Ah, the holidays. A time when people reflect on the year that has passed, the year to come, and the joy experienced from spending time with family and friends, and perhaps some favorite TV shows that have accumulated on their DVRs! True, not everyone owns a DVR, but adoption is growing. This year, 33% of U.S. TV households are using DVR technology, up from 27% a year ago. Nielsen projects that 49% of households will have one by 2011, with nearly one quarter of all TV viewing expected to be time-shifted.
As growth continues, the challenge becomes finding a way to keep audiences watching and engaged with commercials. This is evident when considering the current television season and how it’s been impacted by DVR viewing.
DVRs are changing the dynamic of television.
As DVR penetration grows, networks and local stations are increasingly competing with pre-recorded fare. The hours before and after primetime, as well as Friday and Saturday nights, have become catch-up time for viewers. DVRs have extended primetime at the expense of local news, syndicated programs airing in prime access, and late night talk shows. Conan O'Brien's competition isn't just David Letterman or "Nightline," it’s also that episode of "The Office" which aired earlier in the evening.
Shows on the fringe have renewed life when DVR playback is considered.
DVR playback has resulted in increased viewership for many shows, with 20% to 40% more Adult 18-49 viewers realized after seven days. For some programs, this increase represents renewed life. One show on the “Fringe” (pun intended!) has seen its audience soar by 39%, or 0.9 rating points, when factoring in live-plus-seven-day-DVR-playback (L+7). Another show with a questionable fate, “Heroes,” has increased by 32%, or 0.9. These shows have seen the largest percentage increases of the top ten most time-shifted programs.
Thursday night at 9 p.m. is the busiest timeslot of the week.
This hour has seen a huge amount of time-shifted viewing, with three shows ranking among the top four most-DVRed programs, and four shows ranking in the top six. Nielsen reported that ABC’s “Grey’s Anatomy” had a 1.4 increase, or 23%, for the second week of the season when factoring in L+7 viewing for Adults 18-49. The other Big Four networks also experienced gains in this timeslot: CBS’s “CSI” increased 1.1, or 27%; NBC’s “The Office” increased 1.0, or 26%; and Fox’s “Fringe” increased 0.9, or 39%. The trend is clear: Faced with several shows they want to watch, people are viewing one show live and recording the others for later.
Demographics and programming influence DVR habits.
Younger-skewing programs are time-shifted more than older-skewing shows. The CW is reaping the benefits, seeing the largest L+7 increases of any network. Nielsen has found that actual commercial viewing during playback is highest for Kids 2-5, with 50% seeing ads. All other demographic segments see 43% to 44% of commercials during playback.
Generally speaking, comedies fare worse than dramas when adding DVR ratings. Among the top ten time-shifted programs, only one is a comedy. Viewers also tend to be more engaged with dramas, with 73% of viewers skipping the commercials.
Without question, DVRs are impacting advertisers, but it’s not all bad. Viewing audiences are larger than previously thought. In addition, DVR viewers tend to be more engaged. The Council for Research Excellence found that DVR use with “no other life activity" is done 59% of the time, translating to fewer distractions. Also, as noted above, Nielsen found that 44% of commercials are seen during playback. Finally, DVR viewers skew younger, with the five networks' median age for DVR playback at 40, versus 51 for live viewing. Still, the challenges are substantial. Primetime viewing now begins at 6 p.m. or 7 p.m. and extends past midnight. And, if 44% of commercials are seen during playback, 56% are not, a number that increases for popular dramas.
The industry is working to overcome these challenges. Tivo has introduced banner ads that pop up when viewers pause, fast-forward, or delete shows. Time Warner has introduced a “Start Over” feature that allows viewers to watch a show from the beginning, but they cannot skip commercials. Advertisers and networks are also working together to engage consumers. Sprint’s Palm Pre, for example, has tied its products into “Desperate Housewives,” creating its own housewife character, and “Heroes,” developing an extended storyline around one of the show’s main characters.
What it comes down to is this: As more people use DVRs to record their favorite shows, advertisers must be creative and think outside the box, literally, to capture their attention.