Are PVRs the Devil in disguise?

Personal Video Recorders - BSkyB claims its personal video recorder, Sky+, won’t spell the end of TV advertising. Ian Quinn and Julia Martin say Sky is not the only threat to the 30-second spot.

Any TV buyers out there who listened to some very high powered people in the media talk about their predictions on the impact of the personal video recorder could be forgiven for clearing their desks right now and heading straight for the job centre.

With more than 70% of existing Sky+ users already fast forwarding through all ads when they watch recorded programmes, and with use of the awesome piece of kit set to go through the roof in years to come, it’s easy to sense doom and redundancy on the horizon. Now, however, BSkyB’s sales operation has put the benefits of its PVR at the heart of its new drive to become more agency-focused.

But Sky is not the only provider of PVRs now, and it certainly won’t be in the future.

The really bad news for TV buyers who may be losing sleep over the “devil” that some believe is Sky+, is that the vast majority of the companies behind its rivals do not share their worries.

Sky claims that, rather than the death of TV advertising, it represents a huge opportunity for new ways to target viewers.

The satellite giant has invited agencies to join it in drawing up a so-called Software Roadmap, which will decide which features it rolls out in its PVR beast.

Sky cares

It claims that one of the reasons agencies need not fear Sky+, despite predictions that it is going todo for the 30-second spot what CDs did for vinyl, is that Sky actually cares about the business that funds commercial television.

Sky may have used subscription to build its TV empire, but advertising still accounts for half its profits and funds a huge proportion of the shows its platform has to offer.

Little wonder Sky is so keen to get agencies on board, especially as it has the tools in its box which it claims can unlock the future of targeting TV audiences in a multichannel world.

However, the string of rival PVRs, as yet still in only a relatively small number of households, is growing and is aimed first and foremost at enabling viewers to make the most of their ability to record TV in ways far more sophisticated and idiot-proof than a video recorder ever could. The ad revenue can go to hell as far as they are concerned.

And with the widespread use of recordable DVD players also looming on the not-so-distant horizon, it could be that Sky+ is the least of advertisers’ worries.

Competitors to Sky include Tivo, the original PVR and a huge hit in the US, which stopped production in the UK last year, although still has well over 10,000 users and is still available through outlets such as eBay.

This gadget can learn a viewer’s favourite programmes – you can bet it won’t learn their favourite ads.

When Tivo lauched in October 2000, its then marketing director, Ted Malone, said the challenge to advertisers would be to create better ads so that viewers would not skip through them. Three years on, that statement appears more and more of an impossible challenge because, whereas Tivo may have disappeared from the UK, others have taken its place.

There are now more than half a dozen PVR rivals to Sky+, including several boxes manufactured by the likes of Pace, designed specifically for Freeview boxes (see box).

It could be argued that Freeview viewers, who have a far more limited choice of channels than Sky provides, are much more likely to watch something they have recorded on their PVR, rather than switch over to another “live” option.

Not the only threat

The majority of these manufacturers, Sky claims, are not interested in funding models for TV because they don’t have the same place in the broadcast supply chain and PVRs are not the only threat to this chain.

Cable companies NTL and Telewest are due to start rolling out video-on-demand services next year, while emerging technologies, such as Homechoice, are already offering hundreds of such films, as well as digital TV, through your telephone line – a business model funded by subscription, not advertising.

Meanwhile, the reason for stores such as Dixons offering seemingly unbelievable cheap deals on DVD players is not out of the kindness of their hearts.

They know that, by as early as the end of next year, recordable DVDs, which are currently an expensive luxury for all but high earners, will be amass-market product.

A whole range of electronics manufacturers already produce these products and recordable DVDs perform much the same basic function as a PVR – except you can skip through the ads, rather than just fast-forward through them.

Opportunities for advertisers using traditional spots are already being squeezed and if you thought this was scary, then what about the news of Microsoft boss Bill Gates reportedly assigning half of his research budget until 2010 – that’s a cool £11.2bn, by the way – to turning home computers into the televisions of the future? A hard business drive if ever there was one, this could really throw the cat among the pigeons in the TV trading room, as Gates apparently wants PVR technology built in to every computer.

Microsoft, along with other computer companies, has had products featuring PVRs on the market for some time. Like recordable DVDs, products such as the Microsoft Media Centre, which will set you back around £1,000, are widely seen as an expensive, niche product. But for how long? As one TV source points out: “With a company like Microsoft and the financial muscle they can put behind these things, you can’t discount it.”

Vulnerable to change

Certainly, the media industry is more vulnerable to technological change than almost any other. If an invention like those busy being dreamt up by Microsoft boffins were to change the way customers consume their media, there will be little agencies can do except try to look for new revenue streams.

Sky+, it claims, has deliberately been modelled so as not to destroy the business that funds TV. For example, on Sky’s EPG, the recording features are listed at the bottom of the page, whereas if it was just about marketing the killer application, they would surely be slap-bang at the top.

Sky+ boxes also have been deliberately designed with a limit on the fast-forward speed, of x30, and the company claims that viewers still recall ads, even when they are speeding through them.

Perhaps the answer is for creatives to start making ads at -x30 speed – then PVRs will have no impact at all.

Joking aside, there appears no doubt that Sky+ and its rivals are going to force media agencies to change.

Three years ago, when Tivo arrived, it was seen by some as a bit of a gimmick for tech-heads.

Your granny can work Sky+.

Sky Media’s commercial director, Mark Wood, denies this signals dire straits for advertisers.

“It’s not going to kill advertising. It will change the way people watch TV and, therefore, the way advertisers have to reach those people,” he says.

“ We’re changing. We want to engage advertisers as closely as possible to get their buy in to mould the technology,” he says.

For a start, Sky’s research shows Sky+ owners watch more TV and are far more engaged in what they’re watching.

“We’re not shying away from the issue,” says Wood. “The key point is, if I could say one thing to advertisers, we didn’t invent this technology, it’s happening anyway. We happen to have got in first and, we hope, will continue to be brand leader. The question we ask advertisers is, who would you rather led this technology – us or someone who doesn’t take advertising? We consider this to be a piece of kit that, if you’ve got it, you never want to get rid of because it’s so good. The question’s not of hiding from it, but asking advertisers how they want to use it.”

Programming by phone

The sort of ideas Sky has come up with include enabling viewers to set their Sky+ on the move, through their mobile phones.

“Say you record The Simpsons thatway,”he says. “It’s sponsored by Domino’s Pizza so they’ll send a text back confirming and reminding you of the take-away number.”

In future, viewers will also be able to pause TV while they watch interactive advertising channels and Sky says agencies need to come up with ads people will want to opt into.

“Things change all the time.

Cars didn’t kill the railways, TV didn’t kill the cinema. All things adapt and change,” says Wood.

Andrew McIntosh, research director at IDS, says his company is also in talks to encourage advertisers to “do thingsin new and different ways”.

Cate Connolly, a researcher at Mediaedge:cia, admits PVRs will “change TV advertising as we know it”, but says her company’s research shows that only just over a third of people who own, or are planning to buy, one saw being able to skip ads as a benefit.

But what if planned features for its boxes of the future kill off Sky’s advertising revenue and, for that matter, that of its fellow broadcasters? For example, Sky could go down the road of putting recordable DVD technology into Sky+ boxes. That wouldmake it an even more awesome beast but would take still more viewers away from live TV.

If media agencies stand still, Sky argues, they will be left for dead by the sea change going but what if they are able to adapt? It remains to be seen how enthusiastically agencies follow Sky’s roadmap and the sort of advertising of the future they come up with. Ideas, however, are beginning to flow.

But will Sky’s rivals, including a certain Mr Gates, let advertisers share in their vision of the future of TV in the same way or will their technology ride straight over them?

The competitors to Sky+.

TiVo

What it does: A PVR that works with any TV system, unlike Sky+.

It can record up to 12 hours, displays TV schedules for up to 17 days and can “freeze” live TV

Price: £200

Availability: Withdrawn from UK in 2003; service is still provided to existing subscribers and models can be found on eBay Killer application: It can recognise the type of programmes the viewer watches and independently record similar programmes

Threat to advertising factor: 5/10

Pace Twin

What it does: The first PVR designed specifically for Freeview, meaning it won’t work with digital satellite, digital cable or analogue TV

Price: £170

Availability: At high-street retailers

Killer application: Twin digital tuners, allowing the viewer to watch one digital programme while recording another.

Threat to advertising factor: 6/10

Other manufacturers of Freeview boxes include Fusion and Humax

Recordable DVDs (and Digital Video Recorders)

What they do: Like conventional DVD players, but they can also record from TV onto DVD

Price:£300 - £400

Availability: Manufacturers include the likes of Philips and Sony; all have models available

Killer application: the chance to bin that blasted VCR at last

Threat to advertising factor: 7/10

Computer-based PVRs Microsoft Media Centre

What it does: PC/PVR in one

Price:£700 - £1,500

Availability: Only for the well heeled and well-informed

Killer application: Microsoft envisages incorporating a video version of the MP3, allowing users to download films and watch them on the move

Threat to advertising factor: 9/10

Sony PVR Games Console

What it does: Much like the Sony PlayStation 2, which allows gaming and DVD-watching, but with PVR functionality thrown in

Price: £600

Availability: You’ll need to make a trip to Japan to get your hands on one at the moment. Possibly available in the UK next year Killer application: The current Japanese version is packed with high-end features, such as the seven-tuner capacity

Threat to advertising: 8/10

DIY PVRs

What it does: Everything your shop-bought PVR does – allegedly

Price: Free

Availability: All that is needed is a PC with the right hardware to record video signals. The necessary software is available on the internet – but be warned, it’s complicated

Killer application: It’s free!

Threat to advertising: 6/10

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