A Variation on the DVR, Without Ad Skipping
A menu for functions that include Start Over and Look Back, but without fast-forward ability.
By LOUISE STORY
Published: August 13, 2007
In a move that is certain to delight advertisers, Time Warner Cable is about to offer its customers a free recording feature for their televisions * one that will not allow them to zap through the commercials
The service, called Look Back, will let cable customers watch certain shows later on that they missed, just the way a digital video recorder does, but without an extra monthly fee. The fast-forwarding function will be turned off
, however, and consumers will be limited to watching programs later on during the day they are shown, anytime before midnight.
Time Warner Cable plans to start offering Look Back in October in South Carolina and then gradually introduce it around the country
The service will be something of a test case both for consumers, who will have to weigh how much control they need over their television viewing and how much they are willing to pay for it, and advertising executives, who in the past refused to pay for commercials shown during time-shifted viewing because they thought most advertisements were skipped.
Time Warner Cable, which is taking a radically different approach from other companies that sell DVR services, is convinced that the interests of advertisers and consumers are more closely aligned than is commonly assumed.
Many customers do fast-forward through commercials when given the choice, and that is an obvious and undeniable benefit of a digital video recorder, said Peter Stern, executive vice president for new product development at Time Warner Cable. But the digital video recorder is principally about enabling customers to watch what they want, when they want. It returns control to customers over the television schedule.
Under pressure from advertisers, the Nielsen Company, which rates TV viewing, introduced a system this year that shows how many people were tuned in during commercials, a departure from the old measure of how many people watched the program. Confronted with Nielsen data showing that many DVR viewers do watch advertisements, most advertisers agreed this year to pay for television viewing based on how many people watch their commercials either live or on DVR within three days of the initial showing.
In essence, Look Back will provide the kind of time-shifted television viewing that has persuaded millions of Americans to pay $10 or so every month to cable companies or to TiVo. DVRs are now in about 17 percent of American households, but that figure is growing rapidly as more cable operators sell the service.
Time Warner Cable is the nation's second-largest cable provider, behind Comcast, and * as with most cable companies * it benefits when people watch commercials, because it often sells many of the local ones.
But the company, a unit of Time Warner, has other reasons for wanting to make sure customers watch the commercials on its system. For one, Time Warner has been a leader in developing ways to deliver more interactive and customized commercials, and it is in the company's interest to find ways to keep people watching those advertisements.
Perhaps more significant, the cable operator is part of a large media company that has long earned much of its money by selling advertisements.
Time Warner includes Warner Brothers Entertainment, the producer of many television shows; AOL, the online company that aims to make most of its money selling advertisements; and Time Inc., which includes magazines like People, Time and InStyle.
The point is not lost on Time Warner Cable executives. We have a particular sensitivity to the needs of business in every stage in the value chain, because we're part of a diversified media company, Mr. Stern of Time Warner Cable said.
Time Warner started down this path in late 2005, when it introduced a free feature called Start Over. Now available in six of its 23 cable markets, Start Over allows viewers to begin watching television programs from the beginning, after they have started playing. During a half-hour show, for example, viewers can start fresh anytime within 30 minutes of when it began.
Similar to Look Back, which will allow late viewing until the end of the day, the fast-forward feature is turned off in Start Over. Time Warner plans to introduce Start Over in eight more of its markets by March.
Another benefit of both free services is that neither Start Over nor Look Back requires viewers to remember to record programs. But unlike DVR services, Look Back will not let people keep a library of older recorded programs. Time Warner does not pay networks for the content * but because it blocks the fast-forward feature, networks are assured that their advertisements are not being skipped.
Time Warner is also hoping to persuade Nielsen that the shows viewed on Start Over and Look Back should be counted as live viewing, rather than delayed viewing, because the ads cannot be skipped.
Time Warner has negotiated deals with TV networks and program producers to store the shows on its own servers. For Start Over, the cable company has deals with every major network except CBS, Mr. Stern said. Time Warner is negotiating deals for Look Back. MTV Networks, which includes MTV, Nickelodeon and Comedy Central, has agreed to have its programs become part of Look Back, an MTV Networks spokesman confirmed.
Other cable companies, which do not have the same goals as Time Warner, are not focusing on blocking fast-forwarding. Comcast, for example, offers 9,300 programs through video-on-demand, where many of the programs are free and allow fast-forwarding through commercials.
Comcast is planning to offer a Start Over tool similar to Time Warner's, but has not decided whether to disable fast-forwarding, said Derek Harrar, Comcast's senior vice president and general manager of video services.
Cox Communications, another cable operator, announced a video-on-demand deal this spring with ABC, where fast-forwarding is turned off for several of the programs.
If more cable operators begin providing time-shifted television watching at no cost, it will be hard to predict whether sales of DVRs and DVR subscription services will taper off. TiVo, whose surveys have routinely showed that viewers value time-shifting more than fast-forwarding, is aware of this potential threat and has begun offering new services, like downloads and searches of Internet content.
TiVo has also built a business * sold on a subscription basis to companies in the media industry * of monitoring which advertisements people tend to skip and which they seem to like. People are voting with their remotes on what they do want to watch or what they don't want to watch, said Todd Juenger, vice president and general manager of audience research and management at TiVo.
Time Warner is aware that it may lose some DVR subscribers as its Start Over and Look Back features become more widespread, Mr. Stern said. But it believes it can make more money in the long run by providing free time-shifting, accompanied by ads.
People are used to advertising. A good number of people like the advertising, said Jeffrey L. Bewkes, the president of Time Warner Inc. at a cable industry conference in late July. Our research and our in-market tests show people would rather have free everything you want, when you want.http://www.nytimes.com/2007/08/13/bu...ia&oref=slogin