Greg Dyke On Broadcasting

Why commercial TV is in a spin over PVRs - and viewers love them
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The Independent Online

For years now all sorts of people have been warning that the future of advertiser-funded television around the world is threatened by the advent of the personal video recorder (PVR), which enables viewers to skip through advertising breaks. I even did it in my 2000 MacTaggart lecture when I suggested the likes of ITV would not be as well funded in the future because advertisers wouldn't pay as much if people span through the ads.

But research in the States, where the Tivo box emerged in the late Nineties, and in Britain, where Sky Plus is by far the most popular PVR, suggests we have all perhaps exaggerated the threat posed by PVRs to the commercial broadcasters and have underestimated their impact on the new commercial channels which have emerged as part of the multi-channel world.

For those who have never used a PVR, they allow you to record programmes, stop them while they are being played live and then re-start them, and even record ones they think you might like on the basis of previous choices. All this gives you the ability to spin through the ad breaks.

Research into PVR use in the UK shows that viewers still watch more than 50 per cent of the output on BBC One, ITV and Channel 4 live; in multi-channel homes that figure falls to 20 per cent. So if spinning through the ads is a real threat, it will do more damage to the dozens of channels in the "other" category rather than ITV and Channel 4.

But the story is worse for the "other" channels. The figures also suggest that when viewers finally get around to playing the programmes they have recorded, 50 per cent spin through the ads on an ITV programme, and 55 per cent on a Channel 4 one, but this rises to 80 per cent on the "other" category.

I could make a couple of guesses why this is happening. First, the "other" channels play more ads than ITV and Channel 4; second, the ads generally are not of such a high quality.

All this is bad news for the hundreds of "other" channels, which between them now get a third of all commercial viewing in Britain. It means as more homes get PVRs - mainly Sky Plus - the effectiveness of their ads drops.

Of course, Sky is keen for as many homes as possible to get Sky Plus because the figures show that homes with it are far less likely to stop paying their subscription. The "churn" rate in Sky Plus homes is very low, whereas in non-Sky Plus homes it has risen to around 15 per cent a year, an alarming number.

There is one piece of good news, however, for all the advertiser-funded channels who feel threatened by PVRs. There is one piece of research that suggests that when people spin through the ads they concentrate on them more than when they are played at normal speed and, as a result, have a better recall rate of what the ad was selling.

Now, while this does stretch credulity a bit - if it's true, why don't we run all ads at high speed? - I can believe that this happens with the last ad in the break. Anyone who has used a PVR and spun through the ad break knows that you regularly spin into the programme then spin back, so you see the last ad twice - once speeded up and once at normal speed.

In the States, where PVRs were introduced earlier and have taken off faster than in the UK, (not surprising given the quality of the ads and the number played in every hour of television) at least one advertiser, Pepsi, is planning to produce an ad that is comprehensible at both normal and high speeds. So maybe the PVR isn't such an enormous threat after all.

Sky's winning streak

The deal between the Premier League and the EU on TV rights has been successfully spun as bad news for Sky because it is certain to lose the monopoly to broadcast Premier League football that it has held for the past 13 years. To me, it is a much better deal for Sky than could have been expected, and will almost certainly ensure that Sky's dominance of televised football will continue for at least another three years.

Sky is almost certain to bid for all six packages of live games that the League will sell and, given the market advantages it starts with, will almost certainly win five of them. That would mean Sky having 115 live games a season and another broadcaster having 23, which is nowhere near enough to build a new pay TV business.

So who will win the sixth package? Sky will be keen to stop it going to a terrestrial broadcaster, as that will look like its monopoly has ended, so I suspect another pay broadcaster will be "persuaded" to bid. That way you will still need to subscribe to Sky or cable to watch the games.

The most interesting question is why did the EU change its position at the last moment? Three years ago they told the League that around at least 34 games could not be sold to Sky. It seems they backed off after pressure from the UK Government. That old relationship between New Labour and Rupert Murdoch is as strong as ever.