When Tivo first launched in 2000, the TV business panicked. Tivo was heralded as the next step in the evolution of the VCR, the DVR - the Digital Video Recorder. DVR's required no tapes to either save or watch, but allowed you the same functionality as a VCR - saving your programs, rewinding and re-wathcing, and of course, fast forwarding. (Remember setting the time on your VCR to record shows? Worrying about how much space you had left on a tape? Setting the tape for 2, 4 or 6 hours of recording? Using magic markers to label your tapes with the contents? Ah the 80's & 90's - good times).
And the real problem was with the fast forwarding. If you can fast forward, of course what you are fast forwarding past is the very unpinning of the entire business model of the television industry - the commercials. You're not fast forwarding past the show, but you do fast forward past the commercial. The studios couldn't stop the technology from being released, and consumers liked DVR's better than VCRs. So if consumers aren't watching the advertising, this undercuts the entire television industry. And with Tivo gaining in popularity, both the cable and satellite industries jumped into the mix so their revenues didn't get eroded by consumers switching to Tivo altogether for the DVR technology. If you spoke to anyone in the TV industry at the time, the sky was falling.
Flash forward to 10 years later and we now know considerably more about DVR (or PVR's - Personal Video Recorders, as they're called internationally). First of all, the sky didn't fall. The TV industry is still funded largely by advertisers. What is happening in the TV industry now is that broadcast networks are now adopting the cable business model where a network is funded by both advertiser revenue and with carriage subscriber revenue. Certainly a dual revenue stream is better than a single revenue stream. But it wasn't the DVR that blew up the broadcast industry, it was the decline in advertising revenue from the recession that did it.
And now we know considerably more about DVRs that we did 10 years ago. So let's look at some of the myths:
1. Viewers skip all the commercials. Not really. Sure, most people skip past most of the commercials, but really, viewers always skipped commercials. Viewers used commercials to go to the bathroom, return a phone call, make dinner, check their email, and a million other things. Turns out that people use their DVRs in the same way. They skip commercials that they don't care about, but people will watch commercials that appeal to them. Personally, I watch movie trailers and network promos and skip everything else. Women I know watch commercials that appeal to them, fashion, music, movies. Men watch sports promos for upcoming games, beer ads with pretty girls in them. Kids watch ads for toys, games, and Disney World/Land. My point is that consumers will and do watch commercials that appeal to them and consumers have always had the option of "skipping" commercials, even before the DVR.
2. Everyone viewer will have a DVR. We're doomed. Well, it's been a decade and only 35% of U.S. homes have a DVR. (it's about 25% in the UK and most other advanced television countries). I know alot about consumer adoption of new technology. Whereas VCRs had 80-85% penetration, DVR's only have 35% after 10 years and availability on every platform (satellite, cable, telcos)? That's not mass consumer adoption, that's a transitional technology. In fact, if cable companies technology wasn't so poor, VOD would have (and will have) mass consumer adoption. DVR's will be a thing of the past in about 5 years.
Also, the latest consumer research shows that consumers are using the DVR the exact same way they did before DVRs. Now most consumers pause on a commercial while they go to the rest room, cook dinner or return a call (so they see the ad). Also, people leave their TV's on, go to the rest room, likely hear the commercial, return to the rest room to find their TV is on and then rewind to where they left off - at the commercial (largely seeing the ad multiple times). Viewers are seeing more commercials than they used to, and the DVR has added to that, not subtracted from it.
3. We can't stop consumers from skipping the ads. You're right, you can't, but you don't have to. My #1 example here is the Super Bowl. Consumers watch every commercial during the Super Bowl. Which leads me to my point Madison Avenue, if it's a good commercials viewers will watch it. Whether it's a movie trailer, a soft drink ad, a beer commercial, or an internet company, if it's a good ad, people will watch it. Also, broadcast networks have figured out how to combat skipping with an old internet advertising standard, the banner ad. If you watch promotions for movies and TV shows now, you'll notice a black box above and below the screen that says either the name of the movie and when it opens or for TV the name of the show and day and time it airs. The banner ad stays on throughout the entire commercial. So even if you fast forward past the ad, you see the name, day, and date whether you like it or not. Smart.
The #1 way the DVR has changed my TV habits is "video snacking." Video snacking is only watching the parts of a TV show that you want to see. For example, I almost never watch live TV. Even for an awards show (the Academy Awards, Golden Globes), I skip right past the nominees and fast forward right to the winner's speech. It takes me about 1 hour to get through a 3 hour awards show. And for me, that's the best thing about my DVR, skipping boring programming, not the commercials.
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