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Is Your DVR a Dinosaur? Advertisers Are Hoping It Is

Is Your DVR a Dinosaur? Advertisers Are Hoping It Is

Video On Demand is quickly making DVRs obsolete

September 22nd, 2012 in News

The digital video recorder, or DVR, is one of those things that seemed almost revolutionary when it was invented, but just a few years later, it's kind of yesterday's news.

You can record a show and watch it later? Big deal. You can record two shows while watching another one? So what? Who needs to do that when there's Netflix, Amazon, Hulu and all those other streaming services?

It's really like comparing iTunes and Spotify or Pandora. Sure, you can download a track or a whole CD from iTunes and lots of people still do. But everyday more people figure out they can have all their music everywhere, anytime, on any Internet-connected device. Eventually, iTunes must -- so to speak -- streamify.

The same is true of video. Nearly everyone who's not in a coma at least occasionally streams video and as more TVs and DVD players come with built-in connectivity, the numbers are expected to grow exponentially.

Hang around an electronics department at your local big box store, eavesdrop a little while and you'll find that a major decision point in many DVD purchases is what streaming services it's able to receive. 

This is not a small phenomenon we're talking about. No. 1 video streamer Netflix is already estimated to use 30% of the available Internet bandwidth in the United States during peak hours. 

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There is just one little cloud looming over all this sunny prognosticating -- and it is, yes, advertising.

No one follows media trends more closely than Madison Avenue and at the moment, the Mad Men are lusting after streaming video, seeing it as a magic river of data that lacks nothing except a swarming schools of ads, spots, commercials, call them what you will. 

"Video on demand is going to play a major role in how people consume video going forward," said Alan Wurtzel, president-media and research development at NBC Universal, quoted by Advertising Age. 

Why are ad people so fired up about this? Well, it's pretty simple. You can't fast-forward past commercials when you're watching streaming video. The DVR and its ancestor, the VCR, have caused enough heartburn in adland to keep the Rolaids factory working overtime for decades.

After all, it's the ads that foot the bill for all those prime-time shows. Viewers who skip past the commercials have cost the TV business untold millions of dollars in lost ad revenue.

But, you say, there are no ads on Netflix or Amazon Video. True, but this is today and it's tomorrow we're talking about.

Two Pandoras

If you go back to the Pandora model, there are really two Pandoras -- the one you can get for free and the one you subscribe to. (Actually, there are tiers but let's keep it simple for now). The free one has ads, the paid one doesn't.

While no one is talking about it publicly right now, you can expect something similar in the world of streaming video as it displaces the DVR and, for that matter, over-the-air and cable broadcasts.

Even TiVo, which invented the DVR, is now shifting its emphasis to enabling consumers to find what they want to watch wherever it may be in the omnisphere (nice word, eh?) on whatever device they happen to be using at the moment.

For example, TiVoStream, a new service that lets TiVo owners stream shows they've recorded to their iPhone. 

So is all this a bad thing? Well, it's a good thing for the networks and program producers in that it gives them more control over their products and should at least protect and perhaps enhance their revenue stream.

Is that a bad thing for consumers? Perhaps those who think everything should be free will think so. But if everything was free, we wouldn't have much other than what YouTube offered in its early days. Or what Facebook offers today.

Free content sounds good in theory but it takes a lot of money to produce the high-production-value programming Americans and consumers everywhere have come to expect. Streaming video may well turn out to keep the lights on in Hollywood, at 30 Rock and all the other fantasy factories.

Besides, think how much more entertainment-cabinet space you'll have when that bulky DVR is gone. You've already pitched all your old DVDs and CDs, haven't you?