Media Watch

Illustrated by Doug Potter

Thanks to its status as a first-rate city for couch potatoes, Austin is at the center of a growing industry debate about dramatic shifts occurring in how people watch television. Three years ago, Nielsen Media Research began tracking viewers who use TiVo and other digital video recorders to record programs and including the data in its official ratings reports. Now, with DVR use growing, the debate has intensified over the meaning and implications of the numbers, which will eventually impact how and why programs are produced.

It's a particularly big deal in Austin, which boasts the highest percentage of DVR users in the country – 31% of Austin TV watchers use a DVR, according to Nielsen, compared to 22% in Boston and 13% in Miami, to name two other hip media cities. Beyond reaffirming Austin as a premier hangout for the television-obsessed, the ratings reports including the so-called "live plus" numbers show that a large group of Austin viewers is flipping the bird at the TV schedule, watching the shows they want when they want.

"It does change the game," said Patti Smith, general manager of KVUE, the local ABC channel. While the ratings were relatively unchanged for most shows in the report for the recent November sweeps period, others posted dramatic leaps when the DVR fanatics were factored in. For example, NBC's Heroes recorded a 9 rating among "live" viewers, representing 9% of the TV audience. But when DVR viewers were factored in, Heroes jumped to a 13.2 rating, a 47% increase. ABC's Grey's Anat­omy posted a 9.9 rating in the live audience numbers and a 13.9 when the live-plus numbers were included. Desperate House­wives, House, and CSI: Crime Scene Investi­ga­tion were also favorites with DVR users.

While it's not surprising that people record hit shows, the numbers may give renewed hope to programs struggling to find an audience, such as Big Shots, the new series starring Dylan McDermott. The live-plus numbers gave the show a 20% boost in November, at least in Austin.

Another benefactor is the fledgling CW network, which targets a younger audience. According to Nielsen, 18- to 34-year-olds are most likely to use DVRs to "time shift." In Austin, the CW's Smallville posted a solid but unspectacular 5 share in November, but jumped to a 7 with the live-plus number. "That's huge," said Eric Lassberg, general manager of local CW affiliate KNVA, as well as KXAN, the NBC affiliate. At this point, Austin is one of the few markets seeing such dramatic shifts, thanks to the high percentage of DVRs in use. "This doesn't happen in Bangor, Maine," Lassberg said.

Broadcasters are trumpeting the new numbers as a more accurate gauge of the real size of the audience for their programs. And, perhaps more importantly, they want advertisers to pay for the DVR audience. But this is dicey terrain for TV station executives. The numbers may be larger, but DVRs also make it easy for viewers to whiz past commercials – and that's very, very bad news, at least from advertisers' perspectives. "Research shows that people will still watch the commercials," Lassberg said, echoing a familiar refrain from broadcasters. "If you're in the market for a car, even if you're fast-forwarding, you're still going to stop and watch it." Many advertisers remain unconvinced. The industry has been reluctant to pay for DVR viewers, without evidence those viewers are actually watching their ads.

Advertising industry research shows "70 to 80 percent of DVR users skip commercials," said Carolyn Fisher, group media director of Austin-based Kolar Advertising & Marketing. "But they do see visuals while they're doing that," she said. "Do they register? Sure. But is it the same effect?"

The issues are complex. How long DVR users wait before watching a show is a constant topic of industry discussion. A retailer promoting a Friday sale – or a studio promoting a weekend release – may not be interested in an audience using DVRs to watch a show a week later.

Last year, Nielsen, for the first time, began issuing standardized minute-by-minute reports tracking the audience size for commercials watched on DVRs, a move demanded by advertisers. The standard is based on "live plus three days" viewing, which the industry prefers over the "live plus seven days" ratings, but advertisers are still clamoring for more data on how DVR users watch their commercials. (For what it's worth, The Office initially posted the highest percentage of commercial viewing by DVR users.)

Beyond the battle over ad rates, there is a vast array of implications for the industry, as the installed base of DVRs grows. Nationwide, only 22.3% of viewers currently use DVRs, according to Nielsen, but the audience is growing by more than 20% a year. As more and more people watch shows on their own schedules, programs that don't spur people to record may find it tough to survive. Hit shows will grow even stronger. Conversely, there will be increasing emphasis on sports events, awards shows, and the American Idol ilk, which audiences watch live, offering advertisers more "quality" viewers (read: non-DVR users).

Already advertisers are designing ads that "pop," using big logos and strong visuals to entice fast-forwarding viewers to pause for a moment. Some are moving away from commercials and relying on product placement in programs – paying to have their products used in a scene. (A practice best illustrated on 30 Rock, where characters often wave products at the camera, to make a point.)

As advertisers grow more frustrated trying to woo this new breed of viewers, they may simply shift more marketing dollars to new and emerging media, a trend with dark ramifications for broadcasters. Either way, there is a sense within the TV industry that the playing field is changing, with no one quite sure what the end result will be.

"This is pioneer territory," Lassberg said.