August 2008 - Marketing Methods

How DVRs and Online Video Alter TV Viewership

By Peter Koeppel

There are some profound changes occurring in the world of TV. Ratings for primetime TV shows have declined on every major broadcast network this May versus last May, except on Fox. More and more viewers are watching TV when they want to watch it, thanks to DVRs. Consequently, less people are viewing TV during primetime. NBC is now streaming some of its shows to the Apple iPhone, cable operators are offering on-demand programming, more televisions shows than ever are available online and online viewing of TV shows is increasing.

Watching streaming video online is especially popular with younger viewers. Shows like “The Hills” and “Gossip Girl” are being streamed millions of times. “The Hills” provides a good example of the changes occurring in TV viewing habits. According to a recent article in The New York Times, the show averaged 3.7 million “live” viewers on MTV during new episodes on Monday nights. One million viewers watched the show on DVRs and 32 million episodes were streamed on the Internet. Each viewing creates a new advertising opportunity for MTV, noted the Times.

DVRs are the most popular time-shifting technology among consumers. This past May, about 25 percent of TV homes included a DVR, which is double the number from the previous year, according to Nielsen. Broadcast networks showed a 60-percent increase in DVR viewing this TV season and highly rated broadcast shows have experienced a 20- to 25- percent increase in ratings when DVR viewing is considered. DVR users watch more TV than other viewers, which is a positive aspect of DVR usage for networks and advertisers, although the Times article notes that about half of all commercials are skipped during DVR viewing. As a result of the increase in time-shifted viewing, many TV networks recently adopted a new ratings metric for TV media sales that takes into account shows watched within three days of the broadcast.

“Lost” provides a good example of viewership patterns in DVR homes. According to USA Today, live viewership was down 12 percent last season to 11.3 million viewers. However, the decline was only 7 percent when the people who delayed viewing, but ended up watching it the same day, are considered. If you include anyone who watched the show within seven days of the initial broadcast, then the drop is only 3 percent. When the entire time-shifted audience is included, the total audience increases to 14.7 million, which equals a significant gain of 3.4 million over live viewership.

The TV networks, advertisers and media buyers all need to adapt to rapidly changing viewership patterns. For example, ABC and NBC are now trying to sell cross-platform advertising packages that include broadcast TV, cable and web components to better target viewers. Media buyers and advertisers are now factoring in DVR usage in their negotiations with the networks. Stay tuned for more changes ahead.

Peter Koeppel is president of Koeppel Direct Inc., a DRTV agency based in Dallas. He can be reached at (972) 732-6110, or via e-mail at [email protected].


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