DVRs Could Devour Infomercial Slots
by Curtis Lee Fulton (G2 News)
March 25, 2002
Anyone who's ever heard of the George Foreman Grill knows about infomercials.
For those with healthy sleep patterns, a quick introduction: during the wee hours, the cable TV audience is slim enough that some channels can't sell enough ads to cover the cost of programming. So rather than broadcast a test pattern, they sell 30- and 60-minute time slots to advertisers at fire-sale rates and insomniacs who've done the CNN loop can catch definitive presentations on cellulite creams, self-sharpening knives and meat ovens equipped with flavor-injecting syringes.
Now, it seems, the digital video recorder (DVR) industry might be able to exploit those infomercial slots with a technique called time shifting.
Time shifting is what DVRs do. The gadgets sport a simple remote-driven interface that offers consumers an easy way to search for content by genre, title or actor. When they air, selected programs are recorded onto the DVR's internal disk. Recording schedules are worked out automatically from a programming database. After a show has been recorded, it has been time shifted. The consumer can play it back whenever he wants.
At first glance, mining those infomercial time slots looks like a breeze. All cable providers would have to do is air content as usual with the expectation that DVR users will watch it at a normal hour.
But it's not that easy. Once content has been time shifted, consumers can blast through commercials, leaving cable folk where they started: holding time slots with no ad revenue possibilities except paid programming.
However, leading DVR makers Tivo and Sonicblue have different technologies designed to work around the problem.
Sonicblue's solution is content-oriented. Its ReplayTV DVR has technology content owners can use to designate a show subscription-based. Viewers who have recorded such a show either have to pay to watch it or agree to watch the ads, in which case the device will disable fast forwarding during the program.
Tivo takes a different approach. The company is pushing paid programming as a place where advertisers should add interactivity with a service called Showcase.
Tivo's Showcase service packages a chunk of paid programming time with a prominent ad on the Tivo interface. Tivos will automatically record content flagged for the Showcase service and store it in a "hidden" partition on the hard drive reserved for Showcase promotions. Once the Showcase content has been saved, consumers will see a message on the main Tivo interface screen advertising the Showcase promotion.
Showcase advertisers can run their ads during normal hours, with special control codes inserted between the video frames. If a Tivo user is watching the ad, the device will detect the control codes and display a message on the TV screen telling the viewer that there's more information available about the advertised product in the Showcase presentation.
Last weekend, Tivo tested Showcase by offering viewers a half-hour "Hollywood Awards" presentation that featured an interview with film director Francis Ford Coppola. The company said about 304,000 viewers received that show, but couldn't say how many actually watched it. Tivo first tested Showcase Super Bowl week and used an interview with football quarterback Joe Montana as the draw.
No word yet on the Showcase pricing model. Tivo says it's too soon to price it.
Tivo's next trick with Showcase comes with an agreement with electronics retailer Best Buy, which will be the exclusive outlet for Tivo's next-generation products, Series2, and will produce and distribute entertainment Showcases to Tivo users later this year.
Foreman is still the champ of early morning cable, but if DVRs increase demand and raise the value of paid programming real estate, Foreman and his friends will have to throw in the towel.