Nielsen is accelerating plans to count TV viewers who use TiVo and other personal video recorders to record and watch programs after they're broadcast.
The media research firm had planned to report figures on so-called time-shifted viewing habits in 2006. It's moving up that deadline a year.
"What prompted us to move forward our time frame is the rapid expansion of PVR technology," said Anne Elliot, a spokeswoman for Nielsen.
The company will keep track of shows that are recorded and watched within seven days but will not collect information on "trick modes" like fast-forwarding, rewinding or pausing, Elliot said.
While only about 2 percent of households have PVRs, the numbers are growing as cable and satellite operators include the time-shifting feature in their set-top boxes.
"That's accelerated the adoption faster than standalone devices like TiVo," Elliot said.
The new data will help broadcasters and advertisers tailor their businesses to reflect dramatic changes in television-viewing habits. With the help of PVRs, many viewers are deciding ahead of time what they want to watch and when they'll watch it, instead of surfing the dial to see what's playing.
However, Nielsen's new reporting won't help solve another problem: Many PVR users skip over commercials, a practice that is threatening the value of television advertising.
"The assumption has to be as more of these things roll out, more commercials get zapped," said Tom Wolzien, senior media analyst with Bernstein Investment Research and Management.
Even without the adoption of PVRs, however, the economics of television have been under assault. With more and more channels on the dial, viewers are pulling away from the major networks, and the audiences for individual shows are getting smaller.
Meanwhile, the Internet, DVDs, movies and cell phones are also demanding consumers' attention.
"Everything is getting slivered up," said Bob Maxwell, an adjunct professor in NYU's Department of Culture and Communication. "You can only slice up the pie so often."
Mitch Oscar, executive vice president of Carat Digital, a global advertising agency, admitted the industry has been slow to react to viewers' changing habits.
But advertisers need to be careful to wait until "there is enough critical mass to warrant expenditures for the creative community to modify the way they traditionally create marketing material," Oscar said.
Rethinking business models, then, will be crucial for advertisers to stay on television, experts say.
Adi Kishore, an analyst with the Yankee Group, said that while advertisers must explore new ways to reach viewers because commercial-skipping will not go away, the move could provide opportunities for advertisers to make better, more-effective ads.
The Nielsen data, for instance, doesn't take into account whether the viewer is actually watching television simply because the TV is on. It's common knowledge in the advertising business that 40 to 50 percent of TV watchers are not watching commercials anyway, even without a PVR.
"The viewer could be fixing themselves a sandwich," Kishore said.
Enhanced commercials that invite television watchers to click a button to get more information, for instance, could be a more effective way to reach consumers, he said.
A cruise line, for example, could run an ad in the dead of winter and prompt sun-starved Wisconsinites to click to get more information on the cruise. Movie buffs might want to click on an enhanced movie trailer to see a longer version of the trailer or even order tickets.
A shift to a premium programming model like HBO is also possible, Maxwell said. On-demand programming, which allows viewers to pay to watch what they want, when they want it, is another way of bringing in money.
Oscar said advertisers also hope to learn more about individual households in the future, so they can target their messages accordingly. For example, families with children could receive ads that are relevant to kids.
Another revenue stream that advertisers are using more frequently is product placement.
"The question is how much more product placement can you do before people get sick of it," Wolzien said.
Not to mention the unmentionables: "It's unclear how you handle Charmin and personal products."
Wolzien said it's good that the industry is focusing on the change now. "Otherwise you'll be like the guys who ran the music industry," he said.
Posted on aef.com: March 11, 2004
Katie Dean, Wired News. March 8, 2004
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