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October 11, 2002 |
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Centrimedia is a consultancy providing research, analysis and insight for the business issues of VOD, PVR, ITV and ETV. To join the leading media and technology companies that are Centrimedia clients, please email Bill Niemeyer at bill@centrimedia.com or call 415-585-1150. The NIEMEYER REVIEW is a free newsletter on VOD, PVR, ITV and ETV. To subscribe, unsubscribe or modify your subscription, click here. PVR Primetime Metrics - Networks' Good News/Bad News by Bill Niemeyer Last week TiVo released metrics on the primetime viewing behavior of their subscribers that have interesting implications for television networks and the brands that advertise with them, both for PVR usage and for "on-demand" television overall, including VOD. They reported (Fall Television Premieres Give Glimpse of Future Viewing Habits of a TiVo Nation) that "in TiVo households 80 percent of primetime programming is recorded and played back on the viewers' schedule." The TiVo release goes on to cite specific timeshifting metrics for 14 high rated primetime shows. Of the 14, the most timeshifted (at 86%) is NBC's Friends. Ironically, the following day, Advertising Age released its annual survey of primetime network commercial pricing and Friends was #1 there too, at $455,700 per 30-second spot. The next four shows at the top of the Advertising Age roster of best "earners" (as Tony Soprano would say) are also timeshifted at or above the average by TiVo subscribers, including:
What do these metrics portend for TV networks and the brands who advertise using their programming? What is the good news/bad news scenario? The first bit of good news is well known - currently the impact of these numbers on network programming is minimal, at least for now. TiVo has about 500,000 subscribers currently, small compared to the total number of U.S. TV households, which Nielsen recently updated to 107 million. However, the total number of U.S. PVRs will be approaching 2 million by the end of 2002, adding in Echostar's (DirecTV's PVR subscribers are included in TiVo's numbers), ReplayTV's and others' plus the impact of the coming holiday buying season for retail consumer electronics. Even though two million PVR households still may not be seen as significant for network programming (the impact is larger than it may seem - see below), it will grow as DBS providers continue aggressively promoting PVR adoption (why? - see this past issue of the newsletter) and standalone PVR prices continue to decline quickly. Also, next year will probably see MSOs start widely offering PVR-equipped set-top boxes in a defensive response to DBS deployments. So let's assume that PVRs are coming in significant numbers and look at the bad news (and the potential opportunities) for networks and brands indicated by these primetime metrics. The first bit of bad news is that for most PVR users the concept of primetime "appointment viewing" has apparently gone right out the window. "Friends" PVR viewers are very willing to trade their Thursday 8PM viewing habit for the convenience of watching "on-demand." Even for a reality show like "Survivor," where office conversation the next day could spill the beans on who got voted out, most TiVo-equipped viewers are still willing to timeshift (although some of the 79% doing it are likely timeshifting to later the same evening). More bad news - once a program is timeshifted, it becomes much easier to skip those revenue-generating commercials by hitting the fast-forward button. Plus, timeshifting makes any time-sensitive ads, skipped or not, less effective. A network promo for the following night's programming doesn't do much good if it's seen three days later. Potentially the biggest bad news - the TV viewers that advertisers are willing to pay the most for are in the demographic groups most likely to get and use a PVR. It's no accident that "Friends" is #1 on both the timeshifting and ad rates lists. This is why the impact on TV advertising will be larger than the gross number of PVR subscribers might indicate. Primetime TV ad rates are largely set by ratings among 18-49s, which represent slightly less than half the U.S. population. And it's a good assumption that the typical PVR buyer is in that age group. The number of PVRs at any given time will look like more when you are advertising on "Friends." But, there are opportunities for networks and TV advertising brands amongst the bad news. First, PVR households are showing that they still enjoy the what the networks are showing in primetime. They care enough about Rachel and Ross and Will and Grace to tell their PVRs to record them so they can watch later. PVR users are saying they want the control over the when and how of their TV consumption (plus they like the ad-skipping). This indicates there could be an opportunity for networks or content owners to use VOD systems to provide timeshifted TV programming in an environment where they have more options for generating revenue (i.e. an NBC SVOD service?). MSOs are deploying VOD at a rapid rate with 8 million households having access to it by the end of this year (for more details including Comcast's coming VOD launch of timeshifted network shows - see this past issue of the newsletter). Another opportunity for networks presented by increasing "on-demand" video deployments - bad primetime timeslots become "less bad" if they are populated with shows that are popular with the PVR/VOD demographic and more likely to be timeshifted. The increasing availability of PVRs with multiple tuners (the current PVR receivers from EchoStar and DirecTV/TiVo have two) means that eventually this strategy could work even when shows are up against other programs popular with PVR users. "Push, Nevada" would have had a better chance, slotted against "CSI" and "Will & Grace," in a world with more two-tuner PVRs. Of course, it might have had an even better chance in a world where "straight to VOD" was an available option. Increasing PVR deployments could mean that "really bad" timeslots - say 2AM to 5AM - become the "on-demand system delivery" daypart, effectively increasing broadcast/cable network bandwidth. Networks could put programming there that would never make it in primetime, but still resonates with the PVR/VOD user demographic. Even given these opportunities, significant challenges of on-demand video for primetime programming (as well as other dayparts) remain:
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On Demand Video In Demand Among VCs Over the past few weeks, on-demand video has attracted some notable investment dollars from VCs and strategic investors. TiVo Raises $25 Million in Common Stock Offering - from an institutional investor and a VC MetaTV Receives $21 Million Investment Led By Comcast Corporation And Cox Communications - MetaTV has shifted it's emphasis to feature VOD as a key application for it's technology (first app listed in this press release) and gets a $21 million round led the two MSOs that are first to launch wide-scale "free VOD" (see this past issue of the newsletter ). Coincidence? - you be the judge... Broadbus Technologies Closes Oversubscribed Series A-1 Financing - $12 million in Series "1-A" funding from two VCs for Broadbus, a VOD server company BigBand Networks Announces Investment From AOL Time Warner Ventures - $60 million in Series C money led by AOL. BigBand makes a router optimized to handle the integrated video, audio and data needs of MSOs, with VOD being a featured application. Let's see - $106 million of this went to Bay Area companies. How about allocating marketing dollars for some San Francisco 1999 dot.com style parties? They were fun... The Merger Unmerges... Thursday, as expected, the FCC officially voted 4-0 to reject "The Merger" (that EchoStar / DirecTV one). The Justice Dept. has yet to weigh in. But Justice is reportedly going to reject it as well. So, it is pretty much dead. Or is it... EchoStar and DirecTV are promising to adjust the deal to make it more attractive to regulators. And EchoStar's Charlie Ergen is a very resourceful and persistent Chairman/CEO. If the deal does wind up sleeping with the fishes stand by for some nasty litigation. Witness Echostar's $5 billion breach-of-contract lawsuit against News Corp. after their 1997 almost-merger (ultimately settled out of court). As to what this means... since DBS has been doing the "getting out and pushing" on deploying advanced TV services (PVR and ITV) it means that overall (by MSOs and DBS) new TV tech will: (a) Be deployed less because the unmerged EchoStar and DirecTV are less able to "get out and push" (b) Be deployed at the same rate because EchoStar and DirecTV will return to competing with each other (c) Be deployed more because Rupert Murdoch will now buy DirecTV (like he wanted to in the first place, only now on his terms) and "BSkyB-ize" it, forcing EchoStar and the MSOs to respond (d) Absolutely some of the above If I have to say, I'll say (c) (if I really have to). |
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