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March 1, 2013
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Is DVR still a television villain?

Towards the end of last year there was an interesting debate that exposed very different opinions about whether DVRs are a good thing for channel owners and whether the TV industry would benefit from more VOD viewing and less DVR time-shift. It also highlighted how the growing use of VOD on televisions is forcing channels and platform operators to decide whether to give consumers the right to fast-forward ads for on-demand. On television, consumers have learned to expect fast-forward thanks to DVRs, but online they often have to accept that advertising fast-forward is disabled for catch-up.

On one side of the argument was Simon Kelehan, Head of Content at UPC Ireland, the Liberty Global cable operator that has been offering VOD and catch-up TV since last year. “We think cable VOD finally offers our broadcast partners the opportunity to reclaim some of the ground they have lost because of fast-forwarding on the DVR,” he declared. His company is implementing VOD pre-rolls with fast-forward disabled, and that is a response to what content partners want to see.

“What we hear from content partners is that viewers are watching primetime series on a time-shifted basis and over half of them fast-forward through the ads on their DVR. We have an opportunity to work with those content partners to reclaim some of that lost revenue by monetizing the ad breaks with fast-forward disabled.”

UPC Ireland introduced VOD in May 2012 and will be the first company in the Liberty Global group to introduce dynamic advertising insertion (DAI) for on-demand programming. That means the adverts that are aired with the original broadcast can be stripped out and replaced with fresh ones when the programmes are served to customers as an on-demand stream. DAI is an important advertising innovation and is viewed as a way to better monetize VOD, since the ads should always be fresh and relevant even as time lapses, and new campaigns can be introduced. DAI is also a foundation technology for targeted cable advertising.

As with other cable systems, a large proportion of the on-demand viewing at UPC Ireland is catch-up TV content from national broadcasters, who are part funded by advertising. But content owners are proving reluctant to make content available for on-demand viewing on the television set without trick-play restrictions, based on what Kelehan told the Future TV Advertising Forum late last year.

Acknowledging that consumers are used to controlling trick-play on televisions, he said: “We have to take a rounded decision. We would like consumers to have complete flexibility but you need the content to watch in the first place and if this is the way to get that content, by keeping channel partners happy, then that is the trade-off you have to make.”

Kelehan added: “Our channel partners have their own online players on tablets with fast-forward disabled and they say, ‘Why would I give my content to you so your customer can watch on the big screen rather than the iPad so they can fast-forward the ads? Why should I give you this content?’ So we make a trade-off. Getting access to content is the critical thing on the platform, so we are disabling fast-forward on the pre-rolls.”

It looks as if cable operators (and presumably IPTV too, if they offer catch-up TV) are going to have to be flexible in their content negotiations. As we reported previously, one German cable operator is giving broadcasters the ability to dynamically insert advertising into their on-demand programmes in return for free access to the content. The broadcasters own and sell the spots and the platform operator stores and inserts the advertising. This could be another variation on a theme – where the theme is ensuring that content owners can maximize the value of on-demand viewing in order to persuade them onto the platform or get the content at the right price.

Kelehan viewed cable VOD as a broadcaster friendly solution for time-shifted viewing, especially when compared to DVR. As he pointed out, it may be too late to disable fast-forward on DVRs, but consumer expectations are still being set for how television VOD is going to look, especially when it comes to catch-up. “In the online world people are conditioned to watching pre-rolls and not being able to fast-forward through them,” he noted.

While agreeing that more VOD is a good thing (see more about that here) Julia Jordan, Executive Director Business & Operations at UKTV (which owns a number of popular channels including Dave and Yesterday) said there is a danger in over-playing the impact of PVRs on advertising. She disagreed with the general thrust of Kelehan’s argument, that VOD is a safe-haven from the DVR. Jordan is also the Non-Executive Chair of the Thinkbox board. Thinkbox is the marketing body for commercial TV in the UK and therefore a long-time evangelist for TV advertising.

“There was a fear when PVRs launched that they would eat away at advertising opportunities but 89% of all viewing on TV is still live despite the proliferation of the PVR and the vast proportion of PVR viewers watch the ads and sometimes go back to view them again,” she said.

At UKTV, Jordan helps oversee a channel business that includes paid and free channels and the company makes content available on-demand on the Sky, BT Vision and TalkTalk platforms. She said it is ready and willing to include advertising in its on-demand assets. Near the end of last year the company soft launched free catch-up player services for its most recognized channel brands, Yesterday and Dave.

Jordan argued that commercial TV viewing has never been higher, even if you include an element of ad skipping. “Ad skipping is not undermining live TV advertising,” she said. Asked whether she would prefer people to watch their time-shifted television on a PVR or as a VOD service, she had no preference. She viewed VOD advertising as a different and complementary advertising opportunity, incremental to viewing and advertising elsewhere.

Mark Brandon, Commercial Director at Virgin Media, which provides a comprehensive VOD and catch-up TV offering as well as PVRs (including its new TiVo platform), said the advertising business has adapted to PVRs, sometimes with a more content-related approach to messages. He also pointed out that it is becoming much easier for consumers to find content (one of the key benefits of the TiVo platform). This can only be good for content that relies on advertising, obviously.

Virgin Media has been enabling advertising in what it calls ‘Big screen VOD’ (i.e. on the television set) for two years and that has been an unqualified success, Brandon said. The next step is targeted advertising. But despite its strong on-demand proposition, the company is still a big fan of the PVR.

“VOD is a fantastic resource but because of rights you cannot always guarantee a particular series is available at a given moment, and that drives some PVR behavior. It is not as simple as PVR bad and VOD good. Both are important.”

When it comes to fast-forwarding, and whether you enable or disable it, Brandon pointed out that Virgin Media launched VOD many years ago before it had any plans to include advertising. As a pay platform, it has to put customer expectations first, “So for us, fast-forward [enabled] is a given in VOD.”

But he did also reveal a ‘never say never’ attitude to disabling fast-forward. “You will find us experimenting. We will put our customers first but we could disable fast-forward on an advert-by-advert basis. We have the ability to turn fast-forward on and off for an individual advertising asset if we want. We will look at that, but we will put our customers first.”