April 15, 2003

Another Testimony for Tivo

Yet Another Testimony for Tivo...

We have Tivo, which has (and this is not hyperbole) changed the way we watch television. We watch what we want, when we have the time to watch it. Unfortunately, there is a small issue with having the time to watch everything we want to watch. But we simply don't watch much network programming at all anymore.... We pick and choose, basically, which is the short answer to your question... I haven't seen good network programming for a while.

Network programming was always... peculiar... It was lowest common denominator stuff, oriented toward gaining eyeballs for advertisers, rather than for consumer satisfaction. The idea was that network programming had to be something that those who wanted to watch TV would barely prefer to staring at a blank wall (and to staring at what else was on), so that you could sell eyeballs to advertisers. A network show that was loved by 3% of the potential audience was an extraordinarily big flop. Advertisers only got 3% of the eyeballs. The fact that the fans loved the show didn't get the network any money.

Tivo has the potential to break this cycle: to turn us into a world in which programs are made because a few people will really like them, rather than made so that a large number of people who don't really like them will prefer them to staring at the wall...

Posted by DeLong at April 15, 2003 04:40 PM | TrackBack

Comments

hey, those words look familiar!

Posted by: matt on April 15, 2003 06:06 PM

TiVO also has the potential to kill commercial TV as we know it, by making it so easy to eliminate the ads. (It also has the potential to run afoul of the Supreme Court, since the Betamax decision revolved, in part, around the fact that the taped shows still had the ads in them.) This means that the eyeballs will need to pay for themselves some other way. This is likely to mean either more product placements, which I find kind of irritating, or more subscription or pay-per-view systems over free broadcasts.

About all I watch on TV anymore is sports, and I find that commercials are very disruptive to the game, not only when I'm watching at home, but particularly when I'm attending and get lengthier timeouts. So, having to pay cash rather than time to watch stuff would be fine by me; a lot of other people probably disagree.

Posted by: J. Michael Neal on April 15, 2003 06:32 PM

The remote control and the bladder are as much of a problem for advertisers as TIVO, and have been around much longer. Hell, you can fastforward thru commercials on tape just as well as you can on TIVO. TIVO's digital nature just makes this more exact. The solution is not pay-per view service, it is to make the advertisments interesting. There's a whole segment of people who watch the Superbowl primarily to see the advertisements, for chrissakes.

Posted by: Carpbasman on April 15, 2003 07:18 PM

Indeed, many of the most rewound moments in the Super Bowl last year (according to TiVo) were the ads themselves. Make the ads compelling, and people will watch them. A broadcast does not (at least thus far) contain the inherent legal agreement to watch all of it at normal speeds. If it were, we'd all be strapped to our chairs, Clockwork Orange like, while the parade of inanity rolled before us.

I loves me the TiVo!

Sage

Posted by: Sage on April 15, 2003 07:26 PM

How does Tivo break this cycle? What is the incentive to make shows that only a few people will watch?

Posted by: JT on April 15, 2003 08:28 PM

>How does Tivo break this cycle? What is the incentive to
>make shows that only a few people will watch?

Well, yeah, there is *some* lower limit to audience size, but the point is that with the current system, whether or not a show can run depends to a considerable extent on whether or not it can find an appropriate place on some network's schedule. So a show with a small (but loyal and marketable) audience could actually be a money maker as long as "enough" people saw it, but that might not happen if you run it "against" a big hit or at almost any time when not enough people are likely to be watching. So such shows don't get made, or don't last if they do get produced.

TiVo changes that in that you can set the thing to record "Great Moments in Calculus", which can now play at 3 AM Saturdays but will still capture all of its potential audience, who will watch it whenever they like. This should help out many cable channels that end up showing only dorky infommercials in some slots becasue that, alas, is the only common denominator audience at the time.

There is still the issue of what to do with commercials, but TiVo probably doesn't make that situation much worse than it is already. In fact, there is some worry in the advertising community that their industry might not really ever come back to anything like it was because people have finally found out what works and what doesn't. And most forms of advertising aren't especially effective.

Posted by: Jonathan King on April 15, 2003 09:25 PM

>How does Tivo break this cycle? What is the incentive to
>make shows that only a few people will watch?

Well, yeah, there is *some* lower limit to audience size, but the point is that with the current system, whether or not a show can run depends to a considerable extent on whether or not it can find an appropriate place on some network's schedule. So a show with a small (but loyal and marketable) audience could actually be a money maker as long as "enough" people saw it, but that might not happen if you run it "against" a big hit or at almost any time when not enough people are likely to be watching. So such shows don't get made, or don't last if they do get produced.

TiVo changes that in that you can set the thing to record "Great Moments in Calculus", which can now play at 3 AM Saturdays but will still capture all of its potential audience, who will watch it whenever they like. This should help out many cable channels that end up showing only dorky infommercials in some slots becasue that, alas, is the only common denominator audience at the time.

There is still the issue of what to do with commercials, but TiVo probably doesn't make that situation much worse than it is already. In fact, there is some worry in the advertising community that their industry might not really ever come back to anything like it was because people have finally found out what works and what doesn't. And most forms of advertising aren't especially effective.

Posted by: Jonathan King on April 15, 2003 09:26 PM

Tivo is awesome.

Posted by: MattS on April 16, 2003 05:07 AM

TiVo is so amazing that is difficult to explain. It completely changed my viewing patterns and I believe its true potential is still untapped. We are still using it as a glorified VCR but, with broadband reaching the mass market, TV truly on demand is just around the corner. I would not be so worried about the death of advertisment, a good product placement can be more effective and less disruptive than normal commercial breaks.

Posted by: Mooraq on April 16, 2003 05:52 AM

We have a new TV strategy in our house: broadcast chanels + HBO. No lifetime, cnn etc. The great thing is that there is never anything good on broadcast, so we watch hbo about 95% of the time. I am sure this saved me from CNN Induced Psychosis during the Iraq war.

How does this tie into the Tivo thread? We also have HBO-on-demand (USD7 / mo). So we can pick from about 50 series eppisodes and about 25 movies, which rotate weekly, and watch what we want, when we want.

Posted by: John Eckstein on April 16, 2003 06:12 AM

We have a new TV strategy in our house: broadcast chanels + HBO. No lifetime, cnn etc. The great thing is that there is never anything good on broadcast, so we watch hbo about 95% of the time. I am sure this saved me from CNN Induced Psychosis during the Iraq war.

How does this tie into the Tivo thread? We also have HBO-on-demand (USD7 / mo). So we can pick from about 50 series eppisodes and about 25 movies, which rotate weekly, and watch what we want, when we want.

Posted by: John Eckstein on April 16, 2003 06:13 AM

I'm sorry that my question is so basic, but how is Tivo changing the model in which advertisers are paying for programming (instead of viewers)? And if it is changing that model, to what model would Tivo be moving us? I'm a bit skeptical about anything "revolutionary" happening.

Besides, I've had Tivo for at least a decade -- it's called a programmable VCR. Now I suppose you could argue that Tivo can capture more programming without having to flip tapes, but does ANYBODY capture more than 6 hours of programming per day ... and then watch it?

Posted by: Ken Overton on April 16, 2003 06:28 AM

It will probably be a combination of product placement, more interesting ads, and more pay channels. I don't see them as being mutually exclusive. The fact that each show will have lots of viewers that literally never miss an episode might make the ads (or placed products) *more* lucrative if they can figure out who those people are (not necessarily by Tivo and the like giving up the information; there are still phone surveys, data on who's buying Buffy T-shirts, and who's in the fanclub, etc.). So if someone figures out they have the perfect product for *me*, they'll pay a little more to make the ad interesting and put it during the West Wing, and not waste their time with, say, Boomtown.

In sum, it's not clear that Tivo will kill anything. More interesting ads for stuff I might actually buy and more channels like HBO may be worth a little product placement irritation (anyone notice the blatant product placement by Ford in Alias a few weeks ago?)

Posted by: A-ro on April 16, 2003 06:54 AM

Disagree. Mass market television isn't "lowest common denominator" and Brad's model of "something that those who wanted to watch TV would barely prefer to staring at a blank wall" isn't convincing at all. There are massive positive consumption externalities in entertainment, and as long as we remain human beings, we are likely to want to consume the *same* entertainment product as lots of other human beings.

If the timeshifting effect of Tivo was so important, we'd have seen some similar effect when VCRs were brought in and we didn't. Niche programmes become more viable because of supply effects (digital broadcast spectrum and/or cable is in much less fixed supply than analogue broadcast TV), but these niche programs are fundamentally not in competition with the big broadcast stations.

If you read the media industry blatts, they call it "event television" (the sucessor of "watercooler television"). Notoriously, it was only the big hits that drew in the advertising revenue anyway, and the networks are reacting to that by producing short-run, punchy reality shows with a big climax, rather than long-running serials.

Also, there's much more to advertising that eyeballs. The programming has to be suited to the brand, and big national brands need to be associated with popular programming, not niche programming. Economists never really seem to get to grips with the advertising industry (Gary Becker is an honourable exception), and it's a bit of an achilles heel.

Posted by: dsquared on April 16, 2003 07:02 AM

The big difference between TiVo and a VCR is that TiVo identifies shows for me that I would never, ever have found on my own without a lot of legwork on the web. I can look through a menu of all the history documentaries playing in the next 48 hours and choose what I want to record. If there's a movie I want to watch, TiVo will let me know if it's showing up on any channel out of the 100+ I get at any time in the next two weeks. I am catching up on the first two seasons of King of the Hill thanks to the Cartoon Network and 12:30am reruns on two different channels. I can tape more than 6 hours of shows every day and then watch the first two minutes of each show, discard what I don't find worthwhile, and watch the rest. I can watch a long movie in three different sessions while recording and watching other shows and not worrying about tapes.

TiVo has changed my life too! I fear that what was a blessing in winter will become an iron chain in nice weather!

Posted by: M.S. on April 16, 2003 07:07 AM

I've never heard someone who actually owns a Tivo say it's just like a VCR, except when they're having trouble explaining how cool it is. Let me try an analogy here.

audio cassette tapes :: napster, mp3 and CD burner

as

VCR :: Tivo


Hey other Tivo owners - does that work?

Posted by: A-ro on April 16, 2003 07:14 AM

TIVO is just another means to a bad end-watching television. Turn off the tube or, better yet, get rid of it and go outside. My wife convinced me to do this and it was a good move.

Posted by: John Horstkamp on April 16, 2003 08:15 AM

I second John Horstkamp's suggestion. I, personally, jettisoned television completely after the Gulf War started. (The later one.) Instead, I obsessively haunt the Internet for news, which makes me so very well informed, in contrast to most television news recipients, that I am further alienated from the general population than if I merely spent the same computer time surfing for porn. That said, I would be very pleased to view documentaries when I wanted to do so, but am probably reading instead, now.

As competition for the Internet, I think Tivo falls short. As competition for real life, including reading, it fall shorter, because all it delivers is television.

Heartily second the comments on televising sports, a practice that has destroyed the live fan experience (except in baseball and soccer, and especially in football). A massive restructuring of the way games are shown (using framed advertising the way soccer does) is the only solution I see, and I don't think that US advertizers would buy it without a consumer revolt.

Posted by: Brian C.B. on April 16, 2003 08:50 AM

Another good analogy for the VCR vs. TiVo. It's like saying the car is like a cart without horses. Technically it's right but if you think the effect that cars had on our society in the last century you will see the difference.

I think TiVo could have some similar long term effects (proportionally). For instance, with a broadband connection it could easily be adapted to additional functionality like a video-phone messaging system.

Posted by: Mooraq on April 16, 2003 09:19 AM

WRT to the video phone comment, it seems odd to couple an inherently "real-time" product (video phone) to an inherently "virtual-time" product (Tivo). There are plenty of real-time devices that could offer it too: Cable-TV systems could bring you video phones just fine without Tivo. So could, um, phone lines (people already do it over their dialup phone connections). Same with DSL and satellite.

Posted by: Ken Overton on April 16, 2003 09:42 AM

John, do you feel the same way about movies? How about live theater?

Posted by: M.S. on April 16, 2003 10:15 AM

Put me in the Horstkamp camp. (Horstcamp kamp?)

But I can't help opining on the subject anyway: the thing nobody seems to have mentioned is for stuff outside of sports and news, the whole concept of time-shifting is fundamentally opposed to the entire historical model of TV.

So let's look beyond today's TIVO: Besides "event television" - and you're hardly going to come up with Seinfeld the orginal Survivor on even a yearly basis - if I can consume a TV show like I can a book, then everything's different. What's the point of 13-episode series, when a count of 10 or 20 might provide better pacing? Why should an episode be 22 minutes? All chapters of a book aren't the same length.

Or it could work like the movies. First episode, enough people like it you can get them to pony up to download for another epsiode, and so on.

But it could go in just about any direction. However, if USA-style capitalism is really going to take over the world, then I can most confidently predict that in one aspect, quality, the direction will continue downward unabated by changes in technology. Nobody wants to learn math at the current rates of renumeration that discipline commands, for instance.

Posted by: a different chris on April 16, 2003 11:23 AM

TV is shifting from a pay-via-advertising to a pay-for-content and pay-via-advertising model. It's more efficient that way, as HBO's high quality shows suggest. HBO doesn't go for mass market appealing to everyone, they go for niche market that will appeal to those who will pay. And the results are excellent. Every creator wants to do shows with HBO because they allow creative control to stay out of the hands of executives. Executives in the networks have to mind advertisers and the public; HBO doesn't. There are no ads and the churchgoing public just doesn't buy HBO.

HBO doesn't have to follow a formula because their economics don't demand it.

TIVO is allowing this transformation to happen more broadly. I don't want live TV much anymore. I seek quality content and skip the ads.

Clearly, advertising isn't going away, but the model will move to a sort of reality show MTV-esque low production quality free channel, network lowest-common denominator, for-pay premium quality offerings, and niche cable outfits who sell their good shows to the networks (kind of like a minor league). Product placement will also become more important.

Posted by: MattS on April 16, 2003 01:18 PM

We may see more advertisement-as-content programming. Think Pokemon, Power Rangers, heck any uneducational show for children I can think of. The characters in these shows are available as toys that you buy.

I don't know that this would be as effective when targetting adults.

Posted by: Gray on April 16, 2003 02:44 PM

I am inherently sceptical of claims that a technology hitherto confined to early adopters is "life-changing." I do think that Tivo may make "appointment television" more practical. Although the Supreme Court was convinced that the VCR was fundamentally a time-shifting tool, in practice few people so use it (overwhelmingly people use VCRs to watch rented pre-recorded tapes). The programmable VCR isn't. There is a significant minority that can't even set their VCR's clock. It is clear that the early adopter Tivo community can actually use it to ensure that the three programs they want to watch this week do get recorded so they can watch them at their leisure. Whether this will carry over to a wider population remains to be seen.

There is a wider question (which a different chris, I think, raised) whether "appointment television" is in fact a stable behaviour pattern. Television-watching, it seems to me, is a habit. If you're in the habit, then you watch more or less whatever is available to watch. The network isn't trying to provide something better than staring at a blank wall, it's trying to provide something which will feed the habit: "don't touch that dial." But once you're out of the habit, then there's little real incentive to watch. As John Horstkamp said, other things are more attractive (once you start doing them). That's why artificial aids (the programmable VCR or Tivo) are required to make "appointment television" possible in the first place. The other things you might do don't come to an end on the hour or half-hour, and you're certainly not going to break off what you're doing just because a television program is starting.

But then, I cancelled my cable a few months ago because we hadn't actually watched anything for a couple of years and we didn't see why we should continue to pay for something we weren't using. So I may not be the ideal commenter on this subject.

Posted by: jam on April 16, 2003 06:01 PM

I did want to add something about Brad's characterization of network television being "made so that a large number of people who don't really like them will prefer them to staring at the wall."

The phrase brings to mind (though I don't know if Brad intended it) Nathanael West's description of the original Homer Simpson:

"When not keeping house, he sat in the back yard, called the patio by the real estate agent, in an old broken deck chair. He went out to it immediately after breakfast to bake himself in the sun. In one of the closets he had found a tattered book and he held it on his lap without looking at it.

"There was a much better view to be had in any direction other then the one he faced. By moving his chair in a quarter circle he could have seen a large part of the canyon twisting down to the city below. He never thought of making this shift. From where he sat, he saw the closed door of the garage and a patch of its shabby, tarpaper roof. In the foreground was a sooty, brick incinerator and a pile of rusty cans. A little to the right of them were the remains of a cactus garden in which a few ragged, tortured plants still survived."
--The Day of the Locust, Chapter 10

Posted by: jam on April 16, 2003 06:39 PM

Michael Lewis (Liar's Poker, The Next Big Thing) RAVED about TIVO back in August of 2000 (if I am interpreting the datestamp correctly.

EXCERPT:

Aug. 4, 1997, was the beginning of the end of another socialistic force in American life: the mass market. Forty years from now when you have your grandson on your knee and he asks you, "Grandma, how did 50 million Americans ever let themselves be talked into buying the same mouthwash?" you will say, "Well, you have to know how things were before Aug. 4, 1997."

http://www.nytimes.com/library/magazine/home/20000813mag-boombox.html

Lewis goes on to explain niche marketing and nice commercials.

Everyone I know with TiVo swears by it, but I am holding out.

Posted by: Tom Maguire on April 16, 2003 08:23 PM

Tivo is real good, as I've noted before. As for all the comparisons to VCRs, Tivo is as far ahead of a VCR as a hard drive is ahead of reel-to-reel tape memory. Yes they do the same basic thing, but with the hard drive come a lot more options done better, faster and with more convenience. (FCC Chairman Michael Powell recently referred to TiVo as "God's machine", for whatever that's worth.)

I've read conflicting stories in the business press about how the business is faring -- it looks like your "old fashioned" internet company with fast growth losing money all the way: revenues for the past year tripled to $60 million, while losing $55 million.

But hey, that's a heck of a lot better than having revenue of only $19 million and losses of $160 million like the year before. And they supposedly made $2 million in the last quarter (albeit before all those costs that don't count like interest, depreciation and taxes -- old fashioned internet accounting too) ...
http://news.com.com/2100-1047-991415.html
... so maybe the company will be around for a while.

I've also read that they are licensing the technology to cable companies for use in cable boxes, to get around the resistance that a lot of people have to buying the whole online setup. So it looks like the technology is going to be entering the culture by one route or another.

Posted by: Jim Glass on April 16, 2003 10:28 PM

"Oh, and BTW, a clarification question for Mark Bahner: do you mean that implementing your five-step government reduction program would raise the LEVEL of GDP by 2-4% (i.e. raise it from $10.1 trillion to $10.3-$10.5 trillion, and it would continue growing at 2.5-3% a year from that new, higher base), or raise the growth rate of GDP by 2-4% (i.e. raise the growth rate from about 2.5-3% a year to 4.5-6% a year, permenantly)?"

The latter. If the size of the U.S. federal government were cut by 70-90%, I think the U.S. GDP growth rate would average 4.5% to 7+% per year.

Posted by: Mark Bahner on April 17, 2003 10:03 AM

brilliant boys,

try to remember your dreams tonight (prediction one or none for heavy TV watchers), with the one possibly tv-based

try not watching anything a week, each night trying to remember your dreams

by the end of the week, you'll be up to three, with maybe one of some significance (loaded term)

don't be offended; if anyone cared for you earlier then you 'd have an integrated contempt for all things Republican

By the way, under Patriot Act, JAshcroft can appreciate your TIVO choices (but nothing to worry about her, I mean, we're only taking moderate narrowband,not that controversial stuff for the freaks, right?)

Posted by: channelthis on April 18, 2003 09:38 AM
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