Increase in DVR use changes ad game

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LONDON -- The growth in the usage of digital video recorders means that television viewers are increasingly skipping the adverts, with 79% fast-forwarding all or most of the time, according to a report published Monday.

An additional 15% of those polled said that they fast-forward advertisements "some of the time," while 4% said they rarely skip past ads and just 2% never hit the fast-forward button.

The report, produced by Entertainment Media Research for media law firm Wiggin, makes for bleak reading for advertisers and space sellers alike.

"On-demand television funded by advertising and free-to-view is seemingly the mass market model of choice," Entertainment Media Research chief executive Russell Hart said. "However, since 80% of viewers with fast-forward technology avoid the adverts most of the time, viable ad-funded models of the future will need to deny the consumer ad-skipping control to guarantee ad exposure."

Added Wiggin Music and Technology partner Alexander Ross: "The challenge for advertisers is to find more targeted forms of advertising that consumers are more willing to respond to. The technologies are already with us to enable that to happen."

And while there may be no such thing as a free lunch, it seems as if entertainment consumers want there to be.

The report, derived from a January survey of 1,608 U.K. consumers ages 15-54, also indicates that consumer demand for on-demand programming is potentially huge.

But when confronted with the three options -- subscription with unlimited content, PPV and free ad-supported models -- the free model wins comprehensively, with 70% saying they would rather put up with ads than pay for the content.

Driving the growing audiences for on-demand services are recently released movies, while live music concerts and recorded gigs have generated high demand. Playing for laughs also is popular, with comedy high on consumer on-demand wish lists.

YouTube is the most popular provider, used by 37% of consumers, while U.K. broadcaster Channel 4's 4OD service is top among broadcasters at 15% use. Project "Kangaroo," the planned single-platform service from the BBC, ITV and C4, also has heightened interest, with 52% saying they are more interested in this service than other services.

"While there is huge interest in content on-demand, only specific types of content look likely to realize mass market paid-for revenues," Hart concluded. "A viable business strategy needs to ensure that content in demand is also capable of being monetized."

The wide-ranging media survey also noted that as many as 70% of those pirating content via the Internet would stop if they "received a warning from their ISP" that what they are doing is illegal.
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