Time Shifted Viewing: An Evolution, Not a Revolution
By Ed Weiner Owner and CEO, Hudson Media ServicesIs the DVR killing TV advertising? Is the 30-second TV Spot no longer effective because DVR users are fast forwarding through commercials? Is TV advertising on its way out? We think not and while the TV landscape is in a state of perpetual change, there’s plenty of life left in TV advertising. Besides, people announcing the death of TV advertising is nothing new. We’ve been hearing that since the mid 1970’s. Commercial skipping begins In 1975 Sony introduced the first home VCR (Betamax). Initially, it was Sony’s Betamax vying against VHS recorders for market share. Initially the price of home VCRs was too high for most consumers. In the mid 1980s VHS emerged as the winning VCR format and prices dropped quickly. By the end of the 1980’s, 70% of US households owned a VCR. VCRs gave viewers the first opportunity to tape programs, view them later (time shifting) and fast-forward through commercials. But as anyone with a parent born before 1960 knows, VCRs were a chore to program and skipping through commercials was a challenge to avoid skipping program content too. Because of these challenges, commercial skipping was less worrisome to marketers in that era. Commercial skipping gets easier In 1999 the first consumer DVRs, ReplayTV and TiVo were introduced at the CES show. ReplayTV won the “Best of Show” award in the video category, but TiVo was more successful. Early legal action by the broadcast networks forced ReplayTV to remove features including automatic commercial skip and the sharing of recordings over the Internet, which led to the brand’s demise. Today, DVRs have regained these functions and added others such as programming remotely via smartphones, tablets, and Web browsers. When TiVo first hit stores in 1999, the advertising trade press again predicted that within a short time that no one would watch TV spots and that TV, as we know it, would die as advertising medium. Surely the time-shifting phenomenon and commercial skipping would be the cause of TV’s demise. Not so fast! Now 14 years later DVR ownership has grown to 46% of US households. However, analysis indicates that time-shifting has had a surprisingly modest impact on the ability of a typical television commercial to reach its target audience. According to AC Nielsen’s Cross Platform Report 3rd quarter 2012 (most recent data), TV Time Shifted Viewing varies by program source:
| Total | Time Shifted | ||||
| VIEWING | Live | DVR Viewing | Same Day | within 7 Days | 7 Days + |
| Broadcast TV | 87.2% | 12.8% | 5.5% | 6.1% | 1.1% |
| Cable TV | 93.3% | 6.7% | 3.4% | 2.8% | 0.6% |
| Syndicated Programs | 94.4% | 5.6% | 3.4% | 1.9% | 0.3% |
We expect when the next Nielsen Cross Platform Report is issued that the Time Shifted Viewing will show an increase, as the numbers reflected above include the 2012 Summer Olympics, which is typically viewed live. Trick mode data (fast forward/rewind) are outside the scope of Nielsen Active/Passive meters. It should be pointed out that if you watch the program, Nielsen is unable to recognize that you may have skipped through the commercials. Only Live Viewing reported data totally eliminates commercial skipping in ratings data. Appointment TV most vulnerable to commercial skipping Prime Time TV is the most susceptible to time shifting via DVR. Among Adults 18-49, 76% of all Prime TV viewing still occurs Live and an estimated 24% is time shifted. Research indicates DVRs are primarily used for scripted fare in Prime. Sports programming, News and Award shows like the Oscars are considered DVR proof. It is important to note that the bulk of time-shifted viewing does include fast-forwarding through commercials (up to 60% of DVR usage includes skipping commercials).
| Most often DVR’d shows Largest Average Viewership Increase From DVR Viewing for Broadcast TV Prime Programs | ||||||
| Week of February 4th 2013 | ||||||
| Rank | Program | Net | A 18-49 Viewers Live+SD (000) | Post Airdate A 18-49 Inc. From DVR Viewing (000) | % Increase | |
| 1 | Modern Family | ABC | 9,286 | 4,651 | 47% | |
| 2 | The Following | FOX | 9,012 | 4,207 | 47% | |
| 3 | Big Bang Theory, THE | CBS | 18,982 | 3,959 | 21% | |
| 4 | Elementary | CBS | 10,891 | 3,954 | 36% | |
| 5 | CSI | CBS | 10,969 | 3,723 | 34% | |
| 6 | Castle | ABC | 8,891 | 3,722 | 42% | |
| 7 | Criminal Minds | CBS | 11,980 | 3,630 | 30% | |
| 8 | Person Of Interest | CBS | 14,888 | 3,492 | 23% | |
| 9 | Grey’s Anatomy | ABC | 8,910 | 3,414 | 38% | |
| 10 | Hawaii Five-0 | CBS | 9,860 | 3,409 | 35% | |
| 11 | NCIS | CBS | 21,789 | 3,277 | 15% | |
| 12 | Chicago Fire | NBC | 6,604 | 3,081 | 47% | |
| 13 | Blue Bloods | CBS | 11,242 | 3,046 | 27% | |
| 14 | Nashville | ABC | 5,303 | 2,758 | 52% | |
| 15 | Scandal | ABC | 8,137 | 2,694 | 33% | |
| 16 | Once Upon A Time | ABC | 7,046 | 2,694 | 38% | |
| 17 | Glee | FOX | 6,029 | 2,676 | 44% | |
| 18 | Revenge | ABC | 5,202 | 2,606 | 50% | |
| 19 | NCIS – LA | CBS | 16,670 | 2,602 | 16% | |
| 20 | American Idol-Thursday | FOX | 13,284 | 2,599 | 20% | |
| AC Nielsen: The average viewership increase From DVR Viewing ranks which of the top broadcast shows [by Live+7 viewers] had the largest absolute increase in average viewership by DVR between the Live + Same Day and Live + 7 day ratings measurements. | ||||||
Prime Cable programs are also particularly affected by DVRs; of the top 10 Time Shifted programs on Nielsen’s annual list, Fox’s Fringe is the only show from the broadcast networks.
| Top 10 Time-Shifted TV Shows of 2012 | |||||||
| Rank | Program | Network | % increase over live viewing | Rank | Program | Network | % increase over live viewing |
| 1 | Breaking Bad | AMC | +130% | 6 | Justified | FX | +108% |
| 2 | Mad Men | AMC | +127% | 7 | White Collar | USA | +108% |
| 3 | Warehouse 13 | SyFy | +127% | 8 | Fringe | FOX | +106% |
| 4 | Covert Affairs | USA | +117% | 9 | Sons of Anarchy | FX | +104% |
| 5 | Suits | USA | +110% | 10 | American Horror Story | FX | +103% |
| Source: AC Nielsen #8 Only broadcast network show in top 10 | |||||||
Time shifting continues to expand With DVRs currently in 46% of all U.S. TV households, it’s no surprise that viewers time-shifted in 2012 more than they did in 2011. Please note that each program on the list above more than doubled its live viewership when DVR playback was factored in—the No. 1 show saw audience delivery jump 130%. In 2011 the highest gain was 90%. The percentage of Prime broadcast TV commercials skipped by DVR users is 46.7% and for cable 50.4%. News and Sports continues to be viewed Live By comparison, news and sports programming continues to be watched live and not recorded. For news networks, 93% of viewers watch live and for sports networks 94% watch live. Interestingly, cable networks TBS and TNT stand out for their high proportion of live viewing, likely a result of their sports and off-network shows (e.g. Seinfeld), that as a rule are less frequently time shifted. In the aggregate, about 6% of all commercials on Broadcast TV are skipped and approximately 3.4% of all spots on Cable TV. We believe that number will rise for 4th quarter 2012 and 1st quarter 2013 without the Summer Olympics (mostly live viewing) and without the 3rd Quarter re-runs skewing the data. So with ad skipping and the time-sensitive nature of certain ads, advertisers need to be wary of buying commercial time on the most frequently recorded Prime TV shows on Broadcast and Cable. These are also among the most popular shows and enjoy the highest ratings. With up to 50-60% of pre-recorded Prime programs’ commercials skipped, we see the real value in Live Viewing audiences and deeply discount the value of DVR Playback viewing. We question how much of a pricing (CPM) premium Prime shows can continue to command in light of the broad scale time switching & commercial skipping data. Where do we go from here? New media opportunities afford advertisers the chance to gain commercial exposure among consumers who have shifted some of their TV viewing from TVs to other screens. Although the online audience is nowhere near as large as traditional TV, it does provide an alternate solution to reach viewers in a cost-effective manner using the same TV spots that have proven successful in the past. We think there’s a bright future in Video on Demand (VOD) advertising, particularly as ABC and FOX programming have the fast forward feature disabled, eliminating commercial skipping. Currently, CBS and NBC do not have VOD advertising. Most of the cable networks that have VOD have not disabled fast forward but have slowed it down to only two times the speed of normal playback. This at least allows the possibility of exposure to some of the advertising (visuals) on VOD. In the near future, networks will insert ads dynamically on content played through DVRs. Advertisers will be able to insert time-relevant ads to recorded programs, when the program is viewed,( i.e. McDonald’s could then promote breakfast items when delayed viewing is done in the morning and advertise burgers at lunch time). With this technology, ads will be topical and personalized to viewers interests. Broadcast networks look to the courts for relief Dish Network has a DVR called the HOPPER, offered at a premium. The Hopper records all prime-time programming from the 4 broadcast networks. With their Auto Hop feature, viewers can watch the programs they choose without commercials, without making the effort to fast-forward. Within a month’s time of its introduction, CBS filed suit against Dish for copyright infringement. Adjusting to a new reality Currently, TV advertisers pay the networks for commercials watched Live and up to 3 days after the initial airing of a program. These ratings are referred to as C3 and for now, are universally accepted. But as more consumers fill up their DVRs and delay watching what they’ve recorded, Network executives want to extend that time span to 7 days. The TV networks are now talking about delivery guarantees and lower CPMs if the switch is made to C7 ratings (live plus 7 days). All of us involved in TV advertising need to stay current on DVR research and how TV viewing is changing. We need to be able to answer some key questions to adjust our strategies to this new reality. Will viewers eventually adopt the same time shifting /commercial skipping habits in areas other than Prime Time? In order to continue to use TV spots effectively, how can we reach the targets where they don’t have the ability to skip the commercials? Will VOD expand sufficiently to compensate for commercial skipping and will NBC and CBS follow in the footsteps of ABC and Fox and not allow for fast forwarding? How will online video services deal with this situation and will they become broad enough to augment viewers lost on traditional TV through DVR’s? How will the Hopper law suit be decided and how will that affect TV viewing on Satellite services and Cable providers? Finally, how will all this impact the cost to advertise and the attendant CPM’s? The concern over commercial skipping has been around for 30+ years and while we finally know which programs are most effected, smart clients and agencies are re-thinking strategies and tactics. We continue to explore new avenues to better reach prospects using TV spots in media channels other than Prime TV. We will be paying very close attention to this subject and will share our findings as things continue to evolve. Ed Weiner, owner and CEO of Hudson Media Services, has been directing advertising media plans and buys for more than 35 years. During that time, Ed has provided the leadership for over 250 category leaders, challenger brands and start-ups. An alumnus of some of the most respected ad agencies and media services, Ed started Hudson Media in 2009 to offer advertisers an alternative approach to managing the media process. Ed can be reached at (212) 448-9741 or eweiner@hudson-media.com.
