• by Joe Mandese  @mp_joemandese, March 10, 2004

As the implications of Nielsen's plans to measure digital video recorders began to sink in, members of the TV and advertising industry reacted with shock and frustration during a half-day client meeting in New York on Tuesday. The meeting, which generated the kind of energized and at times rancorous discussion that has become expected of Nielsen's national client meetings, also revealed how unprepared the industry is for dealing with the issues of time-shifted viewing, despite the fact that there have been decades of experience with videocassette recorders and several years of digital video recorders.

While Nielsen adopted a band-aid approach to measuring VCR usage - crediting recording, but not playback of the devices - the reality of the always-recording capability of DVRs is forcing Nielsen to adopt a radical new definition of TV "viewing" and fundamentally changing how it processes its TV ratings. Among other things, the changes could mean the end - or at least a serious rethinking of - some important TV advertising concepts such as audience "shares," "overnight" ratings and "HUTs" (households using television).

Because Nielsen will begin delaying all DVR affected viewing by seven days when it implements its new approach in July 2005 for national TV ratings (April 2005 for local ratings), it will essentially "obviate" the meaning of "overnight" reports, because users will still have to wait another week before the time-shifted viewing is added back in for a final rating.

That move also challenges the context of an audience "share," a term used to describe the percentage of TV households or viewers that are "currently" tuning into TV. Because a percentage of the audience will be time-shifted, shares could well become "a relic of the past," one top network executive told MediaDailyNews following Tuesday's meeting.

One of the most energized discussions and one that another attendee called a "mindblower" was the rule Nielsen will use to define time-shifted viewing. "Any time anyone touches their DVR remote control - even if it's to pause programming for only five seconds - it will be removed from live viewing and held back for seven days," said one big Nielsen client.

That rule was particularly vexing for some attendees who see it as an extreme measure. Instead, many said they'd like Nielsen to include "near-live" viewing, viewing via DVRs that occurs the same day it was recorded, in Nielsen's daily ratings, even if it means delaying its overnight reports.

The reason, they said, is that by July 2005, 10 percent or more of U.S. TV homes may have DVRs, which could account for a significant share of total TV usage.

Nielsen clients said they were concerned with other elements of the plan, especially the decision to delay the release of Nielsen's new A/P metering system - a system that was designed to measure digital television - for another year to allow the system to be retrofitted to measure DVRs.

Among other things, the clients said they were concerned that the equipment might not be up to snuff an that it would only be an interim technology until Nielsen developed a final solution.

Some clients said they were also skeptical about a related service Nielsen discussed Tuesday, its joint-venture with TiVo to launch a monthly ratings report based on DVR usage in TiVo households. They said the report would not be as detailed as the data that ultimately would be provided by Nielsen's new DVR measurement plans and that the TiVo ratings service also was an interim product at best.

Scott Brown, a Nielsen executive, told clients the company is in talks with other DVR providers, including DirecTV, but that no other deals are yet in place.

Meanwhile, a chief concern of both Nielsen's core DVR measurement plan and the TiVo service is that neither initially will provide some of the most critical data points for evaluating TV viewing in a DVR environment - commercial audience exposure. Ad agencies in particular say that makes both services somewhat irrelevant and may force them to explore other means of researching what happens to TV commercial viewing via DVRs.

Nielsen will hold another national client meeting in Chicago today and one in Los Angeles on Thursday.