Commentary

Play It Again, Sam

by Jack Loechner , Staff Writer, March 2, 2011

According to revised projections from Magna Global, the number of U.S. homes with a DVR should pass the halfway mark and reach 50% of all TV homes or about 61.8 million households by the end of 2016, up from 32% or 37.9 million at the end of the third quarter of 2010.

The firm is also predicting that the homes with VOD, a category that includes both traditional multichannel VOD offerings and over the top services, will hit 70.1 million homes, about 57% of all TV homes at the end of 2016. That is up from 51.1 million homes with VOD or about 44% of all TV homes at the end of the third quarter of 2010.

Today, according to a new Nielsen study, DVR playback contributes significantly to overall TV usage and makes up a substantial portion of the ratings for some TV shows. During the 2009-2010 broadcast season, DVR playback after 7 days added 2.29 rating points to total day TV usage levels for persons 18-49 in households with a DVR. Nevertheless, because DVR households watch less television throughout the day than non-DVR households, TV usage (Live+7) for total day was about one rating point higher in non-DVR households than in households with a DVR, even after playback.

In primetime, however, where DVR playback added almost 7.9 ratings points to TV usage levels in DVR homes, the situation was reversed. In this daypart, playback pushed TV usage in DVR households almost a full rating point above that in non-DVR homes.

For the television and advertising industries, the DVR continues to represent both a blessing and a challenge. By allowing viewers to timeshift shows that they are not able to watch during the original broadcast, the DVR is helping TV networks hold on to viewers who would otherwise seek out other ways to watch these shows, or not watch them at all. At the same time, DVRs enable viewers to fast-forward through content that doesn't interest them, including commercials, potentially undermining television's longtime ad-supported business model.

Some key findings discussed in this report include:

Viewers DO watch commercials on their DVRs
Among DVR homes, playback lifts commercial ratings by 44% among 18-49s after three days. Among all 18-49 year-old viewers, DVR playback adds 16% to commercial ratings after three days
More than 38% of DVR users are over age 45
When DVR playback is included, DVR households watch more primetime programming than non-DVR households
Overall, 49% of time-shifted primetime broadcast programming is played back the same day it was recorded, and 88% is played back within 3 days
DVR playback peaks at 9pm and 10pm

According to the Nielsen National People Meter Panel, as of September 2010 DVR ownership stood at 38% of all US TV households. A key factor in the increasing adoption of DVRs has been their integration into cable and DBS set top boxes.As of September 2010, 58% of DVR homes had a DVR within their cable set top box, and 40% had one within their DBS set top box. Just 3% had a stand-alone DVR.

Though DVR penetration continued to grow over the past year, the percentage of homes with multiple DVRs remained unchanged. 71% of DVR homes have only one unit, 24% of DVR homes have two, and 5% have three or more.

DVR ownership is highest among White households, followed by Asian households. Ownership rates are lower for African-American and Hispanic households.

DVR Penetration by Race/Ethnicity
*Characteristic*	*% of DVR Penetration*
Total U.S.	38.1%
White	40.3%
Asian	35.4%
African-American	30.3%
Hispanic	29.8%
Source: Nielsen, December 2011 Study

Viewers in upper income households are more likely to have and use a DVR than those in lower income households. During May 2010, adults in households with an annual income of $100K+ represented about 19% of the total NPM sample but made up 29% of adults that owned a DVR.

Similarly, viewers in households with $100K+ income made up 30% of the primetime DVR playback audience, and those in households with $75K+ income made up half the primetime playback audience.

Demographics of DVR Playback Audience
	*Persons 18+*	*% of Sample*
*Household Income*	*% of total P18+*	*% of P18+ within DVR HH*
Less than $25K	17.9%	8.0%
$25K - $50K	26.9	20.5
$50K - $75K	21.1	23.0
$75K - $100K	15.3	19.5
$100K+	18.8	29.0
Source: Nielsen, December 2011 Study

The majority of DVR users are under the age of 45. However, as DVR penetration has grown, older viewers have begun to catch up with their younger counterparts in their willingness to use this technology. As of May 2010, about 38% of the DVR-playback audience was 45 or older.

Contrary to fears that DVRs would wipe out the value of commercials because of viewers fast-forwarding through ads, DVRs actually contribute significantly to commercial viewing. In May 2010, the average rating for a primetime commercial minute among persons age 18-49 in DVR households rose from 1.54 in live viewing to 2.21 three days later, a 44% lift. This degree of lift to the viewing of commercials has remained steady for several years. On a total U.S. basis, DVR playback added a 16% lift to the average minute of primetime commercials.

Overall, 49% of time-shifted primetime broadcast programming is played back the same day it was recorded, and 88% is played back within 3 days. But the length of time within which shows are played back varies depending on the time at which the program aired.

Generally, programs that are broadcast at 8pm are more likely to be played back later the same day (57%), while those that air at 9pm and 10pm are less likely to be played back the same day (45% and 33%, respectively) and more likely to be played back later in the week. Of course, the later in the evening that a program is broadcast, the less time viewers have to watch it later that same day.

For additional details on playback, primetime and genre trends, please visit here for access to the PDF file.

dvrs, research, video

8 comments about "Play It Again, Sam".

Check to receive email when comments are posted.

Mark Rossi from Dover Motorsports, Inc, March 2, 2011 at 10:24 a.m.
I have to admit I fast forward through most of the commercials..... I didn't realize I am in the minority...
Reply

Philip Moore from Philip Moore, March 2, 2011 at 11:14 a.m.

Sorry, this research is from Nielsen - the same company that recently said average Americans watch 40 hours of TV per week. Nielsen's entire business model is based on the proposition that people watch commercials. They are not an objective source for this kind of research as they have a vested interest in propogating the myth that DVR does not impact viewing commercials. I know dozens of people with DVRs, many of them occassionally forget they are watching a recorded show at some point during the playback and may catch one or two ads before they remember they can fast forward through them. This does not mean that their typical behavior isn't to hit that 30-sec forward button six times and get back into the programming they are actually interested in. Nielsen and most of the people on this site need the old paradigm to survive. They need advertisers to continue to believe that their 30-second ad stuck in the middle of a six-minute commercial pod is still going to produce results. Lots of marketing decision-makers who grew up when TV commercials still worked want the old paradigm to survive because it's what they know. At some point, the young guns who see the Emperor has no clothes will succeed into these decision-making roles and the whole house of cards will come tumbling down.

Doug Garnett from Protonik, LLC, March 2, 2011 at 12:46 p.m.

Philip -

Attacking a study's veracity based on this reasoning is pretty cheap. Yes, there is reason that Nielsen benefits from what they found. But this research confirms what's been found in numerous other studies. So, time to accept that DVR's don't kill advertising.

Sadly, that's not what the ad business did. Our business convinced itself that TV ads were dying because of the VCR. They didn't. In 2000, the ad biz convinced itself that the DVR would kill them. In truth, other studies show that TV ad's have become MORE effective since the DVR came out. (You can look at them again, save them to show your spouse or kids, and even while FFing you have to pay close attention so you retain more brand flashes.)

One conclusion from JAR was that it's always been true that 1/3 of viewers ignore all ads; 1/3 of viewers ignore some and 1/3 tend to watch ads. The impact of the DVR is that it allows consumers to skip ads who were previously ignoring them.

In college, I ignored ads. My roommate and I would play darts during the commercial breaks while watching Mash at night. Sure, those ads played real-time. But that was okay because we needed time to play our game.

Seems to me many of us in the ad biz have become poor observers about TV issues. We project our individual activity and bias on the general population instead of listening and observing. Truth is, people watch a lot of TV, get value from the advertising and are pretty happy with the way things work.

As we evolve into the future, the technologies that survive will be those that understand this.

...Doug

Philip Moore from Philip Moore, March 2, 2011 at 1:52 p.m.

Doug -

As I mentioned in my first post, most of the people on this forum need this to be true. As an advertiser responsible for allocating marketing budget, and as a former Nielsen diary keeper, I cannot continue to ignore the obvious. My ad dollars have to move to content integration or ad messages with provable viewership, e.g., interactive online that produce click throughs or shares.

Doug Garnett from Protonik, LLC, March 2, 2011 at 5:11 p.m.

Philip -

As I noted, merely attacking Nielsen for having an agenda isn't enough. Truth is that there are many other studies which point to the same truth: the primary value of a DVR isn't ad skipping - it's delayed viewing. As a result, it's only a portion of the DVR owners who skip.

To add one more data point: I'm a DIRECT RESPONSE television expert. So I certainly agree on the need to make action happen. And our measured results show is that the DVR has not lowered response to our ads. That includes both direct sales (measured by phone and web response) AND the massive retail sales a DRTV campaign drives (measured at the cash register and correlated against media).

Would I like to have the current TV world remain unchanged? Doesn't matter because it will be changing.

But, now that it's clear the DVR hype turned out to be ENTIRELY incorrect, I'm taking the "Future of TV" discussions with a grain of salt - searching for truth instead of hype.

And I wish that the people who desperately want to tip over television actually UNDERSTOOD the medium - because then something good might come out - or they might not tip it over, just modify it.

Best...

...Doug Garnett

Philip Moore from Philip Moore, March 3, 2011 at 2:57 p.m.

Doug,
I guess we're the only two reading this article (wink).
Direct Response or eventually "click-through" TV is exactly what I'm talking about. Pay for performance, not for Nielsen's made-up numbers. Not saying that Nielsen makes up the numbers, just that numbers based on diaries like the ones I filled out are, to some degree, made up. As I recall, the diary asked me, as a parent, to chronicle everything my kids watched on the basement TV from the time they came home from school until they went to bed. It's the basement TV for a reason. The diaries asked for 15-minute increments, but pre-DVR, my channel surfing was in 45-second to 3-minute increments. Since there was no way to record that in the diary, the program I started on got credit for my eyeballs during the commercial breaks while I was sampling anything else I could find. This is an instrumentation problem that set-top box data and people meter should solve (if they could get people to use the people meter as directed). As a former academic research methodologist, I can tell you that there are too many options in research design to trust any result from an interested party. Nielsen, ad agencies, and industry consortiums should not be conducting research in this area. It's like trusting the Japanese fishing industry to conduct research on the environmental impact of whaling.

You have access to the data that matters. Why cite "numerous other studies" from unnamed sources, when you can say your DR TV ads produce better ROI for you clients than the online digital or product integration strategies they might otherwise pursue. I suspect the DR audience you convince to buy ShamWow, Snuggees, and ProActiv indexes a bit lower for DVR use, so your continued DR success may not perfectly inform the topic of this article. However, your contention that performance-based advertising must replace ratings-based advertising is an area where we completely agree.

Tim Orr from Barnett Orr Marketing Group, Inc., March 3, 2011 at 6:24 p.m.

The burden of proof is on the accuser. Your beliefs about Nielsen's agenda do not constitute evidence that Nielsen is lying, which is exactly what you're asserting.

If we're going to accept anecdotal evidence, I have innumerable times watched a commercial that I recorded because I forgot I was watching a recording. (Recording quality is too high, I guess.) Either bring evidence to the table or stop implying Nielsen is lying.

The data from some DVRs, at least, should be pretty hard to falsify. And having kept diaries myself, I wouldn't trust much of what is written in them. No reporting is objective, but machines come closer than people. It was at least 30 years ago that I first heard that nobody was watching television any more. Easy to assert, and even appeals to some notions of "common sense." But that doesn't make it true.

Sometimes, it's hard to accept that our cherished notions aren't true.

Doug Garnett from Protonik, LLC, March 3, 2011 at 8:30 p.m.

Nothing like response to tell you a real story. It's amazing how often the "best" media according to traditional planning turns out the be the media that drives the lowest action.

Anyway, click through TV is an interesting thought. But, so far all the testing we've done with online TV has produced zippo in terms of action. It has a loooooong way to go.

I trust these numbers because they AREN'T diary. Nielsen has a deal with the DVR providers and are able to get superb tracking data directly downloaded from the consumer TV without the consumer having to take action. So, they are digitally tracking every playback, length of playback, commercial skip, etc.

Besides, I know we all convinced ourselves that with DVR's everyone would skip. But watching my own HH's action, the DVR generally helps advertising effectiveness.

Guess at the bottom we need to remember that consumers have never remembered more than 1 TV ad out of 200 or 300 because it's only that one that had meaning. (Sadly, in the online world this has dropped to remembering 1 out of 2500 or even 5000.)

So when we see THAT ad we care about, we rewind, stop, check it out, save it for someone else. In other words, that 1 ad we paid attention to before has become more powerful.

Cheers,

Doug