Over the next few weeks during the holidays I will be attempting to do a series of posts that will hopefully come together to significantly update our FAQs. As always, consider it a work and progress.
Do DVR Viewers Matter?
Short version: As of December 21, 2009, not much. For those wanting the longer (and denser) version, read on.
As with “Do Total Viewers Matter?” matter, it is of course a matter of perspective. Our primary perspective is one of revenue potential and renewal prospects, and from that perspective, when it comes to a shows earnings potential and renewal prospects, DVR viewing doesn’t matter much at all. At least not in a good way.
That isn’t to say that it doesn’t matter at all, but to say that it matters so little that we don’t see it being a factor in show renewal decisions, despite anything to the contrary you might see in the media.
Recently I saw a comment that went something like “Ok, total viewers don’t matter to advertisers or the TV networks, but they do matter to the general population!” There’s a ring of truth to that in the sense that the total viewing numbers surely do seem to matter to many people, regardless of whether they are instrumental to revenue and renewal prospects. My conclusion is that for many people “being counted” matters to them, even if it doesn’t matter to a show’s prospects. And since total viewing numbers aren't total viewing numbers without the DVR viewing, let's take a look at what Nielsen Measures.
Live Program Viewing (Live)
Nielsen measures Live viewing both at the national level and at the local level. Though when it comes to national reporting (pretty much everything you see on our site) it is almost never reported. In fact, we do not use it at all other than for the purposes of counting the total number of people who watched on a DVR
Live Plus Same Day DVR Program Viewing (Live+SD)
By far, the most commonly reported Nielsen metric for national viewing. This is a combination of Live program viewing (see above) plus any DVR viewing that happens up until 3am the morning after the program airs. Our overnight reports, any daily finals and all weekly numbers reported are all Live+SD
Live Plus Seven DVR Program Viewing (Live+7)
This is live program viewing plus a week’s worth of program viewing on DVR. The same day DVR viewing is already included in this number (in other words, you can’t take total DVR viewing for the week and add it to the Live+SD numbers or you will be double counting the same day portion,
What Nielsen DOESN’T Measure
If you fast-forward or skip over content or commercials on your DVR, Nielsen does NOT measure this in either the Live+SD or Live+7 numbers. Let’s say you’re watching Grey’s Anatomy and you skip over the opening credits, any “Previously On Grey’s Anatomy” all the commercials and the ending credits and only wind up watching ~40 out of 60 minutes. Even though from your perspective you’ve watched the whole show, Nielsen will only count you as .67 of a viewer.
COMMERCIAL Viewing (C3)
Though the information is rarely made publicly available, the metric that advertisers are allegedly buying and selling advertising on is called C3 or C+3. It is average commercial viewing during a show for live viewing and up to 3 days of DVR viewing.
If I Am Not a Nielsen Family is My DVR Viewing Counted
No. Nielsen's DVR numbers are national projections based on the National People Meter panel which is about 20,000 homes (and ~50,000 people). At least theoretically "people like you" are represented in the Nielsen panel. It could be your DVR, Cable or Satellite provider does collect your data, but that data isn't part of the Nielsen time-shifted DVR ratings.
What We See When We Look At the Data
Our experience based on data that we’ve seen is that unsurprisingly Live+SD viewing and Live+7 viewing is greater than live viewing. Similarly, C3 commercial viewing is greater than live program viewing. However, C3 is typically noticeably less than live+SD viewing for first run airings of scripted show (though at the aggregate level averaging in all shows, including sports and unscripted programming that doesn't have much DVR viewing like news magazines, those gaps are much smaller but still in a range overall of Live+SD > C3 > Live).
So there are some people watching commercials on DVR, and so C3 is better for the networks than Live program viewing, but not as good as Live+SD program viewing. The data suggests that typically around 75% of commercials are avoided during DVR playback. So for people watching on DVR within 3 days (and most of the viewing does happen in the first 3 days) figure for every 4 people watching the program 1 sees the commercial. So while picking up these DVR viewers is better than nothing, it’s not as good as if most of them were watching the commercials. In talking to people at the networks, it seems the boost in commercial viewing for C3 is only ~10% greater than the commercial viewing numbers you would see if there was a C+SD metric (unfortunately to the degree we’ve ever seen the commercial ratings, we’ve ONLY seen C3, we’ve never seen live commercial viewing numbers, or live plus same day commercial viewing).
The bottom line is that whatever the difference the DVR viewing is making for commercials, we find that using the Live+SD program ratings are still an extremely effective way of predicting a show’s revenue potential and renewal prospects. We don’t believe that the additional C3 metrics changes the landscape much, and the same goes for Live+7 program viewing.
I Keep Seeing Stories That “The DVR Isn’t The Devil We Thought It Was! And That They Are a Friend To the Neworks!”
This is just spin. Spin I have seen/heard quite a bit of myself including even from the chairman of Nielsen Media, Susan Whiting. But networks curse the invention of the DVR, and the proliferation of DVR viewing (currently as of this writing in about 1/3rd of the homes in the United States). So why the spin?
It’s pretty simple, networks definitely feel the need to get the message out “Hey! We’re not dead! People are still watching TV!” And when you do comparisons of live viewing from several years ago to Live+7 viewing today, the networks aren’t nearly as queasy about DVRs from that point of view because things don’t look nearly as bad as they would if you take DVRs out of the picture.
BUT, the big problem is that for all of that, they have still not figured out how to monetize these DVR viewers which is why you see stuff like….
CBS Research Chief David Poltrack Declares DVRs Dead and ONLINE STREAMING The Way, The Truth and The Light!
Poltrack is a master of spin. He’s also really good at having data. And the data he has suggests that while he wishes DVRs were obsolete, today more people watch TV shows via DVR playback than they spend time watching TV shows online on the Internet via streaming.
There will be another FAQ on “Does Online Viewing Matter”, but I bring it up here because Poltrack’s comments to me speak to nothing more than this: they haven’t figured out a way to make money on the DVR viewers yet. And at least with online viewing, there *are* things in the works that will allow the networks to make some money.
Starting in the fall of 2010, Nielsen plans to begin measuring online viewing in such a way that will allow the TV networks to sell the same commercials they air on TV during online viewing for the purposes of C3 measurement. This means a couple of things: one, if you watch a TV show online within 3 days of its original broadcast, you will be seeing a full national commercial load, with the same commercials that ran during the TV telecast.
But the reason Poltrack wants you to watch online instead of your “obsolete” DVRs?? Simple: if you’re watching NCIS on your DVR, you will be able to blow right past the commercials. If you are watching on CBS.com, you will not be able to skip right past those commercials.
In other words, though it hasn’t started yet, the networks figured out how to get PAID for online viewing the same way they get paid for TV viewing. They have NOT figured out a way to get paid for DVR viewing.
Blah, Blah, Blah, it’s STILL Commercials That Pay Most Of The Bills
I don’t mean to deliberately downplay the variety of ways outside of selling 30 second spots that networks COULD get paid and still be paid even on DVRs, but the fact is, none of those ways pays as much as people buying 30 second spots. And for now, it appears, it’s not even close.
But When You Fast-Forward Through The Commercials – You Still See Them!
Some of you even stop for commercials you like! I know it happens. But most of the time you don’t stop. And this notion that even though you just fast-forwarded past the 87,000 Subway $5 foot long commercial you’ve been subjected to since last Tuesday, you did at least SEE the Subway branding. The networks should get paid for that!
Certainly the networks feel the same way. But here’s the deal: advertisers don’t want to pay for that, and currently aren’t paying for that.
Product Placement! More Product Placement!
Yes, but it’s still commercials that pay most of the bills. If DVR viewers are making up 30% of a show’s viewing and those viewers are skipping 75% of the commercials on their DVRs, there is no way the show is going to make up for the lost revenue in product placement based on the way business is done today.
There is money to be made on sponsorships. But today, there is much more money to be made, particularly for the broadcast networks, in having more people watching the commercials. Something DVR viewers don’t do most of the time. Someday maybe sponsorships and product placement might offset the losses in commercial revenues. But that day isn’t today.
Do DVR Viewers Matter?
Oh yeah. They matter a lot. But almost never in a good way. More people watching on DVR is almost never “good” for the networks since they can’t make as much money on that viewing since most DVR viewers skip most commercials most of the time. I think they do matter in the sense of the networks having a better idea about how many people want to watch their program and the networks will spin it that way. But, at the end of the day, more DVR viewing is not good for the networks.
Bottom line: if a show has bad Live+SD program ratings, even if those ratings improve relatively somewhat with DVR viewing, ultimately it won’t be enough to save the show.