Guest Commentary: PVRs a real fear factor for TV’s ad community

Sep 16, 2002  •  Post A Comment

There are three letters that together instill fear in the advertising community. They are “PVR.”
The emotional and sometimes jittery attitude toward personal video recorders is not without basis, but nevertheless requires a more studied and level-headed analysis-one that hopefully leads to an appropriate conclusion.
There is little question that the advent of PVRs is not good news for the advertising business. Despite this overarching reality, there appears to be two camps on how serious a threat this technology is: the “glass half-full” group, which sees PVRs as a minor threat, and the “glass half-empty” group, which considers PVRs to be a catastrophe waiting to happen.
To properly evaluate each perspective, it is important to try to get some of the “facts” straight, or at least directionally correct.
The first “fact” deals with the current penetration of PVRs. The assertion that there are a million installed at this point is an exaggeration. The number is probably closer to half that amount.
The second “fact”-projecting 45 million PVRs by 2007-is also overstated. There are a great number of VCRs and DVD players out there with a lot of life left in them. Planned obsolescence is unlikely to work in this part of a consumer communications spectrum.
The next “fact” deals with ultimate PVR penetration. Some projections say penetration growth will hit a ceiling at 45 percent to 50 percent of all U.S. homes. But the integration of PVRs in new television sets (Sony, et al.) and the manufacture of set-top boxes with built-in PVRs make the eventual penetration level of PVRs likely to be very close to a universal saturation number.
Another “fact” worthy of review is the degree of time shifting that PVRs will cause. Current estimates are excessively high for three reasons. The first is that prime time will remain the prime time for TV viewing. This is a matter of lifestyle-people like to relax in front of their TV sets at the end of the day. What they watch may, of course, change. But increasing investments in programming will keep them tuned-in.
Secondly, current statistics on time shifting come from “early adopters” who love to tinker with new technology. Finally, as underscored in a study of consumers’ VCR recording habits, fully 80-plus percent of recorded programming was never played back (how many tapes do you have sitting in your closet waiting for “someday” viewing?) and a similar pattern probably holds true for PVRs.
As I mentioned earlier, when one aggregates the various points of view on this subject, a glass half-empty vs. a glass half-full set of perspectives emerges. Let’s first deal with those who believe that PVRs are not an imminent threat.
The glass half-full camp suggests that we take personal video recorders with several grains of salt and provides the following logic for that position:
What will solve most PVR ad-zapping problems is to have better creative work in our commercials so viewers won’t want to skip over them.
There are only a few hundred thousand PVRs currently installed, so pressing the panic button is premature by many years, perhaps even decades. (PVRs will never reach critical mass.)
How can anyone expect the consumer to adopt this technology when there are millions of VCRs around the country with “12:00” midnight blinking on them because the consumer doesn’t know how to set the clock?
With PVRs, viewers still have to record programs and commercials to skip over the latter.
Lawsuits regarding the theft of intellectual property will cause this phenomenon to disappear. In fact, the skipping of ads is also really a type of theft and subject to legal action, which will kill the use of this technology for the purpose of avoiding commercials.
The counterpoints to these arguments would be: a) It’s unlikely viewers will notice great creative execution when they’re advancing at digital speed or in 30-second increments; b) integrating PVR technology into TV sets and set-top boxes will put it into a vast number of households; c) there’s a relatively short learning curve on operating a PVR … ask my grandkids; d) legal issues represent an area that has yet to be clarified; and e) emerging TV technologies will ultimately allow viewers to automatically eradicate commercial breaks.
The glass half-empty theorists, in their efforts to validate their trepidation about the potential ills of PVRs, point to a number of studies that show PVR commercial zapping levels to be between 60 percent and 70 percent.
There are also people who have accepted the reality of this technology and its ability to eliminate commercials and have proposed solutions to this problem. Key among them are:
* Charge subscribers added fees for commercial elimination technology, with the funds going to the media to compensate them for their programming costs.
* Have two price tiers: one for programs with commercials and the other for programs without commercials.
* Make commercials more targeted and informational to minimize their deletion.
* Speed up commercials.
* Use banner advertising on television or more creative product placements.
What seems abundantly clear is that this technology and its surrounding issues cannot be uninvented. They are real, as are the misinformation and fear surrounding them. It is also apparent that it’s too soon to know which way many of the related issues will break. What we do have to work with is a two- to three-year window during which television-that means cable, broadcast and syndication (both national and local)-has an opportunity to learn and to test and to start to act.
I strongly suggest that all these entities come together to fund quality research and test various premises during this period to better gauge the usage and impact of PVR technology. It’s critical that we work to make the new economic model of TV one that serves the best interests of all of our constituents.
Joseph Ostrow is president and CEO of the Cabletelevision Advertising Bureau. Before his present position he was executive VP and worldwide media director at Foote Cone Belding and served 32 years with Young & Rubicam.