Royal Philips Electronics is working on a host of ways to change the way viewers watch digital entertainment. To that end, it has peppered the U.S. Patent & Trademark Office with applications for patents on devices that do everything from monitor a consumer's media usage to distribute video clips to multiple devices.
Not all of the proposed technologies will sit well with TV junkies, though. One, for instance, would let watchers skip all commercials in a movie with the click of a button prior to viewing. So far, so good. But that same technology could be used to prevent viewers from switching channels when an ad airs.
ONGOING RESEARCH. Philips (PHG) notes that the technology isn't currently in any of its products. And a spokesman is adamant that, "it was never our intention to bring a technology to market that would press consumers to watch ads." Anti ad-skipping technology and other applications published by the Patent Office in the past month are just part of an ongoing research effort into interactive video applications, Philips says.
Whether and exactly how Philips will use the capability remains to be seen, but the application underscores how electronics makers are at least tinkering with ways to prevent advertisement skipping. Is the Philips application a sign that tomorrow's TVs, digital video recorders, and video-on-demand services will come equipped with features that force the viewer to sit through ads, like it or not?
The answer may make all the difference to the media companies and other providers whose lifeblood is advertising revenue. As much as we'd like to skip ads, most of us still aren't. Research shows that 90% of consumers skip commercials when watching recorded content. By the end of 2009, as much as 10% of programming viewed by U.S. consumers will be recorded, compared with 1% today, says Bruce Leichtman, president of Leichtman Research Group.
BACK TO FREE TV. The potential for ad-skip prevention is great, and it's already creeping in. On May 1, Disney's (DIS) ABC will make several hit shows, including Desperate Housewives, available for free online. Just try avoiding the ads, though.
Anti-ad-skipping functionality might also work with video-on-demand, a service that's rapidly gaining steam. Many consumers might opt to watch ads rather than pay extra for shows like Desperate Housewives, says Brian Wieser, director of industry analysis for Magna Global, a media services company that negotiates ad deals.
Ad-skipping restrictions might also be used in so-called network DVRs, the next-generation of DVRs. With this technology, there's no hard-drive sitting in a user's home. Instead, users get a certain amount of storage on a cable or satellite TV company's server, provided by vendors like Broadbus and Arroyo. Cablevision (CVC) has plans for a trial in Long Island in the second quarter with fewer than 1,000 users.
Network DVR will look a lot like basic DVR. But the service provider will retain more control over what users can do with content. For example, the provider could give users the option to skip ads for an additional fee, says Wieser. Or, it could offer a cheaper subscription if the viewer agrees to watch ads. In the long run, TV-service providers might make more money by giving away service but restricting the ability to fast-forward through ads, Weiser believes. "It's in everybody's best economic interests to disable ad-skipping," he says.
Today, only about 14%, or 12 million, of U.S. households, have DVRs, according to Leichtman. But if it takes hold, network DVR technology could make the service available to anyone subscribing to cable, telco, or satellite TV channels.
TIPTOEING AROUND VIEWERS. Service providers will need to walk a fine line in implementing any ad-skipping restrictions to avoid a consumer backlash. "When consumers have a freedom to do something, and you take it away, it can be a problem," says Dave Clark, director of product strategy and management for home-entertainment products at DVR maker Scientific-Atlanta, a division of networking giant Cisco (CSCO). So far, Scientific-Atlanta's customers -- cable companies like Comcast (CMCSA) and Cox -- haven't asked for anti-ad-skipping features, he says.
The few ad-skipping features that have come onto the market so far haven't been popular. Last September, OpenTV (OPTV), a maker of software used in DVRs and set-top boxes, released its so-called "speed bump" feature. While a DVR fast-forwards through a commercial, a "speed bump" displays the advertiser's logo. "We haven't found many [TV service providers] that are using [the feature]," says Ed Knudson, senior vice-president of marketing at OpenTV. "Viewers are going to skip ads, that's all there's to it."
CREATIVE STRATEGIES. Many companies are coming up with more creative ways to ensure viewers get their regular dose of ads, including building entire shows around products (see BW 4/24/06, "Bet You Can't TiVo Past This"). TiVo (TIVO) has been putting up banner ads when viewers fast-forward. Yum Brands' (YUM) KFC has found success with "secret" ads, which show special promotion codes only to viewers who watch the commercials at normal speed.
OpenTV developed software that allows advertisers like BMW and Hewlett-Packard (HPQ) to show pop-up ads on satellite TV provider EchoStar's (DISH) programming. Viewers who click the pop-up with their remote can get more information about the ad, view an image gallery, watch a longer commercial, or find a list of the nearest dealers (see BW Online, 4/17/06, "Learning To Love the Dreaded TiVo").
Of course, some viewers are going to want to cut back on programming and avoid the ads, no matter how enticing they are. And for anyone wanting to thwart their ad-skipping ways, Philips' technology could come in quite handy.