A couple of week’s back The New York Times published a story entitled “DVRs and Streaming Prompt a Shift in the Top-Rated TV Shows“. The basic premise of the article is that when you count DVR time-shifted viewing in shows ratings you may get different results than the single night ratings. And networks are now selling shows based on the ‘C3′ ratings, which count the three days following the original broadcast.
No other show on television comes close to that comedy in adding 18- to 49-year-old viewers who record shows and watch them later. So far this season, new episodes of “Modern Family” have grown from a first-day average of 7.1 million viewers in that age group to 10.2 million, counting seven days’ worth of added viewing — a gain of 3.1 million each week, according to Nielsen Research.
Total popularity does not perfectly correlate with profitability, however, since the networks all agree to sell ad time based on a metric called “C3.” It measures the average viewing of the commercials within a show within three days of the first broadcast, so it excludes people who wait to watch Wednesday’s “Modern Family” until Sunday or Monday.
And the networks are pushing to start selling ads based on a seven day window, which would improve ratings – and therefore pricing – even more.
But in a Letter to the Editor published on Tuesday, TiVo CEO Tom Rogers says “Not so fast”:
Because TiVo can measure viewership for any commercial, not just programs, we know that the majority of the commercials on “Modern Family” are not viewed when watched in recorded mode. Advertisers are being overcharged by paying commercial rates based on the program ratings and not commercial ratings. This is anything but the boon for advertiser-supported network television that the article suggests.
He’s clearly making a bit of a stealth pitch for TiVo’s Stop||Watch ratings service, which provides the kind of ratings granularity that tell advertisers if their ads are being watched or skipped. But he has a solid point nonetheless. It doesn’t matter if someone watches the program if they’re skipping the ads, not when it comes to selling ad time.
The only thing we know for sure is that the television market is changing, and I don’t think anyone has figured out the new magic formula yet. Content needs to be paid for somehow or it doesn’t get made. That’s been through advertising for many years, but is that sustainable? Just like the new reality for films includes licensing to cable networks, streaming services, home video, etc., I think TV content will need to rely increasingly on secondary revenue sources and not the initial broadcast.