PVRs To Hit UK Commercial Broadcasters Hardest
The impact of personal video recorders is expected to hit the UK commercial broadcasters the hardest, with television advertising revenue predicted to drop in Britain by nearly 4.0% by 2010, according to a new report from Merrill Lynch.
The PVR – Rise of The Machines report shows that PVR penetration in the UK is expected to reach 15.2% of homes in the next six years and recent reports suggest the impact on viewing habits and advertising could be dramatic if the problem is not addressed.
Research shows that around 40% of ads are missed in PVR homes, however, as advertisers become cleverer and adapt different marketing techniques and product placements, Merill Lynch estimates that in reality PVRs will cause a 25% reduction in advertising.
The impact of PVRs is expected to be subdued in all EU countries except the UK, where the reduction in television advertising is expected to fall as low as 3.8%, followed by Germany at 2.2% and France at 1.5%.
According to Merrill Lynch, the UK’s commercial broadcaster, ITV, is to set to be ‘Europe’s clear loser’ due to BSkyB’s aggressive target for its PVR device, Sky Plus, of 2.5 million customers by 2010.
Like all PVR’s, Sky Plus allows users to pause live television, record one programme while playing back another and more importantly, fast-forward through commercial breaks, with its main selling point being that it is very easy to use.
With so much at stake, Merrill Lynch says it expects broadcasters to react and re-invent spot advertising in order to fight off the threat of PVRs. This includes increasing sponsorship, product placement, targeted ads as well as more interesting and interactive commercials.
Overall, Merrill Lynch does not believe PVRs will significantly change viewing habits or kill television advertising because if this happens people will have to pay to watch television and not everyone will want to or be able to afford to do this.
The report added: “In other words, we believe that PVRs will not kill the broadcast model but alongside audience fragmentation they will certainly cause it to weaken.”
Merrill Lynch: www.ml.com
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