Tech advances could prevent PVR from hurting advertising model: broadcasters

Canadian broadcasters say that technological solutions may solve the problem of personal video recorders potentially ruining the existing advertising model of television broadcasting. They were reacting to a keynote address at the Canadian Cable Television Association’s annual convention last week in Vancouver by Leo Hindery Jr., who warned broadcasters that an unexpected consequence of a massive rollout of the PVR could be the demise of a system run on advertising dollars as viewers use the devices to skip over commercials. "So far, it’s really early stages, and the industry is pretty adept at dealing with potentially disastrous technologies," notes Paul Robertson, president of television at Corus Entertainment Inc. "It’s not a positive technology for the advertising side, but it’s early stages." However, Hindery Jr. warned that penetration levels for the PVR would increase and its effect could catch broadcasters off guard. Michael Lee, VP of product development at Rogers Cable Inc., estimates that there are only about 50,000 PVRs in use in Canada – a number which for the time being is not high enough to have any drastic effect. Lee says that as penetration levels slowly grow, technology could be developed to prevent consumers from using the PVR to skip commercials. Bill Hunt, VP and general manager of specialty services at Global Television Network, concurs that technological advancements could eventually provide some protection for advertisers. "I think that there are capabilities within the newer or the next set-top boxes with PVR where in fact advertising space can be conserved," he says. If that proves impossible, then there are "certainly other possibilities, such as virtual advertising. And there’s other ways to get at advertising dollars such as through interactivity within the PVR service," he tells CCR. "We’re going to have to become pretty innovative at finding ways to ensure that an advertiser still gets his message out because (television) is still probably the most efficient way to reach the largest number of people," Hunt notes. He points out, for example, that Global has entered into an agreement with a large unnamed beer company to support its digital specialty channels Fox Sports World Canada and Xtreme Sports that won’t necessarily involve the traditional 30-second advertising spot. He did not provide specifics, but indicated that the deal would involve a sponsorship arrangement. "(The deal) goes a long way to helping us achieve our budgets in our first year," he adds. CHUM Television president Jay Switzer says that while he has concerns about the effect of the PVR on the broadcasting side, he sees increased possibilities through the technology on the production side. He suggests that any advertising revenue that might be lost due to the PVR could be recouped through additional windows, such as video-on-demand or PVR-related technology, for CHUM productions. "We’re not immediately threatened, but we think it has potential down the line to affect our drama channels more than our music channels," Switzer says. "The play list is only 20 or 30 videos and no one has to wait more than an hour to two to see their favourite video, so we don’t think channels like MuchMusic will be particularly PVR heavy. "We’re obviously watching it but the difference for us at CHUM Television is that we pay more attention and have a higher per cent of in-house production… What we might lose in advertising revenue, we could gain by making our more than 40 shows we produce available to other distributors around the world as digital expansion grows." Switzer sees additional revenue being generated through initiatives ranging from micro payments for programming streamed over the Internet to larger payments for VOD.

Tech advances could prevent PVR from hurting advertising model: broadcasters

Broadcast | April 25, 2002

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