TV advertising is dying and PVRs are the culprit   |  March 31, 2009  

Like to fast-forward commercials? Me too. But we're pushing companies to sneak products into our shows 

By Jim Harris

There’s a profound shift occurring in TV viewing, and the advertising industry will never be the same. In 2008, sales of high-definition TVs surpassed sales of standard-definition units for the first time, according to research firm iSuppli, and riding on those coattails are sales of personal video recorders (PVRs). And those PVRs give viewers unprecedented control over programming and the ability to skip the bits they don’t want to watch.

The truth is, once you go PVR you never go back. Imagine you could only read your favourite book from 9:00 to 9:30 p.m. on Thursday nights. Sound crazy? Well, isn’t that how we’ve watched TV for years? But PVRs liberate owners from the network’s schedule: record what you want and watch it when you want.

In my home, we have Roger’s HD cable service, an HD PVR and a new device: a PVR Extender500. This 500GB drive dramatically increases the storage space of Roger’s 80GB PVR, allowing us to record hundreds of hours of programming. With a couple of hundred movies and TV shows recorded there is always something I want to watch, no matter what mood I am in. This is true for most PVR owners and it’s a game changer for the industry.

In our home, we no longer watch “live” TV because we’d have to watch the commercials, something I can no longer bear. Instead, we record programs and fast-forward through four-minute commercial blocks in a few seconds. Even if we want to see a program close to live we start watching after it’s begun, so we can fast forward through the ads.

TiVo started this revolution in the U.S. in 1999 and cable companies, not wanting to have their businesses blindsided, began promoting their own PVRs. TiVo estimates adoption will triple over the next few years, with up to 60 million PVRs in American homes.

Commercials inside your shows
This fairly straightforward technology—PVRs are simply PCs dedicated to a specific function—has changed advertising. With viewers collectively watching fewer commercials, advertising has moved to product placement.

Between January and June of 2008, there were more than 200,000 embedded product placements on U.S. TV shows, according to Neilsen. Whenever you saw American Idol judges drinking from Coke cups that was product placement, making American Idol and Coca Cola the highest show and brand for product placements.

The same goes for movies: I laughed at Mike Myer’s Dr. Evil drinking from a Starbuck’s latte in Austin Powers. It was funny, so I accepted it, but at what point does the product placement begin to compromise the story? For instance, three James Bond films starring Pierce Brosnan featured BMWs, until the outcry from fans pressured producers to bring back the Aston Martin.

Of course screenwriters decry this practice; bending scripts to the advertisers’ interests compromises the artistic process, they argue. At the same time, this can benefit the content creators. Instead of revenue flowing to TV networks or individual stations to play ads, more advertising dollars are paid to content creators to place products in TV and movie programming. Global embedded advertising has been growing at 40 per cent per year, compounded annually for the last five years, and it is predicted to hit US$14 billion by 2010, according to PQ Media.

So we’re all going to see way more embedded advertising.

And forget dinner and a movie
Another casualty of PVR adoption is the time-honoured tradition of the dinner-and-a-movie date. According to a recent IDC briefing at the Consumer Electronics Show in Las Vegas, 47 per cent of North Americans say they’ll be eating out less and 37 per cent will go to fewer movies in 2009. In these tough times, having hundreds of hours of programming on a PVR at home is going to let people save money by doing dinner and a movie at home. 

Jim Harris is the author of Blindsided, a number one international bestseller published in 80 countries. Jim is sought after as a speaker at conferences and seminars around the world. E-mail him at jimh@jimharris.com.