Jamie Kellner, chairman of The WB, joked last week that TiVo-type personal video recorders were developed by the print-advertising business to annihilate the TV medium. But he quickly made it clear that, while that remark was facetious, the TiVo threat is serious.
Ogilvy & Mather CEO Shelly Lazarus, appearing on the same panel as Kellner at an ad conference sponsored last week by The New Yorker magazine disagreed, arguing that most viewers are so passive they won't make the effort to zap commercials.
Not only is the PVR a "great threat at high penetration levels" to ad-supported TV networks, said Kellner, "it might not be good for consumers either."
That's because, if a sizeable portion of the $50 billion or so in TV advertising goes away because viewers use PVRs to zap ad spots, then "free TV" might turn into "pay TV," he suggested. "We [the networks] are paying for them to watch the spots." If viewers don't watch the ads, the whole commercial-TV economic paradigm goes out the widow: "There ain't no free lunch."
Kellner stressed that he doesn't have a PVR solution but suspects that PVRs could reach critical mass in five to seven years as cable and satellite services start to embed PVR technology in their digital set-top boxes. So it may be a decade before the industry sees the full impact of the technology. (Last spring, he said he thought consumers should have the option of buying a "zapless" PVR or paying $250 annually for the privilege of blasting through blurbs.)
Last week, Kellner suggested the industry work together, "to act collectively like the music industry did" in battling the threat of entities like Napster, which tried to make a business of downloading music copyrighted by others.
To be sure, he said, cable and satellite services may well have the solution, or least part of it. Time Warner Cable of New York City (co-owned with Kellner's WB) has begun offering what he describes as "advertiser-friendly" PVR technology. The cable system eliminated the 30-second skip feature in its PVR offering so that the only way viewers can avoid spots is by fast-forwarding through them. Perhaps not the best solution, but at least viewers are exposed to some or part of the spots.
Lazarus believes there is a lot of anecdotal evidence to suggest that PVRs won't mean the end of free TV as Kellner fears. "I remember when the remote control came along and people said it was the end of advertising," she said. And more recently, focus-group research seems to suggest—at least to Lazarus—that TV is and will remain primarily "a passive medium for most." If that's true, she said, most people will continue to plunk themselves down in front of the tube whenever they have a spare half-hour or more and watch a show, in real time, commercials and all.
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