Skin"-- maybe it was an interesting show somewhat aimed at men, but you're not gonna beat Monday Night Football with anything acceptable enough to be run on broadcast television-- and you might not even beat it with Naked Lesbian Jell-O Wrestling.
Spike TV actually has the right idea-- they ran a James Bond movie marathon during most of the holiday weekend, and unless it was Simpsons time or there was something more interesting on the History Channel, that's what I "watched" if I had the TV on while I was doing something else.
~Philly
I was thinking of 3 tablet PCs, but one of them BSODs.
Couch Potato: TiVo, what is good in life?
TiVo: To block commercials, delete them unseen, and hear the lamentation of their advertisers.
Couch Potato & TiVo: bwah-ha-ha-ha-ha! bwa-ha-hA-HA-HA!! BWAH-HA-HA-HA-HA!!!!
"You'll get nothing, and you'll like it!"
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?"