PVRs threaten channel surfing

In a future with less sampling, do new shows stand a chance?

PVR panic and techno fear seem to be running amok south of the border where digital on-screen programming guides and PVRs are now being cited as threats to new program launches, sampling, and promotion.

This Chicken Little reaction, similar to the foretelling of the death of radio, television, and newspapers in the past, is being generated in part by a new report from industry analysts at New York-based JPMorgan, called DVRs: The Developing Video Revolution. In the report, JPMorgan cautions that these devices (personal video recorders a.k.a. digital video recorders) apparently have the ability to suck the very lifeblood from U.S. networks. As well as derailing the advertising money train that drives broadcasting, PVRs could also diminish the syndication value of programs.

The report explains that because these digital conveniences result in less channel surfing, networks have to rethink their programming habits. This could require increased programming investments to reduce the failure rate of new shows – now roughly 60% to 80% – and a new drive to create distinctive, rather than copycat programs.

Whatever the fallout, it is bound to affect programming in Canada where cooler heads wonder what all the fuss is about – after all, isn’t the potential for more quality programming a good thing?

Virginia Pino, research director at MBS/The Media Company in Toronto, for one sees these technologies as a win-win for consumers and advertisers. Consumers can watch the shows they want, when they want and advertisers will have great opportunities to tie in with quality programming.

‘Studies say people are still watching television,’ Pino says, ‘so calm down. They are fast-forwarding through some commercials, but those are the ones that are not relevant to them. The ones they like, they’ll go back and watch again. If they’re pre-recording something, it’s something they really want to watch. The call is for great creative and great programming, and then viewers will come.’

Canadian broadcasters are hoping that is true.

Rob Dilworth, VP research at CTV, says digital program guides do discourage channel flipping and he is hoping to get a good scientific answer to assess the effects, by having Nielsen Media Research measure exactly how much difference there is between the channel surfing habits of analogue and digital viewers.

Dilworth says reduced channel flipping, whether it’s caused by program guides or PVRs, favours established programs and stations, and ultimately could result in U.S. networks giving new shows more chance to catch on before yanking them.

‘They’re certainly more ruthless [in cancelling shows] than we are with Canadian programming. Sometimes a program is doing well here and doesn’t do well there and then it dies. Programs move and [Canadian broadcasters] either try to move forward or suffer loss of audience. The chaos it causes at the agency level is miserable.’

Specialty channels in Canada have gained success in part by taking the opposite approach to the U.S. model: by investing in programming their viewers want and then giving shows time – sometimes years – to attract and build an audience.

‘We can do stunts and marathons. We can keep a program in one spot for a very long time so people get used to it and count on it and know it’s going to be there, and build audience loyalty. We’re able to adjust to what our audience tells us it likes, because we own our schedules 24 hours a day,’ says Phyllis Yaffe, CEO of Alliance Atlantis Broadcast Group.

Alliance Atlantis was able to attract and develop programs such as Britcom The Office and the Canadian Trailer Park Boys, says Yaffe, by taking risks that conventional broadcasters don’t (and in many cases, can’t, because of their mass appeal and dependence on big numbers). That has meant working with small producers across the country, marketing the shows aggressively and keeping them in the same spot in the schedule so viewers learn to rely on it.

Total pay and specialty audiences in Canada and the U.S. are now larger than total audience for all conventional television north and south of the border. The secret, Yaffe says, is that viewers sampling enjoy the focused nature of the programming – so they stay.

Conventional broadcasters have been trying to establish this same program consistency and win loyal audiences through smart program selection and sometimes – like the specialties – this means buying some U.S. cable shows like CTV’s Nip/Tuck, says Dilworth. ‘They are kind of over the edge for the U.S. [networks], but Canadians are more tolerant.’

Over at CanWest Global Communications, Kathy Gardner, VP of integrated media research, says the impact of PVRs on programming can be dealt with by managing the schedule to ensure broadcasters have the hot properties viewers want to tune in to on a regular basis.

‘From what I’ve seen from the U.S. research, with water-cooler properties like Survivor or Average Joe, people want to watch those on a timely basis in order to have that conversation with their co-workers.’

Gardner points out that with or without channel surfing, on-screen program guides, or PVRs, viewers still have a slate of favourite channels they watch.

‘Even in the universe of hundreds of channels, the average channel usage right now is 12 to 14 channels per household. Every new technology will change viewing habits, but the underlying effect I’m always looking for is the fact that promotion is critical.

‘[What's important is] the way broadcasters – and CanWest Global in particular – advise viewers what is available is through promotion – whether in-air during a program or within a program or another medium. That’s not going to change and it’s going to be at the forefront of our strategy when it comes to programming and building our audiences.’

Household penetration of PVRs both in the U.S. and Canada currently represents a tiny fraction of the TV viewing public, but increased availability, particularly through declining prices, is expected to speed up the pace of adoption of the technology.

Roughly 3% of U.S. households have a PVR today, but JPMorgan projects that number to grow to 7% this year and to 30% by 2007. Acquisition is already starting to get pretty aggressive in the U.S. market with at least one cable company offering subscribers a PVR for just $5 a month.

The most recent Canadian figures from MBS/The Media Company pegs PVR households in this country at 90,000, and that’s with the set-top boxes selling at around the $600 mark.

Last month Rogers Cable became the first company to rent PVRs. At $19.95 per month, the set-top box is a digital cable box and PVR in one. It has a picture-in-picture option for watching and recording one show while another is playing in the right hand corner of the screen, as well as a dual recording option that allows recording of two different programs at the same time or the ability to record one and watch another. It can record about 50 hours of programming.

David Purdy, senior director digital television, Rogers Communications, says it’s too early to project the rate of PVR adoption for Canada, but demand has outstripped forecasts and the company has had to increase its inventory.

‘This seems to be a technology our customers have been waiting for and our own employee demand has been overwhelming as well. It’s one of the products that once you get it home it revolutionizes your TV experience. It lives up to its promise. On a personal level, I don’t think I’m watching more TV, but I think the television I’m watching is more satisfactory for me and meeting my needs better.’