Pausing The Panic
Sunday, August 20, 2006
Prime-time television and its mighty 30-second commercial were supposed to be in trouble when a new, cutting-edge technology arrived on the scene several years ago, giving viewers a tool to zip past the traditional, on-screen ads.
Digital video recorders were like VCRs with super powers: able to pause live television, effortlessly record a season's worth of shows and even pick programs they think you will like. By shifting television's time schedule and watching recorded programs at their convenience, viewers could skip those annoying ads with the click of the remote.
Today, as the DVR becomes more accessible to the mainstream -- notably because cable and satellite companies are starting to incorporate the technology into the set-top boxes already in millions of living rooms -- the technology is having a different impact.
Most viewers have not radically rearranged their television schedules. People are watching more, not less, television. And, most interesting, DVRs may end up preserving mass-audience network television by offering viewers more choices and giving advertisers novel solutions to reach potential customers.
TiVo Inc., which pioneered the DVR, owns about one-third of the market and has entered the lexicon as a replacement for the phrase "to tape a show." But with the cable and satellite companies on board, industry researchers say 12 million to 15 million homes are likely to have a DVR by the end of the year. By 2010, that number could be as high as 65 million.
Now, TiVo and television advertisers are working hand in hand to revolutionize the decades-old model of supporting network television. The Silicon Valley company announced last month that it would start selling customer commercial-viewing data to networks and advertisers. And this fall, viewers will be introduced to prime-time commercials made expressly for DVR users -- ads that include extra content seen only when viewers go frame by frame through the commercials, creating a deterrent against using the fast-forward button.
"When the DVR came on the scene, there were all these apocalyptic predictions as to how it was going to destroy the mass market and mass-market TV," said David Poltrack, chief research officer at CBS Corp. and president of CBS Vision, the company's research shop. "People became infatuated with the technology and the idea that people were going to take total control of their TV viewing."
Poltrack is one of the industry's experts on researching viewing habits and telling programmers and executives what the data mean. At presentations, he likes to flout a photograph of a 2000 New York Times Magazine cover story that predicts "The End of the Mass Market" because of DVRs.
What the millennial doomsayers missed, Poltrack said, "was the logical conclusion that the amount of TV that people watched was limited by the fact that these programs ran against each other."
That limit disappears with the DVR, which can record one show while you watch another.
True, a videocassette recorder can do the same thing. But programming a VCR and taping a show can be cumbersome and time-consuming. Seven out of 10 owners use VCRs to play recorded tapes (such as rented movies) rather than to record television programs to watch later, according to the Consumer Electronics Association. The joke of the "blinking 12:00" -- a sign that viewers never learned how to program their VCRs -- turned out to be true.
But with DVRs, viewers can, at the touch of a few buttons, record all of their favorite shows for an entire season, all of which are stored neatly on a hard drive inside the recorder.
Given the opportunity to easily record shows, people wind up watching more of the most popular television programs. Overall television viewing in households that own DVRs increases after their purchase, according to a number of surveys. That means those viewers are exposed to more advertising.
This fall, ABC is moving one of its most popular shows, "Grey's Anatomy," to Thursday nights, opposite CBS's most popular show, "CSI." Poltrack expects viewers with DVRs to watch both shows instead of having to choose between the two or spend the time and effort remembering to program VCRs and put in tapes.
It also turns out that DVRs are not killing live viewing or shuffling the weekly prime-time schedule, at least not yet. From Sunday to Friday, 84 percent of all prime-time television viewing in DVR households is live, according to Nielsen Media Research. According to the same data, 61 percent of all prime-time programming recorded by DVRs is watched on the same days it airs.
And in more good news for the networks, even though there are only six major broadcast networks compared with hundreds of cable channels, 77 percent of the shows recorded by DVRs air on a network such as ABC or Fox, rather than a cable channel such as ESPN or TNT, Nielsen reported.
The networks think they can make more advertising money if they can figure out how to get past one other statistic, and it's a troubling one: Ninety percent of DVR owners say they fast-forward past some or all commercials, CBS data show.
But new information about how DVR users interact with commercials raises questions about that statistic.
A March survey by Millward Brown marketing researchers found that 42 percent of non-DVR owners recalled specific brands in commercials they had seen, such as Ford or Taco Bell. For DVR owners, the number was 43 percent.
There are several possible explanations for differences between what people say and what they do when it comes to commercials. Poltrack said it's smiled upon socially to say that you don't watch commercials. Also, people tend to remember action -- fast-forwarding -- better than inaction, or not fast-forwarding. Further, it's almost impossible to not catch at least some of a commercial block when trying to zip through it. With that in mind, advertisers now make commercials that keep the company logo on screen for the entire ad, for example. Advertisers call it a "logo burst."
More DVR-inspired creativity is at work.
In May, General Electric Co. began showing commercials touting the environmental benefits of some of its heavy industrial products, such as jet engines and diesel locomotives. One 30-second spot featured an elephant dancing in a jungle to "Singin' in the Rain," as other animals look on. Viewers with DVRs were shown how to pause the commercial at certain moments. When they did, up popped whimsical, fictional biographical information about the animals. Gamers call such hidden content "Easter eggs." GE calls the project "One-Second Theater," and it is designed to nudge DVR owners to spend more, rather than less, time with commercials.
It worked, according to GE's research. Viewers spent a little more than two minutes watching and reading the 30-second spots, said GE's Jonathan Klein, marketing communications leader.
So instead of DVR users never seeing the GE spot, as advertisers and networks have feared, "viewers ended up spending over two minutes with the GE brand in front of them," Klein said.