How
the TV Industry is Affected by Time-Shifting Technologies.
By Ryan Boehme
In this new digital
age, the television industry is being significantly affected by advanced
time-shifting technologies. While many innovative devices have contributed to
changing television viewing habits, it’s more about the behavior of time-shifting
a program than it is about the technology. The bottom line is that people want
to watch the programs they want, when they want to watch it and will pay for
this convenience. Time-shifting television programs actually began in the late
1970’s during the analog age as video recorders first hit the consumer market.
Japanese companies such as Sony, Panasonic, and Sharp introduced the first VRC
(video cassette recorder) to enable for the first time the recording of
television programs. Each of these VCR’s integrated a television tuner which
allowed consumers to record content from over the air or a cable connection.
Importantly, the growth of VCRs spurred the growth of stores renting video
cassettes, offering a new market of theatrical releases, which created a new
revenue stream for the studios. In less than 10 years, the VCR penetration of
US TV households reached over 80%, illustrating the high interest of
time-shifting broadcast and cable content as well as newly released movies.
Similar technologies, such as the video disk player, were not nearly as popular
because these devices did not include a record feature. During the explosive
growth of the VCR consumer market, there were many new concerns which impacted
the TV industry. Since the VCR works similar to an audio tape recorder, the
rewind and fast-forward buttons were extremely popular for users. If viewers
can now control the content being played back on their VCRs, this meant they
could not just rewind but also could fast-forward through the less attractive
pieces of content-specifically commercials. The advertising industry was so
concerned about audiences skipping commercials, they coined new terms called
“zipping” and “zapping” commercials. The question of ad avoidance became a
major issue between the ad agencies and the TV networks. It has now become a major
factor in pricing negotiations as well as audience measurement techniques. The
Nielsen Company, which has been the primary source for television audience
statistics, was forced to change its methodology to now try to measure the
amount of playback that was caused by VCR’s.
More dramatic change was about to hit the home electronics’ landscape.
Early in the 2000’s, various cable and satellite began to introduce a new
feature in their set-top box called a digital video recorder (DVR). The advantage of this new technology is it
completely illuminated the need for a bulky VCR which required video tapes. The
DVR was built into the tuner of the set-top box and allowed subscribers to
convenience of recording any content, at any time, without having to manage another
device. The DVR penetration in the United States was quickly adopted by high
income homes, but gained fast traction by 2006 and then grew very quickly for
the next 5 years. According to an article on howstuffworks.com, cable DVRs was
rated as a top 5 time-shifting technology. It stated, “Cable-company DVR offers
a useful and fairly inexpensive way of making sure your favorite shows are
available on your schedule.” (howstuffworks).
Advertisers and programmers convinced Nielsen
they now needed to add time-shifting to their TV measurement methodology, which
became available in 2006. The data revealed critical metrics that advertisers
needed to understand to better market their products. Since both the network
sellers and the advertising agency buyers were impacted by this technology,
many studies have examined the impact of time-shifting on TV audiences. Early
in 2007, Nielsen provided a compromise for how ratings were to be produced.
Instead of just delivering “live ratings (percentage of the population watching
a program live), the company developed a new metric called “C3”. This “C3”
rating calculated the audience to all the commercials within a program across 3
days from the initial telecast. While not completely reporting the value of
each commercial, it was an acceptable short-term solution for advertisers to
understand the impact of time-shifting.
The Cable Television
Adverting Bureau, the trade organization designed to promote the value of
advertising on cable TV, comprised the following insights of the impact of
DVRs:
·
DVR penetration has slowed; one in two
homes do not own a DVR
·
Among ethnic consumers, DVR penetration
has practically doubled in past 5 years
·
DVR households consume more television,
spending 18% more time with the TV than non - DVR homes (P18 -49/Total Day
·
Time spent with time - shifted
programming continues to grow but still ONLY comprises a fraction (10%) of total TV time – across the age spectrum
(Total Day)
·
Majority of playback occurs during
Primetime and extends into Late Night
·
‘Live’ TV still the norm as three
quarters of Primetime minutes (P18 - 49) are viewed live -consistent across the
age spectrum
·
5 out of 10 Broadcast programming
minutes are viewed in playback mode versus only 25% of Cable’s (P18 - 49;
Prime)
·
Broadcast’s highest rated premium priced
programs tend to be the most time – shifted”
(The Cable Television Advertising
Bureau, pg.2).
In March of 2014, GE Capital, a division of General
Electric (GE) also conducted an investor webinar, stated their findings about the
impact of DVRs for the future:
·
Broader introduction of network or
cloud-based storage expected to largely supplement rather than replace set-top
boxes
·
Time-shifting viewing has been more
broadly accepted as ability to EMP increases
·
VOD users watch more of a 30-minute
program: Live-20 minutes; DVR: 23 minutes; and VOD: 28 minutes
·
50% of households win the US are
expected to have DVRs by 2017
(General Electric 2014 Webinar, pg.
38).
The Hollywood Reporter
completed a research poll on the highest rated TV series of 2014, and how
people watched them. According to their results, popular shows like the Big
Bang Theory, Modern Family, and Scandal all ended up in the top five. The most
interesting part about the results was “these shows also boast strong
viewership and (in many cases) a handsome afterlife online and on-demand after
the now-obligatory DVR lifts are tallied,” (Hollywood Reporter).
Looking at a futuristic
perspective, it seems that the amount of viewers who watch shows live are
declining because time-shifting technologies. It is also interesting to note
that DVRs have never reached the maximum penetration of VCRs with over 80% of
TV homes. Is it because the internet now offers more options with streaming
services (Netflix, HULU)? What will
television be like 5 years from now? Will shows be continued to be aired on
live TV or will they just be available to watch on these time-shifting technologies?
Works Cited:
Clifton, Jacob.
"Top 5 TV Time Shifting Technologies. HowStuffWorks.com. 07
February 2015. http://people.howstuffworks.com/culture-traditions/tv-and-culture/5-tv-time-shifting-technologies.htm
Fast - Forward To DVR Insights." The Cable
Television Adverting Bureau, 1 Jan. 2014. Web. 7 Feb. 2015. http://www.thecab.tv/pdf/Time-Shifting.pdf
"Iger, Katzenberg Discuss Time Shifting - 1994
." , . 1 Jan. 1994. Lecture. https://www.youtube.com/watch?v=Dooi512Lq1M&feature=youtu.be
Media’s Rapidly Evolving Competitive
Landscape." GE, 12 Mar. 2014. Web. 7 Feb. 2015. http://www.gecapital.com/webinar-assets/pdf/Medias_Rapidly_Evolving_Competitive_Landscape_3-12-2014.pdf
O'Connell, Michael. "The Highest Rated
Broadcast Series of 2014 - And How People Watched Them." The Hollywood
Reporter. 30 Dec. 2014. Web.
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