Originally Posted by Charles R
The example I used was an OTA network show. Although the local affiliates do get some cable/satellite fees which I'm guessing isn't all that much. And if DVR usage continues to grow (I see no reason why it shouldn't) the commercial model is going to get blown away. Its income is going to all but disappear for a lot of existing content. So it can either disappear as we now know it or its revenues will have to be replaced. There is only so much product placement and sponsorship can do and I don't think it can come close to make up the lost revenue.
So what do the the major networks schedule when only reality show, live events and such can sell commercial spots. Drop scripted shows completely? I can see the major networks re-inventing themselves not because of the Internet rather the DVR will force their hand.
I've heard numbers on compensation anywhere from $.25 a viewer to some stations wanting as much as $1 per. Whether they actually get anything close to the $1, I can't verify. Unlike with cable channels, there doesn't appear to be a broadcast channel compensation list out there. Local TV channels tend to like the idea that you have to trudge up to the station to view the public file.
At any rate....
I don't think the DVR is the threat to commercial television everyone seems to think it is.
Before DVRs, we had VCRs. Before VCRs, we had remote controls to flip to another channel. Before remote controls, we had a fridge, a bathroom and other reasons to leave the room during the break. When I was a kid, we tended to turn the TV off and do something else if we didn't see anything we wanted to watch.
Sure, there are those who are simply opposed to any sort of advertising at all and will avoid it if at all possible. There are similar groups of people who refuse to pay for content, drive without insurance or a license or will eat their way through the supermarket produce section. Not everyone is a potential paying customer.
However, most DVRs still rely on you to fast forward past commercials, meaning you still see them in some form. Others let you jump ahead in 30 second increments. Dish wants to skip them entirely, but I think they underestimate what will happen to their programming contracts as a result.
Personally, having a DVR that jumps forward in 30 second blocks (actually 27 seconds), I actually sometimes jump back to look at something that catches my eye when my brain goes "what was that?" during the second or so snippet I see. Certain really clever ads would get me to watch them when they would pop up (the Mac vs. PC ads being one example). Sometimes, when I'm doing something else while watching a show, I'll just let the program roll, commercials and all. I'm sure I'm not alone.
The networks really don't need to change their business model right now so much as change the content style:
1 - Advertisers need to come up with better commercials that get attention. Commercials like the Volkswagen Darth Vader spot not only got a lot of views on TV, but was huge online. Perhaps taking a cue from the GoDaddy model where the ad drives traffic to the online product would be a better approach.
2 - TV shows need to mix up the pods more. Right now, when a commercial break comes on, you've got a few minutes to do whatever, even if you don't have a DVR. Randomizing the break lengths and the times within the hour they occur would help keep people planted in their seats. Law and Order used to mix up whether they went back to the show or to a break following the opening credits. That unpredictability of when the show will be back keeps people guessing and less likely to wander.
3 - Make the commercial breaks shorter. Right now, networks take the "more is better" approach by selling more ads for less money. The networks complain that advertisers are spending less and need to sell more ads to compensate, but fail to do the one thing that can change that: make content compelling enough to make it worth the advertiser paying more. The fact is, the more commercials stations pack into breaks, the more people are going to want to watch the show through alternate means that have fewer of them.
4 - Offer more engagement for viewers who want it. "Lost" was a great example early on of a show that had a lot of social networking potential. Shows need to get back to being "water cooler" entertainment by giving something for people to talk about. Generic procedurals aren't going to do that.