Tuesday, May 15, 2012

Dishing without commercials

Last week Dish Network added Auto Hop to it's Hopper DVR. With one click, viewers can automatically skip commercials on prime time shows they've recorded from ABC, NBC, CBS and Fox.

Those who hate commercials (most of America) think this is a good thing. Those who understand that nothing in life is free (about 10 people) wonder who's going to pay for commercial-free entertainment.

We all know the old model for TV unsustainable. Yes, advertisers are expected to spend upwards of $70 billion this year on commercial time across all broadcast and cable platforms. Yet for the most part ads are seen as an annoyance by viewers and with today's technology they're very easy to avoid.

Programming that doesn't have to be watched in real time, which is just about everything except live sports, can be found on Netflix, Hulu Plus and other distribution platforms without commercials days or at worst weeks after their initial air dates. Current DVR technology allows anyone to zoom through spots in seconds. Does anyone doubt that it won't be long until auto skipping is common on all DVRs and all channels?

Neither the networks nor production companies are looking forward to this future. Advertising has been a consistent and very profitable source of revenue for both.

Advertisers, though they grumble about the cost, love all the attention their products get when they interrupt your favorite show and won't be happy to see this model disappear either.

So what's the alternative? Pay-per-view programming where you get nicked a couple of bucks an episode or $20 a season for shows like Mad Men, Two and a Half Men or 60 Minutes? While that might have incredible social benefits by lowering the amount of TV watched in most households, it wouldn't make anyone happy.

The networks lose revenue, production companies lose funding, advertisers lose their biggest platform to make people aware of their products, and viewers have to think about whether what they're watching is actually worth their time and money.

Ultimately, what may happen is that the networks themselves may become obsolete. They served a purpose providing a way to bring shows and advertisers together. Their programming and development staffs nurtured shows like Cheers and Seinfeld that needed time to find their voice and grow and audience. But in today's world of infinite choice and non-stop channel surfing, people create their own "networks" choosing which shows to watch and when to watch them.

Given the incredible data gathering capabilities of cable and mobile devices, fewer and more relevant ads could be inserted at fewer points in the programs. This should in theory cut down on waste and make each ad unit more valuable.

Blowing up a 64 year old industry and starting over is never easy, but in the case of network television and advertising industries it's going to happen. The only question is who's going to do it? Those who control the system now or an outside player who isn't encumbered by billions of dollars of infrastructure and decades of organizational inertia.

My guess is the latter.


  1. I think you might be right about the latter but the biggest cost now is not the technology or the infrastructure. It is still getting the "rights" to show mainstream content. Until that "all or nothing" cost structure breaks it is hard to create any model that is going to attract viewers. Look at Joost as an example of a network without great content. The cable co's have the best chance at changing the world on this because they have already got the rights. But getting them to rethink their delivery is going to kill them in the end. Cable cutters are here and they cant seem to get their head around it.

    1. Programming rights are a critical component of this. That's why production companies (content developers) really hold most of the cards moving forward and networks may be left on the sidelines. We shall see.

  2. Personally, I think Auto Hop is a good thing to have as an option on my DVR. I’ve had the Hopper for a few weeks and Primetime Anytime I thought was a good feature and the option to watch those shows commercial free the next day is awesome. My coworker at Dish showed me how Auto Hop worked yesterday and for those people who still want to watch their shows live on primetime will still get commercials.

    1. Thanks Bob, I appreciate the view from inside Dish Network. I'm sure many people love the option and I often fast forward through DVR'd commercials on my Charter supplied unit. This post is not a review of the Hopper or Auto Hop, but an attempt to peer into the future for advertisers and content providers who must learn to live in a world with ad-free or reduced ad programming made possible by alternative viewing technologies.