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DVR's Take Center Stage

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This is interesting, for those of us who have DVR's (especially those of us who built our own out of spare PC' parts) we know how indispensable these things have become. In a way, mine has actually become a bit of a delightful burden. Where as most people will do what is called "time-shifting" -- which is the practice of recording a show and then watching it within 24 hours, typically the same day it was recorded -- I'm getting into the habit of "season-shifting", where I'm basically letting my DVR record an entire half-season of a show before I sit down and watch a single episode.

Most people don't do that, and only use DVRs to make their schedule more flexible. No more having to stay up late at night to catch the deliciously violent and ridiculous 24, or Lost. Wait and watch it when you get home the following evening, that's the ticket. No commercials! How could it possibly get better?

I don't know, but I'm rather certain it could get a lot worse.

TiVo won't allow you to permanently store some recordings, and I don't think you can record pay-per-views at all. I'd like to note that it is perfectly legal to record something off television and burn it onto DVD, because that's not piracy or copyright infringement, it's fair use -- so long as you keep the copy for yourself of course.

TiVo's games with pay-per-view and other programs are a balancing act they play with content providers to avoid getting sued, even though they would most certainly win any suit brought by copyright holders. But how far are they willing to go to protect their bottom line, when it comes to sacrificing the devices features that make it so great, that literally makes it what it is?

I'm talking about commercials, and your ability to skip them. With my home-built system, I can skip them at will and nobody can take that away from me, and that's why I built my own. Files are captured in a DVD-compatible format so I can just burn then as is, or with a little bit of effort strip out the commercials and have a permanent copy.

Commercial DVRs for the most part are designed not to allow this, especially high-definition systems, but the copying "problem" is beginning to take a back seat to the issue of commercials. Copying is a big problem for feature films because almost all of their revenue comes through the initial theatrical release, but TV makes its money from advertising.

A quick explanation of how the system works -- studios produce and own the shows, and license them to the broadcast networks (NBC, FOX, etc) for a set price. That price pays for about 80% the cost of the show, with the gap being made up in syndication (and now more-so with DVDs) when the show gets relicensed to cable channels or other networks.

The networks in turn make their money by selling commercial time to advertisers, and unlike the studios, the networks don't sell those spots at a loss, they gouge the advertisers for ever penny they can get. If people stop watching shows for whatever reason, the ratings go down, meaning advertisers will be reluctant to pay high prices for the commercial space, and shows tend to get canceled.

One huge problem with DVRs and ratings is that Nielsen still for the most part measures things by mailing diaries to a select number of people, who in turn write down what they watch and when they watch it. At set points during the year which have come to be called "sweeps" periods, Nielsen gathers up all the diaries and tabulates the results. The networks try to boost their ratings right before this happens so that when Nielsen "sweeps" the country for the diaries, they come out looking better than they really are.

See it now? If you record it on the DVR and watch it three days later, that information in the diary becomes useless. That's what everyone is trying to deal with now.

Variety is reporting that there is finally some movement on this front where advertisers are warming up to paying for shows that are time-shifted by up to 72 hours.

Last year ABC held out for an even more generous 7-day window known as "live plus seven" and met a wall of resistance from Madison Avenue. But advertisers say if they can get a guarantee through commercial ratings that their spots aren't skipped, they're willing to pay for the first three days of viewing.

That's going to be a huge problem, because consumers now that they've tasted the power, are not going to give up the ability to skip commercials. To give you an idea of how pervasive this issue has become in home entertainment, my most recent VCR (as long as man owns video tapes, man will own VCRs) which by now is probably three years old has a 30-second fast-forward button it. You hit that button and it'll FF for exactly the length of 1 commercial break; hit it 4 times in a row (still gotta wait for it to stop fast-forwarding before you do it again) and you'll for the most part land right at the end of the commercial block.

Think about that, a three-year-old VCR has commercial skipping capability build into it, because people wait it that bad. My DVR has the ability to detect commercials and allow me to skip the entire block with one button, something you aren't likely to find on any commercial DVR, but I can also skip forward by 30 second segments if I wish.

Consumers are simply not going to give it up, so advertisers need to give up the hope that DVR manufacturers are going to disable that ability entirely.

"The whole issue last year in the impasse in ratings was that advertisers said, 'Prove to us that people are watching commercials,'" said Fox sales chief Jon Nesvig. "The research has shown that a significant number of people who are watching on a delayed basis are in fact watching the commercials."

I don't know if that's true or not, but I wouldn't scoff at the notion of the networks lying to get what they want. TV is a brutal business and advertising is the only thing that makes it commercially viable.

CBS research chief David Poltrack estimates that more than 5 million viewers are recording ABC's "Grey's Anatomy," CBS's "CSI" and NBC's "The Office" at 9 p.m. Under advertising deals negotiated last year, none of that delayed viewing will count in the ratings guarantees.

This is the crutch of it, these are the shows that cost the most to advertise on, and networks can't afford to lose out on them like this. This "problem" only figures to grow as DVRs become more mainstream. The real growth isn't coming in affluent convenience purchases like the market it began in, it's in OEM integration. Satellite and cable receivers with DVRs built into them are becoming extremely common and I've yet to meet somebody that wasn't looking to have one, but swears by them once they've had a chance to use them.

The number one use, I'd figure, has to be time-shifting. But the commercial-skipping capability is what makes them a fan for life. If you take that, you're going to kill your own market, your own opportunities to innovate and expand with things like Video On Demand (VOD.)

It'll be very interesting to see how Nielsen's plan to track DVR recording and factor them into the ratings will play out over the next few years. It could mean big changes ahead for television in general, we'll just have to wait and see.

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May 22, 2007, 9:19:00 AM
Why do people hate commercials so bad? Commercials are the perfect time, to get a drink refreshment, throw a load of clothes in, water your plants and a million little mundane chores that get you off the sofa for 60 seconds!! But then, I don't have a fancy tivo like yours so maybe I'll change my mind ;)

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The text of this article is Copyright © 2006,2007 Paul William Tenny. All rights reserved. This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License. Attribution by: full name and original URL. Comments are copyrighted by their authors and are not subject to the Creative Commons license of the article itself.