• by Joe Mandese  @mp_joemandese, November 12, 2004

Magna Global USA, the largest consolidated TV negotiating unit in the nation, Thursday released findings of an analysis of custom Nielsen data it termed an "eye-opener" into the long-term effects of digital video recorders on TV viewing, especially TV commercials. The analysis indicates that the longer consumers have a DVR, the more frequently they use them and the less likely they are to watch TV commercials.

"Much of what we found we intuitively already knew," said Steve Sternberg, executive vice president-director of audience analysis at Magna, adding, "but there were some real eye-openers."

Among the biggest eye-poppers outlined in Sternberg's report isn't the fact that DVR owners watch fewer TV commercials than non-DVR owners, but that they watch increasingly fewer commercials the longer they own their DVRs.

"About 56 percent of those who've had a DVR for less than a year say they always fast-forward commercials when watching recorded shows. This rises to 72 percent among people who've had a DVR for a year or longer," disclosed Sternberg.

Despite these patterns, Sternberg said the biggest threat confronting advertisers is not the impact of DVR behavior on TV commercial exposure, but in Madison Avenue's ability to measure it.

"DVRs only become a major threat to advertisers if we can't measure how people are using them. As long as we know who is watching what, when, for how long, and what is being fast-forwarded and how often, the industry will adapt to new benchmarks and new viewing patterns as it always has," he asserted.

That point is significant, because Nielsen continues to wrestle with how to accurately measure DVR usage and its impact on TV audience exposure. Nielsen has a plan to begin using new electronic meters to measure DVR usage and to begin reporting DVR time-shifted ratings beginning in early 2005, However, it will only utilize those meter in the top television markets, which account for the lion's share of TV viewing and advertising dollars. But in the majority of U.S. television markets, Nielsen said it plans to give DVR owners a paper diary to measure how they use their DVRs over eight-day intervals.

Additionally, Nielsen initially plans to report only the percentage of TV ratings that are accounted for by DVR recording and playback, but has not said when it plans to release data on so-called "trick" viewing using features like fast-forwarding, pause, and slow-motion, when much of the commercial zapping actually occurs.

Nonetheless, Magna does not believe DVRs represent giant threat to TV commercial exposure. In a "worst case scenario" included in its report, the agency projects that only about 4 percent of TV commercials will be skipped due to DVRs in 2005, which will rise to only about 17 percent by 2010.

Worst Case Scenario: Commercial Losses Due To DVRs

                                     2005      2010 
DVR
Penetration                       10%        45%      
% of Viewing With DVRs                50%        50% 
% of Ads Skipped                      75%        75% 
Potential Commercial Losses
3.75%    16.875% 

Source: Magna Global USA projections.