Thursday, November 17, 2005

TV networks say digital recorders raise viewership

NEW YORK (Reuters) - Far from being the TV doomsday machines that some have predicted, digital video recorders that allow viewers to skip advertising and watch shows at their leisure will actually boost television audiences, the major networks said on Wednesday.

That was the principal finding in a report issued by the six major networks -- CBS, ABC, NBC, Fox, the WB and UPN -- that sought to allay concerns in the media industry that DVRs will undermine the commercial value of broadcast television.

Advertisers and investors have watched the entry of DVRs into the mass market, led by
TiVo Inc. (Nasdaq:TIVO - news), with a wary eye for several years. Some predicted the features that let viewers skip ads and watch programs at their convenience would spell the death of ad-supported broadcast TV and its prime-time programming schedule.

But in their research on the use of DVRs, the television networks said the technology offered an opportunity to attract viewers who might otherwise miss shows when they first air.

"For most of the top television programs, the audience will be greater for these programs as DVR penetration increases," David Poltrack, head of ratings research for CBS, told reporters. "The DVR is going to increase viewership to major network television programs."

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Nearly 8 percent of U.S. homes use a DVR, with that number expected to grow to 39 percent by 2010. Acknowledging that trend, Nielsen in January will begin to issue national television ratings that include DVR playbacks within a day of original airing and up to seven days later.

On average, homes with a DVR watched 5.7 hours of television daily compared with 5.1 hours for homes without the device, the networks said. DVR households still watch about 90 percent of their television at original broadcast time, while the remaining 10 percent that is recorded favor the most popular broadcast programs during a given season.

While 90 percent of viewers surveyed said they skipped all or most commercials when they watched a show played back on DVR, the networks' research showed 58 percent paid attention to the commercials in a fast-forward mode and 53 percent have gone back to watch an ad that interested them, the networks said.

Advertisers have already shifted a portion of their spending to new media outlets, trying to reach consumers who devote more time to the Internet or other forms of entertainment. Many view television as part of a bigger mix of commercial vehicles, but say it has lost its dominant role.

"No single aspect of additional media choices that are occurring today is that concerning," said Ellis Verdi, president of the DeVito/Verdi Advertising agency. "The pie has been split up many different ways."

Television networks are also exploring new revenue models without advertising, including a deal between ABC and Apple Computer Inc. (Nasdaq:AAPL - news) to sell downloads of its most popular shows on the portable iPod media player. NBC and CBS will offer video-on-demand playbacks of their shows for a fee as well.

"I think the entire DVR thing is transitional," Poltrack said. "We're probably going to see a much more complicated world where video on demand surpasses DVRs."

CBS is part of Viacom Inc. (NYSE:VIAB - news), ABC is owned by Walt Disney Co. (NYSE:DIS - news), NBC is a division of General Electric (NYSE:GE - news) and Fox is controlled by News Corp. (NYSE:NWS - news).

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