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November 4, 2006

Number of DVR Viewers Up, Amidst Continued Industry Debate

Lost Remote reported yesterday that the number of people who are watching shows through time-delay on DVRs continues to rise steadily, citing the Oct. 11 Lost episode in which 16 percent of the viewers in the target 18-49 demographic watched the show on delay within seven days after it aired. Considering that I now watch almost every one of my shows on DVR delay and that I personally know of other friends who have taken up this process in the past couple of weeks, I anecdotally agree that the use of DVRs for this purpose is steadily increasing. In fact, I watch almost nothing live these days.

Lost Remote says, "Naturally, broadcasters want to be compensated for time-shifted viewing, but media buyers are refusing to pay. After all, most people watching recorded shows are skipping commercials--some estimates have it as high as 75 percent." They predict that buyers will end up paying but at a much smaller rate.

Their blurb came from David Goetzl's piece on Media Daily news, covering ABC's high number of DVR users for its most popular shows.

Goetzl writes:

How many times viewers using DVRs are pressing the fast-forward button during commercials is unclear, although even network executives concede that the number is considerable. Many, however, argue that there is meaningful exposure for the marketing messages--even if viewed in FF.

The significant percentage of viewers using DVRs will no doubt increase both buyers' and sellers' call for Nielsen's coming commercial ratings to gauge ad-skipping behavior.

On the one hand, the high percentages represent lost revenue opportunities for networks. But viewed another way, they could offer some optimism: If fewer viewers are watching "live," buyer demands to reach them could increase, sending prices up. There's also the possibility that viewers who catch a show via a DVR and like it may opt to watch it in its broadcast window later.

I think that networks are right in that DVR viewers cannot be ignored, but the problem is that the myth of the effectiveness of the 30-second spot is being revealed. Others are also correct when they point out that viewers have long had chances to skip commercials, but that process is becoming much easier now, and DVR's also make it harder to ignore. People have always left the room or flipped channels during commercial breaks, but DVR's make the commercial-skipping process more painfully up front and obvious.

As these numbers continue to grow, questions about the effectiveness of the 30-second spot will also grow. Networks have to think now about the diminished effectiveness of the 30-second spots and how to adapt their business by thinking proactively. This doesn't mean the 30-second spot is dead but rather that the overreaching claims of its effectiveness and reach is being exposed more and more all the the time and those ostriches in the industry are just delaying the inevitable.

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