There’s No TiVo Effect, But Cable May Be Headed to Dust Anyway

Advertisers fear TiVo and DVRs. And for years they have been saying that time shifting will kill off the 30 second spot.  Who will watch them when they can skip over them?  Some of us with time shifting devices rely on those spots so that we have time to take a bathroom break or do the dishes, but as it turns out, says a new study by Duke University, that even people who fast forward through commercials are exposed to them.  The study found that 95% of people still watch TV live, rather than recorded.  And even those who fast forward through commercials still watch the screen o know when the show resumes, and therefore see the ads – just a lot faster.  The study’s authors tracked purchases of new products, advertised products and store brands across 50 categories, as well as the viewing behavior of those with the DVRs. No matter how the researchers looked at it, DVRs did not affect what people bought.


Up till now, predictions that the rise of web video will replace cable, satellite or premium channel purchase have seemed pretty specious.  While they watch plenty of web video, most people really prefer watching TV on their TVs.  After all, over 90% of Americans have access to at least a basic for fee service. But those predictions may be coming into their own, if a recent study by The Yankee Group is correct.  The study found that one in eight American consumers will either scale back or completely eliminate their for-fee service this year.  Now, one in eight could not really be considered a surge, but it is likely a warning sign.  The reason, which should not be surprising if you’ve looked at your cable bill lately, is mostly financial.  Cable and satellite viewers pay an average of $71 per month, and they receive an average annual price hike of 5%, according to research firm Centris. For people who don’t watch sports (which can pretty much be exclusively seen on live TV) that might start to seem like a lot of money when there are alternatives out there.  A big question remains for many – why am I paying so much when I don’t get to choose the channels I get?  Eventually, the web is going to bring an element of choice to people who didn’t have any. At which point, either cable companies will unbundle their products, or start to lose subscribers. This does not mean, by any stretch, that people in any large numbers will be abandoning televisions – far from it, in fact.  More people have more TVs in their homes than they ever did before.  It’s still the viewing medium of choice. But 43% of American consumers  have their TVs connected to the internet connected via a Wii, PlayStation or Xbox.                   

“This is the key part of the equation,” says a Yankee Group analyst.. “Not just are these devices connected to the Internet, but they’re coming prepackaged with the capability to connect to rich video sources. That really becomes a competitor to pay TV service.”

Since the easiest devices to connect to the Internet tend to be video game consoles, and they tend to be owned by 18-34 year olds, Yankee Group expects that will be the group to cut their cords first.

“Just like with telephone land lines, it’s going to become hard to sell pay TV to anyone under 30.”

Consumers ditching cable might have something to do with the logic behind the subscription price for Hulu’s new premium service – because if you are already paying over $100 bucks a month for cable and internet connection, why would you shell another $10 for Hulu, to see some of the shows that you are already paying for on CATV or cable?  It really only makes sense for the cable-disconnected, or to those who are only getting the most minimal cable service.


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