PVR Pulse

EMERGING SPACES: PULSE of 6

NEW PVR INSIGHTS:

Commercial TV is in rude good health – evidenced by the

chart opposite – as people tighten their belts in the face of

the recession, opting to spend more of their time and

money on home-based entertainment as opposed to out-

of-home leisure activities.

Bigger, better and flatter TVs – currently HD, soon to be 3D

– are enhancing the viewing experience.

In addition, an ever increasing number of channels are

being reported by BARB and commercial impacts – TV

advertising exposures – continue their inexorable march

upwards.

Against this backdrop, PVR uptake is growing. Enders Analysis estimates

that by the end of 2010, approaching 50% of all UK homes will own a PVR (1)

.

Observing the growth in both PVR ownership and TV viewing, it would be

easy to draw one of two conclusions:

1. That PVRs are having no effect on viewing whatsoever, or

2. That PVRs are aiding and abetting the growth in viewing

SMG believes the reality to be somewhat different: the recession and

its impact on TV viewing are obscuring the real effect PVRs are having

on viewing behaviour.

In this edition of EMERGING SPACES: PULSE, we build on our previous

PVR research and introduce new research insights into viewing

behaviour, based on the Pay versus Free divide and the effect of

acquisition on viewing session duration.


Background

SMG has been following the evolution of the Personal Video Recorder in

the UK for the past five years. In this time PVRs have moved from relative

obscurity to become integral home entertainment devices in millions of

homes throughout the country.

In 2008 we commissioned a special analysis of BARB data to look at the

effect of PVR acquisition on people’s viewing habits. The key finding of

this study was that people watched more TV directly after acquiring Sky+.

Importantly for advertisers, it wasn’t just more programmes they watched

– it was more advertisements as well.

Our latest study – using data from January 2006 to June 2009 – confirms

this finding, but also reveals some contrasting truths.

Measuring actual behaviour

To quantify changes in viewing behaviour brought about by the

acquisition of PVRs, we have tracked actual – not claimed – viewing

behaviour by analysing BARB data. Looking at the same people’s viewing

behaviour before and after their acquisition of a PVR, we have been able

to draw empirical conclusions about the real effect of acquisition on

viewing behaviour.

Research objectives

Our analysis of BARB data aims to gauge the effect of time-shift

technology on viewing behaviour across the three TV multi-channel

reception platforms: Virgin, Sky and Freeview.

The questions we sought to answer are as follows:

1. Does viewing behaviour change over time as people become more

accustomed to the device they’ve acquired?

2. Does the amount of non-linear content people watch vary according

to their reception platform and PVR?

3. Does the increased uptake of PVRs have an effect on programme

loyalty – manifesting itself in increased or decreased viewing session

durations?

Findings

The results of our analyses reinforce some of our 2008 findings – namely

that viewing increases directly after acquisition of a PVR – however

crucially, they also highlight a number of as-yet little documented truths.

In addition, by removing the effect of the rising market – that which is

attributable to the not only normal viewing seasonality, but increased

numbers of BARB reported stations and the recession – we have been

able to document the real effect of PVRs on viewing behaviour.


TRUTH 1:

The longer people have a PVR, the less TV they

watch

The longer people have a PVR, the less TV – both programmes and ads –

they actually watch. Seven months after acquisition, people who

“upgraded” to Freeview PVRs, V+ and Sky+ are watching even less TV

than they were before they acquired the device.

The trend is even more pronounced with viewing to Non Programme

Minutes (ads, sponsorships and programme promotions), with viewing

down against Adults in PVR homes.

Implications / Solutions

With PVRs facilitating the removal of commercial TV exposures from the

impact pool and growth in the number of homes acquiring PVRs, under

the current supply and demand-dictated TV pricing mechanic – Station

Price – we expect TV advertising costs to increase over the medium term.

To minimise cost increases, further implementational optimisation – such

as extending reach through the use of VoD – will be necessary to

maximise cost efficiencies against real target audiences.

Sponsorships – by virtue of their inherent premium in-break positioning as

navigational aids and their cost relative to spot advertising – will also

become a more effective way of offsetting the ad-skipping effects of

PVRs.


TRUTH 2:

Differences in viewing behaviour are evident by

platform

Freeview viewers who “upgrade” to Freeview PVRs watch even less TV

than they did prior to acquisition (-5.2%) and notably, even fewer Non-

Programme minutes (i.e. ads, sponsorships and programme promotions).

Viewers transitioning from Freeview only to a Freeview PVR watch around

50 minutes less TV per day than their pay TV counterparts.

That’s over 20% less than Virgin+ and Sky+ viewers, making “the already

hard to reach” even harder to engage with over time.

And in terms of their exposure to Non Programme Minutes, Freeview PVR

“upgraders” watch less than their Sky+ and V+ counterparts, and also

experience the biggest proportional drop off post PVR acquisition (-

21.2%).

Given the number of Freeview PVR devices in Freeview-only homes (circa

1.9M2) and the sizeable portion of the population this represents,

targeting this audience does raise challenges.

Implications / Solutions

Planners will need to look carefully at the split of budget / impacts

between Freeview channels and Pay platform channels, and offset

investment to take into account the greater TV viewership in Pay platform

PVR homes.

TV intelligence systems such as SMG’s TARDIIS Online will play an

increasingly important role in audience understanding.


TRUTH 3:

People watch TV in shorter chunks the longer they

have a time-shift device

The proportion of viewing conducted at the main TV set location –

overwhelmingly the living room – remains relatively stable even after

acquisition of a time-shift device.

However, viewing sessions at the main set location become shorter the

more time elapses after acquisition.

Implications / Solution

The decrease in length of viewing sessions in time-shift technology

homes suggests TV viewing may well be another casualty of the

Inattention Economy.

Shorter viewing sessions mean it could become increasingly difficult to

plan on dayparts, particularly standard BARB dayparts. Buyers will require

increased granularity within daypart deals to truly reflect audience

viewing patterns.

In addition, trading terms may need to factor in increased Guaranteed

Spot Provision.

Live TV events such as Britain’s Got Talent, I’m a Celebrity, X-Factor and

football will play an increasingly important role in driving viewer

engagement and attention, and should be considered on all plans as

appropriate.


BROADER IMPLICATIONS

TV cost inflation

Station Price is the mechanism by which UK TV airtime is traded; a supply

and demand based mechanic which sees advertising prices increase

when TV audiences decrease, or demand for advertising increases.

We outline an additional scenario below which could amplify the “PVR

effect” of removing airtime from the commercial impact pool, bringing

about cost inflation in the medium term.

Continued erosion of Public Service Broadcaster service charters – i.e.

Commercial Free-to-Air Broadcasters raisons d’etre – combined with

regulationary acknowledgement of the structural difficulties facing the

advertising funded TV sector means we could see a relaxation of the rules

governing the amount and distribution of advertising. Under such a

scenario, we are likely to see broadcasters with Significant Market Power

manipulating advertising minutage in an effort to inflate prices.

The Role of Live TV

Live TV continues to account for the significant majority of total TV

viewing, and is likely to do so for the foreseeable future (3)

.

And whilst technology is forging the Brave New World of TV Anytime,

almost paradoxically it is also amplifying the cachet of Live TV, and in

particular, Event TV. Live events are conversational currency in today’s

increasingly networked world, as the past year has illustrated with huge

TV audiences tuning in to watch live TV events such as X Factor.

Event TV will remain the preserve of big budget broadcasters who have

the funds to create or acquire content people want to watch. This will

allow them to command increasing price premiums, and will arguably

widen the pricing gap between those who have content and those who

don’t.

SUMMARY Our research clearly shows that people in PVR-enabled homes adapt their

viewing habits over time after the acquisition of a time-shift device. And

evolving our earlier research, we’ve seen the more familiar people

become with their time-shift devices, the less TV – and advertisements –

they watch. They’re also “snacking” on TV - watching it in smaller chunks.

This seems to suggest that viewers are becoming more efficient in the

way they view TV.

When we eventually emerge from the recession, with TV viewing levels

returning to “normal” and continued PVR growth, we will be in a better

position to observe the true effect of PVRs on viewing behaviour.

In the meantime, advertisers need to stay ahead of the game by truly

understanding their audiences, and refining their targeting and media

placement to make their advertising exposures count.

References

1. Enders Analysis estimates, October 2009

2. BARB / TNS Infosys as at 01/01/2010

3. Enders Analysis, UK TV Anytime and the Flexilinear future,

18/12/2009

This document is a summary of our full research study. Please contact

Starcom MediaVest Group Research for the complete presentation.

PVR Pulse

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