The Networks Are Eager to Get You On Demand and Off Your DVR

As the fall TV season gets underway, you're going to hear a lot about "live-plus-3-day" and "live-plus-7-day" ratings in the coming weeks. More viewers are watching TV on a delayed basis, and network executives would prefer that everyone stop talking about next-day ratings, which don't capture the full audience snapshot, and instead wait to include several more days of time-shifted viewing.

Most of that belated viewership "lift" comes from digital video recorders. For now. DVRs aren't going away — but as the device's penetration slows (about 50 percent of households with TV have one), the networks are eager to migrate audiences to their cable or satellite providers' video on demand (VOD) services instead.

That's a big switch from a few years ago, when the networks started urging viewers to "Set your DVRs," as Fox did with The Following. Now, says Fox TV Group COO Joe Earley, "We as a network do not want you to watch on the DVR. I'd rather you catch up on VOD. Now that people are adopting VOD and we do very well on it, we are driving that message very hard."

A year ago at the Television Critics Association press tour, CBS chief research officer David Poltrack said essentially the same thing: "We are aggressively marketing and building our alternatives for people so [DVR] will become less and less of the total audience as time goes on," he told reporters.

Matt Strauss, the general manager of video services for Comcast, says the networks began really embracing VOD after Nielsen started breaking out VOD ratings in 2013 (all broadcast and most cable networks are now using that information).

But VOD services actually launched more than a decade ago. In the beginning, movies, music and kids programming dominated the service. Then "about three years ago, TV catch-up viewing on demand really started to spike," Strauss says. "It has grown over one hundred percent since then."

The most popular shows on VOD are an eclectic mix, with reality (Love & Hip Hop Atlanta) and dramas (The Strain) leading the pack this summer.According to Strauss, the 100 most-watched shows on TV are all available on VOD within six to eight hours after they originally air, which means VOD viewing is included along with DVR viewing in multiple-day ratings roundups (Live plus 3, Live plus 7, and C3, the ratings a commercial gets in the three days after it airs). "That was a big milestone, making sure Nielsen measured our platforms," Strauss says.

But the main reason the networks would rather viewers use VOD: Unlike with conventional time-shifting, the ability to fast-forward through commercials is usually disabled.

As a result, according to Strauss, C3 ratings for commercial viewing (which is what advertisers care about) are up 20 percent in Comcast households. "It's a better business," Earley says. Strauss agrees: "If the networks can transition a customer to catch up on demand versus DVR, they can monetize that. They are exposed to more ads."

Also a draw to the networks: After seven days, when commercial ratings no longer count, a technology called "dynamic ad insertion" allows programmers to drop in a whole new suite of commercials — essentially getting a whole new round of commercial revenue.

That promise of more commercials is not a strong selling point for audiences, which is why the networks and satellite/cable providers prefer to tout the immediate access to more series and episodes on demand. "It's a better viewing experience," Earley says. "You don't have to pay the $5 a month for a DVR. You don't have to remember to record anything. It's always there. You don't have any recording conflicts. And you don't have [a program] running over three minutes and having the end cut off."

The rise of VOD is also at the heart of TV's ongoing "stacking" debate. The broadcast and cable networks continue to pursue the ability to immediately post a show's full season on VOD (instead of a "rolling five") in order to hook more catch-up viewers. (Studios and producers still worry that stacking a full season of episodes will hurt back-end sales with buyers like Netflix and Amazon.)

Next up, VOD providers are testing more "instant VOD" — offering a show minutes after initially airing — as well as early windows. Comcast recently ran episodes of FX's The Bridge a week early as a test.

All of this doesn't mean the DVR is dead — yet. "We don't see DVR penetration declining, even though it has slowed," Strauss says. "We still believe in DVRs and are confident they can co-exist with on demand."

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