Why DVRs Are Actually Helping Television

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When TiVo launched a dozen years ago, industry-watchers worried the DVR would be the death-knell of television.

But here we are in the midst of yet another Upfront ad sales season, and DVR technology is actually playing a crucial role in keeping certain shows alive.

Instead of killing the networks and their precious advertisers, in many cases, DVRs provide crucial technology to understand exactly who is watching what, and when.

On Monday NBC renewed "Parenthood" and Fox renewed "Fringe," but not on the strength of the shows ratings when they first air. The crucial factor for both these shows was the viewers they drew on DVR over the week after they debuted. When accounting for a week of DVR, ratings for both shows spiked more than 40 percent. This sends a message to the networks that the shows have broad reach and the potential to really take off.

While networks are only paid by advertisers for ratings for the first three days after a show airs, they monitor ratings for the first seven. They watch these numbers for an indication of what's working and what's worth working on. Broadcasters would like to eventually charge advertisers for that full week of ratings, though that's unlikely to ever be accepted.

Advertisers are understandably resistant to paying for more than three days of DVR playback ratings — they're often looking for immediate connection with consumers — promoting a movie opening that weekend or a limited-offer deal. But still, DVRs help advertisers. They used to pay networks based on an entire show's average ratings, even if people channel-surfed during the commercial break. Now they only pay for the commercial time that's watched during shows the day they air and the three following. And yes, many people DVR a show and then don't take advantage of the feature to skip the ads. Plus, DVRs along with data from cable companies offer far more granular insight into viewers, allowing advertisers to more narrowly target ads.

And DVRs aren't the only technology that's giving broadcasters the boost. It seems Hulu would pose a direct threat to networks — but consumers don't seem to be rushing to "cut the cord" and networks and ad buyers say Hulu doesn't cannibalize viewers but instead allows shows to catch on and gain momentum. The ability to catch up on old episodes or start a show mid-season, can actually drive viewers back to the traditional TV platform.

And while Netflix's streaming service is another technological development that could convince viewers that traditional broadcast is passe, it also is helping broadcasters bottom lines. Netflix shows few recent broadcast shows, but it does pay media giants for access to their libraries — shoes that haven't been on TV for years. In CBS' recent earnings call CEO Les Moonves boasted that its recent deal with Netflix would bring in "hundreds of millions of dollars" in incremental revenue.

The big question now is, whether these digital revenues can grow to be really meaningful, without cannibalizing the billions of dollars spent on TV at events like the Upfronts.

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