• by Mitch Oscar , Op-Ed Contributor, October 23, 2007

Prior to the introduction of DVRs, researchers alleged that 45% of commercials were not viewed in TV households -- both analog and digital. Studies indicate that DVR households skip upwards of 80% of commercials. However, we do not believe that DVRs will have significant impact on commercial viewing in the aggregate and do strongly believe that the next iteration of DVR advertising propositions will meaningfully add to the marketer's arsenal of applications to connect to its potential customer for the following reasons:

·    DVR users tend to view their favorite recorded programs within a day or three of recording.    

·    Real-time viewing is still prevalent in those households that are not light TV viewers -- which are the majority of U.S. households.

·    Even in DVR households, people like to watch commercials and/or forget to fast -orward at different intervals of program viewing.

·     At TiVo's fastest speed, when users fast-forward through commercials, they are paying more attention to the ad content than ever before because they do not want to fast-forward through program content and have to rewind following the commercial break. Secondly, as long as all DVR deployers maintain a fast-forwarding speed limit that enables people to view enough frames of the commercial to determine relevance, commercials will still be viewed. Studies indicate that viewers often rewind commercial content when there is a connection to the messaging.

·    The 30--second commercial is not dead. It is evolving into a video portal where viewers can access more information and interact with the commercial content: telescoping to a microsite -- a Web site housed in the set-top box; telescoping directly to long-form video content; requesting interaction (brochures, coupons, marketing surveys, sales contact); and eventually bookmarking (storing on set-top box for later viewing).

·    Over the next few years there will be deployment of two new forms of on demand advertising applications in which the DVR will play a pivotal role: dynamic ad insertion, in which the systems operator will be able to feed new commercials -- referred to by Fox Broadcast Network as "time-dependent replacement commercials" --within the programs that are stored in the DVR platform regardless of length of time housed; and there will be geo-targeting of commercial messages as well as addressability to individual TV households through technological deployments by companies, such as Invidi, Navic, Visible World, and OpenTV. Also, given the daily pronouncements by companies deploying out of home DVR programming capabilities -- mobile and remote -- there will be more opportunities for advertisers to associate with this customer service and reach consumers across multiple platforms.·    Home networking of DVR boxes and entertainment services (movies, TV programs, music, photographs) through one centralized location within the house will become more prevalent, which will enable advertisers to market to individuals within the TV household via TV personally identifiable numbers (PINs).

·    System operators will not deploy DVR devices that will eradicate commercials through video skips and extreme fast -orward options and jeopardize losing the advertiser revenue streams.