Are PVRs killing commercial television?

Are we becoming a nation of time-shifters and ad-skippers, destroying the commercial TV business model? Tech-savvy trendsetters say yes, but the majority of Australian homes with Personal Video Recorders still watch live television.

While some Australian homes have abandoned free-to-air television completely, the majority of us still watch at least some live or almost-live broadcasts each week. Sport is one of the biggest drawcards, although it's still tempting to watch the footy on a slight delay using a Personal Video Recorder. If you start watching an AFL match at quarter time and fast-forward the ad breaks, which are often inappropriate for young children, you should catch up to the live broadcast sometime in the last quarter.

The true power of a PVR is the ability to automatically record your favourite shows each week, letting you dictate your own TV schedule. Unfortunately these "Season Pass" features are so unreliable in most Australian PVRs that they can't be trusted. Its network scheduling bastardry which renders them so ineffective, a deliberate campaign by the networks to "encourage" people to watch live TV and sit through the ad breaks. Their efforts seem to be working judging from the ratings figures and advertising revenues.

In theory PVRs take the power away from network programmers, but in practice the networks still seem to rule our lounge rooms with an iron fist.

Time-shift in play

Once you own a PVR it's best to automatically record all your favourite shows each week, by scheduling a Season Pass, even if you intend to sit down to watch them live. This way you don't need to arrange your life around the television. It doesn't matter if you're still coming home from work, at the gym, finishing dinner or putting children to bed when your favourite show starts, you can just sit down on the couch when you're ready and press play.

This way you can still join in the "appointment viewing" watercooler and social media conversations the next day, even though technically you didn't watch it live. After a while you might notice yourself getting further out of sync with the broadcast schedule and simply watching programs when it suits you – assuming you can trust your PVR.

Australia's OzTam television ratings have included time-shifting figures since 2010. They actually allow for this habit of watching on a slight delay – breaking the ratings figures into "Live", "As Live" and "Time-shifted" (also known as "Playback"). As Live refers to people who watched a show later that same evening (up to 2am), while Time-shifted refers to people who watched it within the next seven days.

OzTam lumps Live and As Live viewers into the one "Overnight" category. This masks some of the impact of PVRs and makes it more difficult to determine how many people are watching on a slight delay and perhaps fast-forwarding or skipping the ads. Time-shift numbers are later added to the Overnight figures to determine the "Combined" ratings. This way of calculating ratings is obviously good news for television networks trying to convince advertisers that rumours of broadcast television's death have been greatly exaggerated by a tech-savvy minority.

The most time-shifted programs in 2012 were dramas such as Homeland, Alcatraz and Greys' Anatomy, which saw around a 25 per cent ratings boost once time-shifters were counted. But on average only 6.5 per cent of all viewing is time-shifted, not exactly the television revolution that many people were predicting.

Around 57 per cent of Australian homes own a Personal Video Recorder, according to OzTam, but what's amazing is that 84 per cent of these homes still tend to watch live broadcasts. The As Live figures only rise when two popular shows screen at once, with people watching one program live and the other program later that same evening.

The fact that so many Australians don't make the most of their PVRs and still sit through the ad breaks is a timely reminder that things never change as fast as the tech-savvy early adopters think they will. The networks would have you believe that we're happy to watch live television, but the truth is that they've systematically undermined and crippled the technology which powers Personal Video Recorders.

Is your "Season Pass" up to scratch?

Automatically recording your favourite shows each week relies on owning a Personal Video Recorder with sturdy Season Pass features and access to a reliable Electronic Program Guide – letting the PVR check the TV schedule each day for your favourite shows. Your best options in Australia are a TiVo (which appears to be dead in the water), Foxtel's iQ2 or an IceTV-compatible PVR from the likes of Strong, Humax or Topfield.

You might recall that the Nine Network tried to crush IceTV a few years ago, because IceTV's Electronic Program Guide aims to be more reliable than the hotch-potch mess embedded in the broadcast signal. Freeview has launched its own EPG but it's only available on a handful of Australian PVRs and still doesn't guarantee you'll catch your favourite shows from start to end every week.

The Season Pass features built into off-the-shelf PVRs from consumer electronics giants such as Sony, Samsung, LG and Panasonic are useless in Australia. This is because they're designed for countries where broadcasters actually stick to the advertised schedule. Most of these PVRs don't even check the program guide for last-minute changes, they just blindly record the same timeslot each week and hope for the best. That's a recipe for disaster in Australian lounge rooms.

The majority of PVRs in Australian homes suffer from these limitations, especially if you're counting the basic USB-based recording features built into many televisions and digital set-top boxes. Considering this, it's little surprise that the OzTam figures suggest the majority of Australian PVR owners don't regularly time-shift or use a Season Pass. Some people might be genuinely happy to watch live television, but others will have experimented with Season Passes, missed an episode of their favourite show and vowed never to trust the technology again when it was in fact the broadcaster to blame, rather than the PVR.

A Season Pass disaster drives some people to BitTorrent, which they use as a de facto form of time-shifting to break the link between the broadcast schedule and their viewing habits. But more people simply give up on the idea of a Season Pass and decide that it's easier to either watch programs live or press record manually and watch them later that evening – ensuring they remain Live or As Live viewers in the OzTam ratings.

It seems the majority of people are still watching Live or As Live broadcasts, whether they want to or not, but the networks are clearly preparing for the impact of time-shifting. Even a cursory glance at commercial television makes it clear that the advertising is no longer restricted to the ad breaks. Reality TV programs like Masterchef and The Block are basically one long advertisement, interspersed with an abundance of traditional ad breaks. To add insult to injury there are even more ads superimposed on top of the action.

The PVR revolution one screen at a time

Plastering promos on top of TV shows might help protect ad revenues against time-shifting and ad-skipping, at least in the short-term, but it's also driving more people away from commercial television. The reason why fast-tracking efforts have failed to curb piracy is because pirates don't simply want to watch programs like Homeland in advance, they want to watch them intact. It's incredibly frustrating to watch dramas like Homeland on free-to-air television when the network screens promos over the top, squeezes in excessive ad breaks, deliberately starts the show late, constantly tinkers with the schedule and regularly runs spoilers for next week's episode.

The networks continue to get away with this behaviour because the vast majority of viewers continue to tolerate it. If there was a significant backlash against live commercial television you'd expected to see a corresponding drop in ratings figures or advertising revenues, but the numbers from Free TV Australia reveal neither.

Back in 2009 Personal Video Recorders were in around 15 per cent of Australian homes, rapidly rising to 30 per cent in 2010, 42 per cent in 2011 and 57 per cent in 2012. So the number of Australian PVR owners has roughly quadrupled in the last four years. Meanwhile advertising revenues have slipped, but nowhere near as dramatically.

Revenues have fallen an average of 2.3 per cent every six months since the 15 per cent boom in 2010 which followed the GFC slump. It's true that online advertising is siphoning away dollars which may have previously gone to traditional broadcasters, but if Personal Video Recorders and time-shifting were having a significant impact on ad revenues then you'd expect them to be falling much faster.

Even though ad revenues have slipped, the number of Australians watching free-to-air television has continued to rise. The average number of daily viewers sat at 13.5 million in 2010 and rose to 14.1 million by 2012 (coming off a high of 14.2 million in 2011). Ratings have also increased. Back in 2010 the top 40 television shows brought in an average 1.9 million viewers nationwide, which grew to 2.2 million in 2011 and 3.2 million in 2012 – boosted by the London Olympics. These figures make it clear that more of us are watching television every day and the majority of us are flocking to the most popular shows rather than fragmenting our viewing habits.

While more than half of Australian homes can watch what they want, when they want, it's clear that most people still stick to the old ways and the traditional model is holding steady. Fully-fledged time-shifters and BitTorrent downloaders are a lost cause when it comes to watching live television and traditional ad breaks, but these people are still clearly a vocal minority who haven't yet made a major dent in ratings or revenues.

Rather than trying to win back time-shifters and downloaders, the networks are wisely focusing their broadcasting efforts on stopping As Live viewers from slipping away and even shifting some back to Live viewing. The reality TV trend is helping here, with the time-shifting figures on Masterchef much lower than those on Homeland. The networks are also cashing in on the social media trend, using Twitter, Facebook and their own companion apps to drive the idea of community viewing – requiring you watch live in order to participate in the real-time online conversation.

Rather than bring time-shifters and downloaders back into the fold, the networks should focus their efforts on encouraging these viewers to embrace legitimate Catch Up TV options – where it's harder for them to avoid the advertisements and they may eventually be counted in the time-shifted ratings figures. OzTam already monitors PC-based viewing habits in some homes and is running trials with mobile devices. Bringing in more Catch Up TV viewers, via web browsers, handheld devices and Smart TVs, will also help the networks capture a greater slice of the growing online advertising spend.

Vocal tech-savvy trendsetters may have abandoned live television, but the numbers reveal that they haven't had a significant impact on the commercial TV business model. That doesn't mean that the revolution has been cancelled, just that it's moving much more slowly than some people would have you believe. There's still plenty of time for traditional broadcasters to be cut out of the picture if they fail to move with the times.

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