Commercial brands and marketing agencies see DVR ad-skipping as the moral equivalent of Old Testament baby-killing. Devices like DISH Network's Hopper will skip the commercials when replaying a television show, and networks are furious. The television networks feel that ad-skipping infringes their copyright, brands and advertisers feel the technology robs them of their financial and creative investment, and cable carriers are working on patents for devices that display different ads whenever the DVR viewer attempts to skip ads.
The debate has been disruptive and not in the good way. The four major television networks have all filed lawsuits against DISH Network. DISH has sued them all right back. The stakes are high, as the only party involved whose livelihood is not fundamentally threatened is the trial attorneys.
The topic was bound to come up when DISH Network cofounder and chairman Charlie Ergen took the stage as keynote speaker at the D: Dive Into Media Conference Monday night in Dana Point, Calif. Mr. Ergen faced some pretty hostile questioning. Moderator Peter Kafka's first question was, "Why do you want to kill ads?"
Mr. Ergen's response indicated a possible third path -- wherein brands and networks still advertise, consumers see the only most relevant possible ads and the inefficiencies of the marketing industry are minimized.
"I don't want to kill ads. I think advertising is great, and I'm very aware that there are multiple revenue streams in television," Mr. Ergen told the audience, in remarks thoroughly transcribed by Engadget. "But I also don't want to put my head in the sand, and I think the world is changing. As a consumer, I don't want ads that aren't relevant."
"For example, a single mom may not need that testosterone ad. The broadcast industry is slow to adapt to that," Mr. Ergen noted. "It makes sense to give people more targeted ads that make sense to them -- you can run fewer ads and make more money. Our vision is just to do it another way."
To hear Mr. Ergen tell it, technologies like the Hopper can help TV marketers compete better with Internet marketers. "The technology has changed, and we have to look at the total universe of what we compete against," he said. "All of their [web-based] products skip commercials -- on the Internet, you're commercial-free on many things." Mr. Ergen noted Netflix and Amazon Prime as such examples.
In other words, ad-skipping technology may be here to stay, and marketers need to find ways to adapt. One way is to increase product placement inside the content of the programming. (Consider how many Apple logos the viewer sees in a single episode of Netflix's new series "House of Cards.") Another method is a choice of ads, as pioneered by the streaming service Hulu.
Is this Charlie Ergen advocating for positive change in the advertising industry, or is he just defending the turf in the market that his company has cornered?
Do realize that the Hopper does not eliminate all television advertising entirely. The Hopper only skips advertising in a specific segment of programming -- only prime time shows, only shows aired on network (and not cable) TV and only in re-watching sessions 24 hours after the original broadcast. The Hopper cannot skip ads during a live broadcast.
That said, DISH is actively tinkering with their technology. They just introduced a new second-gen Hopper with Sling that allows viewers to send their recorded programming for viewing on a mobile device. That device won a Best of CES 2013 Award, had the award revoked after CBS objected and then had the award re-instated after CES objected to CBS' objections. And DISH's new web-only commercial is unlikely to make any friends in the advertising industry.
"We're not afraid of change," Mr. Ergen said at the conference. "When you run a business, you can fight change or embrace it -- long-term, it's less risky to embrace it. You can lead it and make the rules (or be a fast follower), or be a slow follower and pay more later."
Or, if the TV networks have their way in court, you pay more because your company was on the losing end of some major litigation.
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