The capability of digital video recorders (DVRs) to allow viewers to skip commercials has been a thorn in the side of both advertisers and networks. Advertisers get frustrated when potential consumers do not see their commercials, and networks have typically relied on the revenue those advertisements bring to turn a profit. Generally, the larger the viewing audience, the higher the advertising rates the network could charge advertisers. Now, however, viewers can see their favorite shows on demand, whenever they want without watching the commercials. This ability of the consumer to at-will disengage from the commercials is hurting the pockets of the networks. Some advertisers have decided to bypass traditional commercials in favor of product placement directly in television shows, hoping this exposure will reach viewers. Others in the media have protested the growing use of DVRs, and have sought to curtail their use by filing lawsuits alleging copyright infringement (arguing that the ability to skip commercials is fundamentally different from fast-forwarding through commercials). Others have decided that since they can’t beat them, they may as well join them.
The numbers on DVRs are staggering: it is estimated that there are nearly 3 million DVRs in use currently in the United States, up from 1.7 million in 2002, and all indications show that these numbers will increase. It is estimated that by 2007, 20% of U.S. homes will have some sort of DVR. Nielsen Media, the firm company that tracks viewers’ watching habits, has recently agreed to partner with TiVo, a DVR producer, to provide information on usage. The ability of TiVo to track viewing habits is nearly unprecedented: it recently reported that the Janet Jackson breast exposure that occurred during the February 1, 2004 broadcast of the Super Bowl was the most replayed – not viewed – moment it has ever measured. TiVo has also determined which shows are the most recorded with its “Season Pass,” a feature that allows repeated recording of a particular show (among them are “Friends” and “Sex and the City.”
TiVo devices communicate with the company through use of a telephone line that dials in every day, receiving show menus, pay per view schedules and even show suggestions that TiVo selects based on previous viewing habits. The potential uses for this technology for targeted, updated, and specifically chosen commercials to deliver to viewers could be very advantageous for producers. Nielsen ratings typically determine which shows are hot and which are not. It’s possible that in the future, advertisers and TiVo will begin directly sending specific commercials to shows that appear to have the demographic they want to reach. Advertisers will know which show is hot immediately based on viewing habits, instead of waiting for the slow burn of the sleeper hit. It is possible that people will not need to fast forward or skip the commercials they don’t want to see, because they will not see any except for commercials that they do want to see or are for items that are targeted to them. Welcome to the brave new world of commercials-on-demand.
