News

Cache and Cachet, But With a Catch for Ops

6/02/2002 8:00 PM Eastern

As if The New York Times
's front-page report about digital video recorders and their impact on advertising was not enough, five days later a deluge of letters to the editor vividly emphasized viewer passions about the topic.

The published letters, presumably culled from a far greater outpouring of reader feedback, provided a vivid snapshot of video consumers and their visceral connections to commercials, convenience and control over what appears on their TV screens.

None of the writers was identified as someone with any media or advertising connection, just viewers who are intrigued with the cachet of the DVR — or personal video recorder (PVR), digital media center (DMR) or whatever techno-sellers want to call this caching device and the services it offers.

Therein lies the dismal dichotomy that could stifle the DVR's bloom. Although barely 800,000 U.S. households now have any such device (a TiVo Inc. or ReplayTV box, Microsoft's short-lived UltimateTV or something similar), this set-top video-on-demand tool has garnered immense recognition.

Forecasters still predict they'll be 10 million units in U.S. homes within a few years.

Coverage on the Times 's
front page — albeit in a newsless report — augments awareness among prospective early adopters.

But awareness alone doesn't translate into usage. Whether DVRs are simply used for timeshifting and ad-zapping (the leitmotif of the Times
article), or as new digital entertainment household hubs, the first hurdle involves actual installation of the devices into U.S. homes.

MORE THAN TECH

The cable industry — in a predictable digression into the cost of DVRs, and their impact on VOD — is initially looking at deployment as a technology issue, as evidenced throughout last month's National Show.

Hopeful DVR proponents — mostly hardware and software vendors ranging from Motorola Corp., Scientific-Atlanta Inc. and Pace to Keen Personal Media, MetabyteTV and Digeo Inc. — showed off infrastructure "solutions."

They dished up prototypes and "test" projects to demonstrate how the hardware can be configured for home-network distribution.

But DVR is about applications, including marketing innovations — not just the bottleneck technology.

This is a rare moment when technology — the storage and distribution of digital content — can be blended with applications to create an entirely new kind of media property. Cable executives' focus on tech specs places cash and cache in front of cachet and convergence, or, more fittingly, the emergence
of an entirely new marketing vehicle.

Despite the myopic focus of cable's DVR agenda, the industry is actually playing a significant role in this interactive emergence, albeit a passive one.

The newly launched advertainment alliance between TiVo and retail giant Best Buy Stores Inc. has just debuted on MTV: Music Television, starting with 30-second commercials aimed at the 400,000 TiVo subscribers. Best Buy provides an electronic tag for commercials sent to TiVo customers, enabling them to jump to a "video showcase" area where they can browse through Best Buy items.

The section for MTV viewers also includes an exclusive behind-the-scenes jam session with singer Sheryl Crow.

The segments, of course, have been downloaded onto the TiVo box's hard drive, ready for watching at the viewer's command.

QUITE A BUNDLE

It's a goulash of pushed and pulled content, packaged in an entertainment and marketing bundle — an early version of what's to come in a DVR environment.

Symbolically, perhaps, the MTV/TiVo/Best Buy alliance emerged during the same May week when a U.S. court stayed a movie-studio lawsuit that would have forced ReplayTV, another DVR pioneer, to track its customers' viewing patterns.

Paramount Pictures, The Walt Disney Co. and TV networks insist that their lawsuit is intended to prevent ReplayTV's broadband users from self-distributing copyrighted content. But it's widely recognized that program producers are even more concerned about ReplayTV's ad-skipping capability.

Which brings us back to this wonderful moment in business evolution, in which carriers are able to look beyond the cache and into the cachet of DVRs.

This threshold of DVR expansion should truly be a time for thinking outside the box, albeit with an eye toward what the box's configuration might enable. For example, Best Buy's "advertainment" segments include short comedy skits and other engaging marketing moments intended to steer customers toward specific products. Technologically, the TiVo device automatically pauses the scheduled program if a viewer diverts to these segments, and can then return to the linear show when the viewer is finished with his video digression.

The value, of course, is that a personalized, targeted ad — with direct-response capability in future iterations — is presented to interested customers.

We all know that consumers want to avoid an avalanche of commercials. TiVo's research reminds us that 80 percent of its customers fast-forward through commercials – which is why die-hard ad executives are trying to enforce a skip-proof message.

But that's just an effort to modify the status-not-so-quo. The new opportunity lies in creating acceptable new commercial methods, using the cache and cachet of DVR, VOD and other tools.

Cable operators and networks can explore and extol the creative use of DVRs capabilities — rather than endless hand-wringing (and lawsuits and technical evaluations), which they hope will postpone the inevitable result: a shift away from today's comfortable commercial structure.

Admittedly, any such approach will require Madison Avenue to rethink its approach to commercial production and placement. It will also force cable and broadcast networks to revise their decades-old advertising procedures.

Which makes this moment so important. Cable can lead DVR's direction in the design of interactive advertising, rather than playing catch-up.

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