The broadcast network PR machines have been talking to Bill Carter at the NY Times again, and after his article today on how broadcasters love DVRs, I can guarantee massive confusion will ripple across the TV press (not to mention some segments of TV fandom) about the effects of DVR viewing on TV shows.
Two years ago, in a seismic change from past practice, Nielsen started measuring television consumption by the so-called commercial-plus-three ratings, which measure viewing for the commercials in shows that are watched either live or played back on digital video recorders within three days. This replaced the use of program ratings.
At the time, network executives fiercely resisted the change, fearing that they would never get credit for recorded shows because viewers would skip through all the commercials. But the figures show otherwise.
“It’s completely counterintuitive,” said Alan Wurtzel, the president of research for NBC. “But when the facts come in, there they are.”
Almost across the board, the gains for playback are growing. The best preseason estimate for the current season, said David F. Poltrack, the chief research officer for CBS, was about a 1 percent increase from playback over the live program for the networks combined. Instead, many are in the range of 7 to 12 percent, with some shows having increases of more than 20 percent when DVR ratings are added. The four networks together are averaging a 10 percent increase.
That’s correct as far as it goes. The problem is you probably haven’t seen a number for LIVE program viewing or ratings in the NY Times or anywhere else for more than two years*.
Pretty much all the “next day” ratings you’ve seen in the press since the fall of 2007 have been LIVE+SD (Same Day) ratings which measures live viewing plus DVR viewing through 3am the next day. No mention of that by Carter. And that’s what’s going to confuse people.
All those increases for commercial viewing touted by Carter (via broadcast PR flacks) are all vs. LIVE viewing, not vs. LIVE+SD viewing.
Everyone is used to program ratings increases from “DVR viewing” being defined as the increase from Live+SD program ratings (which is available the day after a show airs) to Live+7 day program ratings (available about two weeks after a show airs), so people will point to this article by Carter and claim “See that increase from DVR viewing really *does* boost commercial viewing, it must be helping my show!” Sadly, that’s mostly wrong.
In fact there is almost no increase in commercial ratings after the Live+SD period.
In a recent conversation with a researcher at a broadcast network, I asked him “Given the fact that the public (and us) sees only Live+SD and Live+7 program ratings on a regular basis, how much of the increase between those two numbers could be assumed to benefit C+3 commercial ratings?”
His answer? 10%
So that 40% increase in program ratings from Live+SD to Live+7 for Dollhouse? It helped advertising revenue by 4%.
Not exactly time to break out the champagne.
Don’t be confused that additional DVR viewing beyond the Live+SD period is going to be a big help to your show, because it isn’t.
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*Except perhaps our posts prior to this season specifically on DVR viewing where we did include LIVE ratings.
Articles like this from the NY Times are why you folks at TVBTN are checked to see if they are even approaching something resembling accuracy.
While I agree that this article could fuel misconceptions because it doesn’t lay out the fact there is a difference between L+SD we all see reported and the live program numbers Poltrack is talking about, I still think the point of the NYT article is valid. There are more people watching commercials on their DVR than you would think, and more than the networks estimated. I know that based on the C3 data released earlier, the live+SD ratings widely reported are pretty indicative of the C3 ratings already (in fact the C3 was generally a tick down from the L+SD), but it sounds like the gap between L+SD and C3 would be larger if not for the larger than estimated DVR Commercial viewing.
All of this being said, it is still true that no show is going to have a big swing in ad revenue from DVR viewing yet.
I have a question. Did you change this article, b/c I swear for the life of me that when I first read it, it was positive/optimistic and rather different than the one I read just now. Instead of saying that it’s not the time to break out champagne you said it was and showed different percentages for the Live+7 and Live+SD…
I agree that fans blow DVR viewing all out of proportion, but I will also say that some of your argument presupposes a logical decision making process by networks that isn’t entirely consistent with what we have seen from them in the past.
It is possible that network execs do take DVR viewing into account despite it’s relatively small current significance. It would not be the first time network execs had overrated something that didn’t matter much. For whatever reason, that sort of thing does seem to happen quite a lot in television. And it would certainly explain some head scratching renewals we have seen in the past couple of seasons.
But there might also be some method to their madness. We are all trying to figure what new media will be helpful to the business of television in the coming years. Well, perhaps shows with a lot of extra people DVRing them might benefit in the following seasons from an expanded LIVE audience. We don’t really know yet, because DVRing viewing and its ramifications are too new to have any long term data on. I’m not even sure how much of that data is being collated from what they have right now. And, heck, I’m still not even sure DVRs are in enough households to even start collecting significant long term data. The number of users has expanded significantly over the past handful of years, as have the ways in which you can use your DVRs. That alone throws all previous data right out the window.
While DVR viewing may never help a show financially in the short term, it might make a good tool for helping to pick which bubble shows get renewed. Right now, if shows A, B, C, & D are all averaging the same rating, yet only one is needed to fill a hole in next fall’s schedule, then you would likely give DVR viewing a lot of weight. That only makes sense.
But what if shows A, B, & C have much better ratings than D, but D’s DVR-viewing takes it quite a bit above the others? What do you do then?
We don’t really know. Maybe you should give that some weight. Maybe not. But it might mean the show has a much better chance to grow next season than the other shows do. And since you are only renewing one of them to fill a hole anyway, why not take a chance on the show that might grow?
That all might be rubbish in the end, but who knows now? We are so far from really knowing what the DVR means as a tool for network execs (as opposed to as a tool for viewers) that I think it’s too soon to come to a definitive conclusion.
By the way, if the 4% increase in ad revenue that you came up with is accurate, that’s a healthy increase. I mean, anytime a company with those type of revenues can see a 4% increase when they didn’t even have to do anything to make it happen, that’s a good deal.
I think network ad revenue was something like 30 billion last year, so that’s 1.2 billion dollars extra that just comes from crunching and hyping one new set of numbers. So while the 40% figure might be totally bogus and worth ridicule, that doesn’t meant that the 4% number is anything close to insignificant.
I love that, as soon as I saw the Times article, I knew to expect a proper fleshing out on TVbtN. The article sounded a little too triumphalist to me, so I guess my suspicions were right. I can sort of forgive Carter: it’s hard having to write about some kind of “new” trend on a daily/weekly basis!
Anyway, my question is: is it at least true that the networks don’t have to fear the DVR? My sense is that, if it won’t save them, it’s hardly their biggest problem.
Elisabeth, you’re not losing your mind. I did edit out a bit at the end of the post that I thought was off topic, but I kept the champagne line!
Here it was:
One last little nugget of PR from the broadcasters was captured by Carter:
“The system even builds in a bonus for advertisers. Although the commercials are rated for only three days, networks receive program ratings for playback over seven days — and the numbers go up again. All that incremental viewing is free to the advertisers.”
A bonus to advertisers! Who knew the broadcasters were so generous? But why no numbers? That’s because leaving them out can allow you to guess there’s a hidden bonanza, but it’s not really there.
From my same conversation with the network researcher:
85% of program ratings are captured in Live+SD period
91% captured in Live+2 period
94% captured in Live+3 period
100% captured in Live+7 period
An extra 6% program viewing after 3 days, and certainly less of an increase in commercial viewing.
Break out the champagne, baby!
@Schmoker
That 40% and 4% number is for Dollhouse specifically, most shows don’t see DVR increases anywhere near that large (as a percentage). The NY times article uses the numbers 7-12% which would mean ad revenue increases in the .7-1.2% range.
When you take into account how many people choose not to watch TV live only because they have a DVR, without which they would watch their shows live, DVRs could very well be costing networks money instead of making them “free” money. With that 10% number only 1 in 10 DVR viewers would have had to watched live if DVR didn’t exist for them to see the same revenue stream, and in most cases I would imagine more than 1 in 10 DVR viewers would watch their favorite shows live if they didn’t have their DVRs.
AJ Christian, one stat I’m surprised Carter didn’t feature that I got from my recent conversation with the network researcher:
“DVR homes average 22.4% higher C+3 ratings than non-DVR homes.”
Their attempt to say “see, DVR’s boost commercial watching!” is almost certainly self selection bias nonsense.
That is, instead of comparing DVR households (which are early adopters and likely heavier TV viewers) with non-DVR households, the interesting comparison (which is impossible) is how many broadcast TV commercials do current DVR households watch compared with to the number of commercials they watched immediately before getting DVRs.
Schmoker, perhaps I should have expanded on my 40% example.
Dollhouse had a 40% increase in ratings from DVR viewing in the post that was linked. That big increase likely contributed 4% to the advertising revenue for that show. I edited the post to specifically mention Dollhouse.
My point is that it’s not going to save the show, not that the extra revenue isn’t welcome.
Dollhouse singled out, but not terribly unique. For the middle of the DVR viewing curve broadcast primetime shows getting ~20% increases from DVR viewing, that 2% extra is not going to make a difference between renewal and cancellation.
I agree with you Beta that right now DVRs are costing networks more money than they are making for them. Of that there is no doubt. But DVRs are a reality, so that money’s never coming back. Calling DVRs evil and sticking their heads in the sand over them isn’t something networks can afford to do right now. If they can bring some of the money back by finding something in the numbers that the DVRs are producing, then it behooves the nets to do it. It’s one of few smart things they are doing.
Whether you can use the numbers internally to predict anything, I don’t know. I was just pointing out that whether it’s possible or not isn’t something that can yet be determined, but that even the current extra money that can be found in the numbers, even if it’s only a 1% or 2% increase in ad revenue, is significant.
And it is free money if it’s money you would not be getting if you were not beating the bushes for numbers that get you back some of the what decreased viewership is losing for you.
I think we are so knee-jerk quick to react to the ridiculous claims by moronic fans that DVR numbers will be a panacea for their favorite show–and they are totally ridiculous claims–that we are being just as ridiculous by saying the numbers are totally meaningless. Even now in their infant stage they can used to produce significant revenue for the nets, as just a couple of percent in increased revenue means hundreds of millions, if not billions, of dollars.
yesterday HD+ started here in Germany (see http://de.wikipedia.org/wiki/HD%2B or a google-translated version: http://translate.google.de/translate?u=http%3A%2F%2Fde.wikipedia.org%2Fwiki%2FHD%252B&sl=de&tl=en&hl=de&ie=UTF-8 ). With this the networks can limit DVR usage. It is not possible to skip ads anymore, recordings can be limited in time. This solves most issues with DVRs for the networks with disadvantages for the common viewer.
Are there any similar plans in the US?
I have a question.
Let me begin by saying I do not have a DVR. Do people who DVR shows to watch later, actually watch the commercials? I thought one of the benefits of watching a show via DVR was fast forwarding through the commercials. I know I would do that if I had a DVR.
Right now, even when I’m watching a show, I pretty much avoid a commercial, either by reading the newspaper or magazine, or using the facilities, or flipping through the channels (remotes are great), or simply just hitting the mute button until the show comes back on.
When I playback a show on DVR I do tend to skip through the commercials, but more often than not I use it to skip through the show.
Of course, when the latter happens that show usually ends up being taken off my event list as well.
Bill,
There is one part of the commercial break that would get a boost from the DVR viewing — and that would the last 10 seconds or so of each commercial break, the snippet you see after you’ve sped through the commercial break to get back to your show and the DVR “winds” back a bit before resuming your show. It’s just enough time to get in a product ID.
I wonder if the networks have started charging a premium for those last 10 or 15 seconds of each commercial break.
That is a good observation Bryan Bell. When I had a DVR, I never watched the commercials, but because of how my DVR worked, I always caught the last bit of a commercial, which in my case, was the local station identification sound bite.
“I wonder if the networks have started charging a premium for those last 10 or 15 seconds of each commercial break.”
Not yet but I believe that day is coming. If we ever get to a world where a majority of all primetime viewing happens via DVR you will see the LAST spot in every break become the most expensive.
Have you noticed – I’m sure you have – that local news promos always come at the end of commercial breaks? It’s because that’s the least valuable part of the break. That will be a thing of the past as that real estate becomes more prized. Promo time will have to be wedged in mid-break.
Bill, I think your general take on this article is kind of harsh.
When networks and agencies were negotiating how DVR ratings would be sold the debate was always between Live ratings and C3 ratings. Live+SD ratings were never seriously part of the discussion. So there is some logic to leaving them out of this story even though that’s what your’re used to seeing in PR.
Yes, you’re right about DVR households being different. Since a majority of TV watchers still don’t have DVR, it’s hard to generalize.
I guess I’m looking a few years down the road. If DVR viewing (+3 or +7) is boosting ratings, even if only by a few percentage points, while advertisers may not be valuing that kind of viewing now, might that type of viewership become increasingly acceptable in the future (and therefore actually lead to significant gains in revenue)? Such that DVR-viewing for Dollhouse would lead more than 4% revenue gains? While I’m not a Dollhouse fan, it seems that equation doesn’t really make much sense, and that the 4% gain has to go up. Why hasn’t it? If it should, the question is: how much?
I guess the real question is whether TV is in trouble because it needs to shift the way it’s doing everything, or whether we are in a transition period. Of course, DVR is just one part of the equation; the age of viewers and year-to-year ratings comparisons (with DVR) are probably more relevant, I suppose.
Mikey,
Bill has a gene where PR people working their magic on others brings out the beast in him. There is no denying it.
That said, if there were C, C+SD and C3 regularly and commonly reported in the press, and we said “there’s really only a very small bump between C+SD and C3″ nobody would think it was harsh.
But some fans of shows will inappropriately put a lot of hope in “Live+7″ numbers saving their shows,and articles like the one in the Times add to that problem.
The fact is networks can and WILL spin this any way they can to their advantage. Why aren’t folks like Wurtzel and Poltrack, instead spending more time using the research they have to sell their own networks on changing things (like your example with local news promos, which is spot on!) rather than spending so much time with mainstream media in hopes that it will convince the advertisers to drink the kool-aid?
Mikey, you are absolutely correct. However, that’s beside the point that there will be confusion because of this article.
While the subject of this article is arcane inside baseball for the TV industry “We switched from Live program ratings for ad pricing to C+3 commercial ratings and the sky didn’t fall”, the effect will be to generate confusion of the “Hey, DVR viewing (meaning the difference between Live+SD and Live+7 program ratings) really does help shows” variety across the media and certain fans.
Many times it takes me more than 3 days to view DVR’d programs. On Tuesdays, I DVR Biggest Loser and SYTYCD, and watch DWTS live. Most nights I am watching one show and DVR’ing another show. It usually takes until the weekend to catch up – just watched Biggest Loser yeterday afternoon (Sunday). Until the cable/satellite companies are able to track all programs DVR’d by consumers, the ratings are not going to be accurate.
BINGO!
BTW, Nielsen DOES measure DVR viewing one week out. The point of this article is that not many more commercials get watched because of the extra week of DVR viewing over the commercials that were watched Live and the same night the program aired on DVR.
They’re not the only ones that post fake ratings. Rupert Murdoch appears to have had a hand in the hoopla surrounding some cable numbers out last week as well.
http://www.msnbc.msn.com/id/3036677/ns/msnbc_tv-countdown_with_keith_olbermann#33500601
Is this common?
gbd, these are not fake ratings and I never claimed as much, please leave the cable news ranting on the cable news posts.
And that link sent me nowhere but the MSNBC home page.
Bill? I did not mean to imply that THESE i.e., your, ratings are fake nor was it a rant? It was the same link that I’d also sent to you privately. The link that I’ve sent to numerous people, where it worked for them and myself, was one from Keith Olbermann that cites Murdoch and his Post’s fudging with ratings, ratings that were also posted here last week. I thought as you’d requested source citation in the past from posters you might want to be aware of your own sources. Further, as I’d personally told you I’d chosen to avoid the cable threads I opted to post it here as it was within the context of a “debatable ratings” thread. I kept it here to keep if from getting out of hand.
Also, what I meant when i typed “is it common” was to ask if it was common for the various newspapers such the as the Times and the Post to alter ratings to fit their agendas.
Furthermore, I clicked on the aforementioned link above and after the 30 second ad it takes one to the question I posed.
“Why aren’t folks like Wurtzel and Poltrack, instead spending more time using the research they have to sell their own networks on changing things”
Two reasons:
1. They are and it’s the kind of thing that doesn’t get publicized
2. They’re media whores, plain and simple. As far as the research/ratings side of the business goes, they’re the two biggest media whores by an immense margin.
Mikey, I can’t argue with your 2nd reason, and I believe your first reason but it strikes me if the second reason is true, why NOT publicize the first reason? The stuff they publicize is ultimately aimed at pulling more cash out of the pockets of the advertisers. And sure, the thing I brought up has the downside of also having to placate network affiliates, but still. I noticed the thing you cited over two years ago. I noticed it more at the start of last season, and by this season it hits me over the head. Because of my 30 second skip tendencies when I get to the local news promo, I just wait it out…but never ever watch the local news!
I guess what I’m asking is if these guys were prioritizing correctly, wouldn’t it have already changed?
this article is like a complicated algebra problem. I can’t make heads or tails out of it?
I dvr everything I watch. I seldom watch live. Friday, Thursdays and wensdays I dvr about 15 to twenty showes. It usually takes me through the weekend to get them all watched. I never watch the commercials. Love the dvr.
I thought only children desired things because of commercials anyway.