Wednesday, March 8, 2006
5:00 - 7:00 p.m.
20 Ames Street
Though younger technologies such as Ipods and cell phones
signify the emerging digital era in the popular imagination,
the transformation of television from a broadcast medium offering
limited channels to a digitally enhanced environment of (apparently)
infinite choice may be far more significant in social and historical
terms. Today’s Forum will examine the changing economic
base of American television, the role of audiences and audience-measurement,
the broader role of consumption and advertising in the evolution
of American television. Our speakers are renowned for their
mastery of this complex economic and demographic history.
Poltrack, one of the media industry’s
most respected expert on audiences and audience measurement,
was recently named president of CBS Vision, CBS' new research
unit. Since 1994, Poltrack has been executive vice president
for research and planning at CBS Television, overseeing all
television research activities encompassing
audience measurement, market research, program testing and advertising
Schement is perhaps the leading academic scholar
of the statistical matrices of consumption and information exchange.
He is distinguished professor and co-director of the Institute
for Information Policy, Penn State University.
of TV's New Economics is now available.
[This is an edited summary, not a complete transcript]
POLTRACK presented a CBS study ("Television
Enters the Digital Era, The Era of the Franchise Program"),
saying the shift from analog to digital television is a technological
shift and, as such, could be assumed to be content-neutral.
This is not the case, he explained, as digital television has
changed television from a linear to a non-linear viewing experience.
looking at four specific technologies and how they're changing
the consumption of television: digital video recorders (DVRs),
video on demand (VOD), portable-viewing technologies such as
the video iPod, and the Internet.
video recorders reached the market in 1999, and were predicted
to revolutionize television. It was predicted that 28 million
DVR units would have been sold as of 2005, and 45 million would
have been sold by 2006. I was skeptical that this new technology
would reach 50% of the market in 10 years, as the VCR did, and
so far I've been right. By 2003, 3% of viewers had a DVR; by
2004, the number was 5%, and by 2006, 8%. It would be an understatement
to say that those numbers are below what was anticipated.
question is how much DVR owners are using the device. In our
research, respondents said they did 40% of their viewing in
playback mode. Electronic testing put the figure at 30%. It
is important to remember, however, that this data only applied
to viewing of TiVo equipped sets, and doesn't include other
sets within the home. The data measures the number of sets tuning
in, not the number of people watching. In an Arbitron study,
9% of the Houston sample lived in DVR-equipped homes. In those
homes, 10% of viewing was done in playback mode during the April-May
period, dropping to 7% in the summer.
In a DVR
survey conducted by CBS, persons in non-DVR households watched
5.1 hours of TV a day, while DVR households watched 5.7 hours:
a 12% increase for DVR households. Even more interesting were
the shows watched: broadcast television made up the clear majority,
making up 71% of the television viewed live, 80% of the television
viewed in playback mode, and 73% of the recorded television.
For comparison, note that ordinarily, only 47% of viewers are
watching broadcast television during prime-time.
Of the shows
being watched in playback mode, prime-time programming dominates.
The top 10 shows on playback make up 30% of the total viewing,
while the top 20 represent 47% of the total viewing. Incorporating
both live and playback viewing, the top 10 shows make up 25%
of all prime-time viewing activity, and the top 20 make up 39%.
These figures are far higher than those for non-DVR households,
in which the top 10 and 20 programs make up only 9% and 15%
of total prime-time viewing, respectively.
are the most frequently played back programs? The numbers are
remarkably close to the top-rated programs for non-DVR households,
in both self-reported and electronically monitored viewing.
One noted exception is The O.C., which did much better
in DVR households, probably due to the fact that it's scheduled
against the extremely popular Survivor.
seems to indicate that franchise programs benefit from DVRs.
The monthly audience for CSI is 60 million viewers,
while the weekly audience is only 25.6 million. While most CSI
viewers only see about half of the episodes aired, it stands
to reason that they might record episodes they expected to miss
for playback viewing. In our DVR research, 13% watched the show
live, which is consistent with the 13.9%. However, another 7%
watched in playback mode, and another 15% recorded the program
for later viewing. Added together, DVR households watch CSI
nearly twice as often as non-DVR households.
has just recently added DVR data to its measurements. 8.5% of
households now have DVRs, and the DVR adds 5% to the audience
of the top prime-time shows.
the top-rated shows among DVR households. You can see that they
match the non-DVR ratings quite closely.
ranked by the percent contribution of DVR playback. As you can
see, some lower-rated programs are pushed into prominence by
higher-than-average DVR playbacks, especially those that compete
with higher-rated programs. Some programs do approximately twice
as well in DVR households than in non-DVR households. Along
with the other data, this seems to imply that DVRs are not hurting
broadcast television, but increasing viewership.
It is my
opinion that DVR is a transition technology, one that will eventually
be replaced by VOD, or video on demand, services. Our VOD study
was made up of 18 focus groups, consisting of adults aged 25-54
who were either the male or female head of their households.
No dependent adults were included, since they would not be able
to discuss future purchase intentions. In total, there were
189 respondents in 32 states. This research was intended to
study the leading edge of the entertainment technology market,
so we focused on adults with cable or satellite television.
These respondents were much more likely than the general population
to have broadband Internet, for example.
two VOD experiments. The first asked respondents to select programs
they would be interested in purchasing, the second simulated
a night of TV viewing. In the first experiment, respondents
were offered programs for $1 without commercials and $.50 with
commercials. 95% selected at least one show, and on average
respondents selected 7.5 shows. There was an even split between
those who opted for commercials and those who opted to remove
them. The program list incorporated the top broadcast shows
and the top original cable shows. These findings closely paralleled
the Nielsen age 25-54 rankings, with the top 10 making up 34%
of the shows selected. The next ten top programs showed more
variance. Nip/Tuck was the only basic cable entry.
Together, the top 20 made up 57% of all choices. Clearly, VOD
demand is centered on a small number of shows. Interest is not
isolated to prime-time, however, and daytime VOD demand seems
to be centered on talk shows, specifically Oprah. Shows
that ran more than once a week were priced at $.50 per day,
and $1.00 per week. In late night, The Late Show with David
Letterman and Saturday Night Live led the pack.
We also included feature films recently available at Blockbuster,
for $5 for one-day access or $7 for a week's access. The selections
were consistent with DVD rentals. While the numbers are indeed
impressive, they are far below the number of people willing
to pay for television VOD, although it must be noted that the
prices are higher for movies.
In the second
experiment, viewers were asked to plan a night of television
viewing, choosing from a selection of VOD options and the usual
selection of prime-time network and cable programming. We rotated
the study so each night was represented. Our 211 respondents
chose to purchase 148 programs, or 0.7 per respondent. Hopefully
this demonstrates VOD's potential to create a secondary revenue
stream for major program brands; the DVR, while increasing overall
television viewing, actually detracts from potential VOD revenue.
Consumers with access to both DVR and VOD technologies are split
down the middle on which they prefer, but must be noted that
those who prefer DVR do so for reasons of convenience and variety,
areas in which VOD will only improve in the near future.
One of the
areas in which VOD technology is expanding is at the level of
portable video devices. The most prominent portable video device
at the moment is the Video iPod. While mp3 players such as the
iPod have become nearly ubiquitous, only a small number of their
owners are interested in buying a video iPod. However, 35% of
iPod owners expressed interest in the ability to purchase episodes
of their favorite shows through iTunes. Similarly, 37% of VOD
users were interested in this service. In light of this data,
it seems obvious why ABC is so eager to make episodes of Lost
and Desperate Housewives available on iTunes. While
those without iPods are not clamoring to buy video iPods, the
possibility of video content through iTunes does make them more
likely to consider it. Another new technology is the full-motion
video equipped cell phone. 11% of our study's high-tech panelists
already own a video cell phone, but aside from these early adopters,
few seemed interested in the new technology. In our study, respondents
prefer the Video iPod to the video cell phone by a margin of
55% to 45%. More recent research places the Sony PSP above the
video cell phone but below the Video iPod in consumer interest,
but all pale in comparison to direct viewing on the PC.
It is clear
that non-linear television is the future, and that it will benefit
franchise programs above others. This newfound dominance of
the franchise program will lead to even fiercer competition,
and for the most part, franchise programs are found on broadcast
networks. More and more, this competition includes the Internet,
which is both a competitor and an opportunity to expand the
reach of franchise brands. Let me give you some examples of
how we're expanding our programming into the Internet.
putting TV content on the Internet, such as a short episode
continuation of an episode of CSI: Miami, which received
one million streams shortly after becoming available, or complete
programs such as Everybody Hates Chris, which screened
the pilot on Google video for a short time, receiving 120,000
streams. It also includes live Internet talk shows for reality
shows. It also includes podcasts, blogs, and interactive applications.
Perhaps the most exciting is the NCAA Final Four, which we will
be running live on the Internet. We believe this will break
the record for simultaneous users of streamed content, currently
held by Live 8, with 188,000 simultaneous streams.
up, the era of digital television will be the era of the franchise
program. That is why we formed CBS Vision to research this new
sector. We welcome the opportunity presented by this new era.
SCHEMENT gave a presentation ("Wiring
the Castle: Demograpgy, Technology and the Transformation of
the American Home") examining some of the "bigger
historical themes" that have affected the homes of the
20th and 21st centuries. I'd like to begin, he said, with a
quotation from a 1927 book called Mother Knows Best
written by Edna Ferber. “Such was the Comet family life.
Theirs was the spendthrift and almost luxurious existence of
the American working class. Ready-made clothes; white shoes;
Sunday papers; telephones; phonograph; a radio; pork roast;
ice-cream; the movies. A somewhat sordid household, certainly
but comfortable, too. Bookless, of course. Extravagant with
its quarters, it's half dollars, and its dollars.”
1920s, this description already defines a household in terms
of information technologies. However, new demographics are arising.
New information communication technologies (ICTs) arrive in
waves, displacing but not replacing previous technologies. As
the home has become fuller with information technologies, we
have become not members of a household, but individuals in a
household who participate as individuals.
size of households is declining, and has been declining since
the first census was taken in 1790. We now live in houses with
enough space for fewer than three people. Similarly, the percentage
of households with children has continued to drop, from 33%
in 1998 to an estimated 28% by 2010. Purchasing behaviors are
expected to change as a result. Thirdly, single-person households
have also been going up quite dramatically, with the biggest
jump coming right after the 1960s. The traditional household
we talk about in political circles represents only 7% of Americans
is an overall picture, it is not of convergence, but of fragmentation.
The realities of living at home alone are different from living
at home with children.
of the ethnic population of New York and Los Angeles show the
cities' ethnic makeup changing dramatically between 1992 and
2020, with Asians and Hispanics becoming much larger portions
of the population, and whites shrinking in population percentage.
In New York, whites have already lost majority status, and it
is estimated that this trend will spread to the entire New York
metropolitan area within 5 years, and the entire state in 10
years. In Los Angeles, whites (or Anglos, as they're called
there) have similarly lost majority status. This is expected
to transform the economy, popular culture, the economy, and
still counts, however. The distribution of Blacks in the United
States is still focused on areas of settlement that followed
Hispanics are affected by wars, but also by a $99 tourist fare
to Puerto Rico instituted in the 1950s that also served as a one-way
ticket to New York City, as well as the 1959 revolution in Cuba.
the borders of the historically Black areas run right up to
the edge of the historically Hispanic areas. East of that border,
ranching doesn't work, and west of that border, cotton can't
be grown without irrigation. Even today, population is still
largely determined by this history. Three other states are expected
to make similar transitions as New York in the next several
years: Iowa, Michigan and Kentucky.
think about technology in general, apart from demographics.
Americans have been eagerly purchasing information communication
technologies for a century. The first opportunity to buy an
ICT was the telephone, offered on the day the Battle of Little
Big Horn was fought. The success of television, though, might
not be as technology-driven as it might seem. Prior to the 1980s,
the home had a fairly simple technological environment, whereas
by 1995, the home had become a node on a network. Prior to 1950,
half of all homes didn't have telephone service, and half didn't
have a car. Most had radios, but only one. Now, let's look at
some adoption rates of recent information technologies.
several patterns of diffusion here, some catching on quite quickly,
and others growing quite slowly. There are two markets at work
here, markets of goods (television, radio, VCR) and markets
of rents (telephone, cable). The markets of rents seem to catch
on slower. Even during the depression, people still bought radios
hand over fist, often shutting off phone service to pay for
it. While this might seem backwards, it's worth noting that
even now in poor areas, telephones are easily sacrificed to
afford cable, since the people most likely to call a poor person
on the telephone are bill collectors, police, truant officers,
etc. In addition, radio and cable are more likely to help keep
kids indoors, which is important for their safety in some areas.
Other people's rational choices might not be your own.
my mother bought a television, and we rearranged the furniture
to accommodate it. My mother, never to be outdone, made sure
that the TV was displayed in such a way that it could be seen
through the window, greatly increasing our social standing in
the neighborhood. Newspaper circulation peaked in 1950 with
the advent of television and has never recovered, and isn't
expected to recover in its traditional form. Similarly, admissions to
movies began to fall earlier, while the purchases of books and
maps remained constant. Television did not kill the movies,
however. Rather, the baby boom increased the economic strain
on an entire generation, making it more difficult for them to
get out of the house. The lesson here is that we tend to look
for technological explanations where social explanations might
be more useful. That books and maps remained constant demonstrates
that some media remain fairly constant.
In the 1980s,
homes were inundated with new media, such as answering machines,
faxes, videogames, cable and VCRs, marking a turning point in
the technology environment of the home. By 1995, the American
home looked very different than it had before.
you're all well aware that videogames have become an enormous
industry, but few people realize that 43% of videogamers are
women, and if you take women over 18 as a category, they represent
a bigger market than boys aged 6-17. It might be that 6-17-year-old
boys helped cement the industry, but they're no longer the majority.
The average gamer's age is now 37, and 25% of gamers are over
consumption expenditures on information technology don't change
much over time. From 1930 to 2000, the percentage moved from
4.5% to 5%. The technologies get cheaper over time, and people
tend to purchase multiples when they get cheap enough.
access is, for the moment, holding steady at about 60%. One
area we've been looking at is what happens to rural communities
in the wake of information technology advances. Rural areas
that have Internet tend to have earlier technologies with slower
connections, and their hope for advancement is to attract businesses.
be interested in this, a list of the top prime-time television
shows by ethnicity.
Monday Night Football is the only show that rates highly
among all three.
this is the home that we have become, as a result of our changes
in information technology. This quote is taken from interviews
that we conducted in New Jersey a few years ago, from a woman
named Jill Reston: “That seems to be the best time that
we have our family discussions—when we can get away from
the home and go out to a restaurant where there's nothing to
distract the kids. There's no video games they can run off to.
There's no phone ringing. There's no TV on. It seems like a
lot of the meals around this table—even though we're still
pretty good at coming together as a family around the table—but
usually there will be something that we have to get done. There's
a game coming on or a TV show coming on or something. The phone
will ring during the dinner. So, we look forward to the times
that we can go and take the kids and go out to some place and
then really have good family discussions.” Americans today
have to purchase intimacy, because they've made their homes
into multiplex theaters. It's not a judgment, it's just what
If I were
to ask myself what this means, I'd fall back on a quote from
Henry David Thoreau: “I had three chairs in my house;
one for solitude, two for friendship, three for society.”
This idea of society as a group of individuals, atomistic, is
what we have today. The home we have built for that society
is as Le Corbusier described: “A house is a machine for
JENKINS: David, you made a convincing case for the
centrality of network programming on television, but I noticed
on the charts you showed that only one sitcom was in the top
20. All the successes seem to be dramas and reality shows.
Reality shows have been the biggest change. Sitcoms have been
unpopular before, and they've come back. I think it has to do
with changing conceptions of home. The most successful sitcoms
are the ones people relate to, whereas dramas are mostly concerned
with varying degrees of fantasy right now. One very popular
genre not yet seen in the U.S. is the telenovela. The chart
shown earlier didn't include Univision. Non-linear television
seems to benefit dramas.
Jorge showed some statistics about changing ethnic makeups,
and suggested that might affect the popular culture. Most of
the shows watched by Blacks and Hispanics are on second-tier
networks, not the big three. How do you feel the changes will
Telenovelas do well internationally, not just on Univision.
One of the outcomes of changing demographics is an increase
in what were called in my youth “mixed marriages.”
I think that's fairly unexplored territory.
Our generation segregated its shows. The shows had acceptance
of minorities, but didn't have social interaction between minorities
and whites. Television is finally starting to get this right,
and I think Grey's Anatomy is a great example of that.
HUNTEMANN: My understanding of the threat represented
by DVR had to do with advertisements: that people could watch
whatever they wanted and skip the ads entirely, depriving the
station of money. How do you address that part of the issue?
When polled, 70% of people say they use DVR to fast-forward
through commercials; electronic data puts the figure at 50%.
People tend to skip ads selectively; they tend to stop early
to avoid fast-forwarding through the show, and they stop for
ads they like. Finally, 21% of people who fast-forward through
ads still remember what they are promoting, which is more than people
who don't try to skip them.
HENDERSON: In terms of the data presented today, is
community media (such as public access TV) a factor in television
viewing? Is that something that was explored?
This is an issue of television vs. Internet. The Internet is
more personal. Blogs and podcasts could soon evolve into video,
allowing a greater level of community involvement than television
ever could. Community television will always be a part of television,
and cable has really allowed it to flourish, but the experience
of community television might be transformed through the Internet.
RIKERT: With the Internet, people will soon be able
to effectively make their own TV stations. Will this cause fragmentation
in terms of distribution, or consolidation in a few major networks
like Google or Yahoo?
Overall, I think we're going to see
many forms of distribution, which is why I prefer to be in the
content business right now.
Commercial distributors on the Internet have been very clever
about funneling user attention, but that doesn't stop independent
RIGGLE: You mentioned earlier that the top 10 shows
on DVR were pretty much the same as those for non-DVR viewers.
Has CBS restructured its programming to take advantage of the
long-tail effect, the idea that niche markets can be more profitable
than larger ones over a long period of time?
Viacom is very active in that area. CBS has also done
some research, but not as much. The key thing we're working
on is pull-through marketing, generating demand for extra content
through broadcast television.
I'd like to make a distinction between fast-fowarding through
commercials and using a 15 or 30-second skip. Will you lobby
manufacturers not to produce DVRs with the skip function?
We've essentially already done that. Comcast and DirecTV, the
top two distributors of DVR, have been very friendly to advertisers
in that area. Giving viewers an option to pay extra in exchange
for no ads produces interesting results. In principle, only
a third said they'd watch the ads, but when they had ordered
7 or 8 shows, about half cared enough about avoiding ads that
they were willing to pay for it, the rest chose to watch them.
In general, about a third of people are passionate about avoiding
ads, and the rest are ok with it.
Was there any particular age breakdown on that data?
Young people are more media-savvy, and are more likely to skip
ads in general, but they do like ads targeted at them, and most
ads are, in fact, targeted at young people.
LENHART: You mentioned earlier one of your VOD studies
in which you excluded data from young people living with their
parents, since the parents ultimately make the buying decisions,
but wouldn't you agree that children often drive the buying
decisions of parents, even if they aren't using their own money?
There is, in fact, a large VOD market for children. Nickelodeon
and MTV are active in that area. It's not an issue we're ignoring,
but in that particular case, we were looking at prime time,
which is considered by advertisers to be an adult area.
But the age group you looked at seemed to be one that might
have children who watch prime-time television.
Yes, but the assumption is that they don't make the primary
buying decision. We did do some research on teens that had some
unusual results. We were testing consumer response to the video
iPod, cell phones and the Sony PSP. Parents who had already
bought the PSP for their children were alarmed to learn that
it could play video or go on the Internet; they thought it was
just a videogame console.
The age group you excluded is the group most likely to be knowledgeable
of BitTorrent, or other services that allow them to get television
content without commercials for free. If you're asking the parents
what they'd pay for, and the parents don't know that they could
get it for free, you might get skewed information.
Rights management is a big part of this. We're trying to head
off the illegal market by getting a legal, reasonably priced
product out there first. The music industry waited too long,
and by the time they had legal downloads available, a culture
of illegal filesharing had already taken root.
There's been a lot of consternation in the last few
years about the disappearance of the young male viewer. Jorge's
explanation seems to be that games are drawing their attention,
but to what extent is the Video iPod affecting things?
One problem with the measurement system is that it doesn't measure
out-of-home viewing, and young people often watch television
outside of the home. The statistics are misleading; young males
never actually lessened their television watching, it just appeared
so due to changes in Nielsen measurements.
Something similar can be said about videogames. While young
males are a small part of the market, they play for longer periods
than other groups who play more on average. In addition, gameplay
is extremely social, even as the number of children in the average
How successful has the video iPod been per your expectations,
and what do you see for the future of the portable video device?
Apple says they've sold 1.8 million Video iPods and 12 million
downloads. The Video iPod itself was generally thought to be
too expensive, too heavy, and with a prohibitively small screen,
but portable video is inevitable. High-definition television
was too expensive for consumer demand, but that's starting to
change, and the same thing will happen with portable video players.
Jorge, which technologies do you see taking off in the near
High-definition television is finally inexpensive enough that
it's gaining widespread acceptance. Technology follows a pretty
static pattern, but gear carried on the body, not left in the
home, is the new frontier.
Historically, as people got more television sets, families stopped
watching as groups. Now that people have HDTV and are building
home theaters, there's a single dominant unit again, and families
are gathering around the TV again.
The one constant is that the home is always a place of negotiation,
even when you live alone.
How has the amount of time spent watching television changed
with the introduction of new media?
It's going up. One trend involves the availability of other
media, but those “competing” media tend to keep
people at home, which tends to contribute to watching more TV.
In addition, many young people have become skilled at multitasking,
allowing them to consume multiple media at once.
LIROFF: We seem to be entering an area where consumers
have more control than producers. You've said that the research
done with teenagers has produced unusual results, what will
it be like in ten years?
I'm a bit worried about the sanity of the kids, growing up in
this media environment. It's been suggested that hearing loss
will become very common. Shared experience is always part of
consumption, though, and TV is all about shared experience.
The context might change, but the experience will remain much
For teens, multitasking with media enhances the experience,
and that will affect the way they consume media.
Ten years from now, what device will be the most disruptive
to traditional media? What will become of CBS?
I think CBS will be handling things, whatever comes up.
The Internet is the most disruptive addition, but it also presents
a great opportunity.
Part of the value of digital information is the ability to embed
meta-data. Will content providers be taking advantage of this?
Yes, technology and content will come together. As content providers,
we're more focused on that, but the CBS Corporation is always
looking for technology to match it.
My generation was taught to look for information, but I think
this one will be taught how to sort through a superabundance
Professor Poltrack, you suggested that technology changes are
content-neutral, and Professor Schement, you suggested that
demographic changes are not content-neutral. I'm concerned about
the news. What's the future for well-financed, highly produced
global news that might or might not be a shared experience?
We are in the process of reshaping our news. We have news bureaus
around the world, but under the old model, we had to throw away
most of our news to make sure it could fit in 22 minutes. We
threw away far more news than we could ever air. Now, the challenge
is to find a way to use all of it.
by Peter Rauch
--photos by Marie Thibault