Execs: Networks need to adapt to PVRs

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Networks terrified over the threat of personal video recorders on their
advertising business better learn to adapt or they will be crushed, industry
executives said.

Speaking at CTAM in Boston Tuesday industry execs said that despite the
modest sales of PVRs like TiVo and Replay, they expect the recorders to be in
millions of homes by 2007 or so.

Rishad Tobaccowala, president of media buying group Starcom MediaVest, said
that his firm is telling clients to plan on the dominance of the 30-second
commercial for only three more years. By then, PVR and other video-on-demand
technologies will be widespread enough to force development of other TV ad
methods.

The danger lies in fastforwarding features on PVRs that make it easy -- even
instant -- for a viewer to zap out commercials while watching King of
Queens
.

Even owners of PVRs without specific commercial-skip buttons, breeze over the
ads about 85 percent of the time.

Tobaccowala said conventional TV advertising won't go away, but also
emphasized that "What's so great about the 30-second commercial?"

Programmers and advertisers will have to exploit new approaches, from
longer-form ads to more compelling creative. "It's not true that people dislike
advertising, they dislike advertising that's not for them," Tobaccowala said.

Ken Potashner, CEO of Replay PVR manufacturer Sonicblue agreed. His company
has been sued by 29 different media companies over commercial-skipping features
and Replay's ability to send recorded TV shows and movies through an Ethernet
port and onto the Internet.

The technology is inevitable, Potashner said. "Whenever you get a disruption
like you have now, with technology itself, you have opportunities on every side
of the disruption. The losers are the ones that try to cement their existing
business models and business approaches. The winners are the ones that take out
a clean sheet of paper and redesign it."

Nielsen Media CEO Susan Whiting said the research company isn't having
problems measuring PVR owners viewership. There's a bit of Nielsen software in
every TiVo box allowing the company to extract certain recording playback
information.

"The technology is pretty straightforward," Whitman said, with Nielsen
readily tracking when a program is recorded in a household and when it is played
back.

The question is what to do with the information.

A TiVo owner records Friends on Thursday but doesn't view it until
Monday. Should NBC be credited with the view on Thursday, or in a separate bit
logged for Monday. If a viewer doesn't watch the show for two weeks, does NBC
get credited at all?

Nielsen's network clients do all agree. Whitman's preference is "We're going
to have to balance the operations side, which means getting the data out on a
regular basis, once a week."

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