Upfront 07

Is Crucial Daypart Finally Past Its Prime?

Megabillion TV Jackpot Is Evolving Into Big Events (Sports, 'Idol') Vs. Time-Shifted on Demand (Everything Else)

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NEW YORK (AdAge.com) -- Prime time used to be "appointment television" time. Problem is that these days many viewers, especially the younger generation, are skipping their appointments.

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Sure, Fox continues to break records with "American Idol," logging 70 million votes for its contestants in mid-April. And no network would consign the Super Bowl or Academy Awards, the top two live TV events, to any other daypart.

But if you want an indication of the status of prime time -- that three-hour slice of the evening that last year attracted $15 billion in TV ad spending -- check out what young people are saying at the University of Southern California's Entertainment Technology Center. The center is a nonprofit venture funded by major entertainment and tech players, ranging from Disney to Cisco, and its "Anytime/Anywhere Content Lab" tracks how students are watching TV.

The good news: Many of these extraordinarily connected young people are watching more TV than ever. The bad news: They're not watching it when the networks and advertisers planned.

"I've watched very little [scheduled] TV since I got my TiVo," admits K.C. Blake, a business student who's participated in the "Anytime" trials. "I time-shift almost every program I watch so I can fast-forward. I watch more programs than before." He adds that he stops if there's a fun commercial he wants to see.

Mr. Blake says he frequently makes his program-viewing and product choices based on word-of-mouth, often via social-networking sites.

The idea of needing to be home in the evening, glued to the TV to watch your favorite shows, is going the way of the cathode-ray tube.

But will prime time be nibbled to death by digital video recorders, broadband and on-demand options? Maybe not to death, but industry observers see big changes ahead for the daypart. The first signs of weakness may already be appearing. Prime time attracted $15 billion in ad spending last year, up 2% from 2005, according to TNS Media Intelligence. But that was down from a 2.7% gain in '05.

Varying options
The experts readily predict prime time will change, but the specifics of how it will change vary.

"There will only be two kinds of television in the future: event television and on-demand television," says David B. Wertheimer, former Paramount Pictures digital entertainment chief and now executive director of USC's Entertainment Technology Center.

"We'll see sports on one end, scripted dramas on the other," he says. "Shows like 'American Idol' will blur that line -- if you're watching it live, you have an opportunity to participate; you get an enhanced experience. But if you miss it live, you can see it whenever and wherever you choose."

Or maybe the broadcast model will start looking like HBO with ads. A show will air repeatedly on the network, with broadband and on-demand options, DVD releases of the show, and viewers time-shifting with their DVRs. As on-demand usage increases, advertisers will be looking at a much wider set of show ratings that reflect anytime/anywhere patterns of viewership, rather than fixating on prime time.

Adding up views
For instance, the premiere of HBO's "The Wire" last September had a prime-time rating of 3.4. Add in all the possible ways of viewing the show while the series was airing on the linear channel, and that number rises to a 13.9 rating. On-demand viewing added 1 million orders to the 1.1 million homes that watched the premiere, and another 200,000 watched it in playback up to seven days later, according to figures provided by HBO and sourced from Nielsen Galaxy Explorer and Rentrak.

"We can't really do good business if we only show it once," says David Baldwin, exec VP-program planning at the Time Warner-owned cable network.

Mr. Baldwin says NBC is at the forefront of exploring new alternatives with initiatives such as its "TV 360" effort and its online video venture with News Corp.
The HBO model: Shows such as 'The Wire' can double their viewers via on-demand options.
The HBO model: Shows such as 'The Wire' can double their viewers via on-demand options.

"They understand they have to create possibilities that are more about pointcasting [to niche audiences] than having a higher CPM [cost per thousand viewers] price, and their efforts online are very much geared to a different ad environment," he says, adding: "There has to be a softening of the linear market. ... [The networks] can't simply keep raising CPM pricing."

Nevertheless, Mr. Baldwin is a booster of prime time's continued dominance. Its mass reach is the key. "Network TV has an extremely long history of doing what it does, and the game for them will change over time," he says. "But it's selling mass audiences, and when advertisers want to sell their products, there are only a few places to go."

Willing viewers
While Shari Anne Brill, VP-director of programming at Carat USA, New York, sees a slight altering of the cartography of the TV landscape, she also says, "Prime time is just as powerful [as ever]. People are redefining their own prime time with their gadgets. Consumers who have the luxury of time-shifting have remapped the prime-time experience. The implications are that same-day viewers are still receptive to commercial content."

Besides, Ms. Brill says, "Most people want to be couch potatoes. The PC is an alternative when you've missed shows or to gain access to additional content."

The networks aren't ready to write any epitaphs for prime time either. Bill Morningstar, exec VP-sales at the CW, says the daypart couldn't be stronger. When asked if prime time is waning, he asserts: "It's the opposite. People are spending more time with their favorite shows. On 18- to 34-year-olds, we're the only [broadcast network] that's up on all three [Nielsen ratings] streams -- live, live-plus-same-day and live-plus-seven [through the end of the first quarter]."

Number of viewers will always matter, but not just those who tune in between 8 p.m. and 11 p.m.

"Not only do the networks have to pull huge numbers with a single show, they now need to distribute it to as many places as possible," says Steve Safran, managing editor of Lost Remote, a blog with the tagline "Where TV finds its future."

"The future lies in niches [rather than big blocks of airtime]," he says. "Content providers will have to demonstrate to advertisers how many people are watching in full regardless of time of day."

Ripe situation
Such an environment, where prime time becomes anytime rather than a set block of hours, is conducive to niche players such as Ripe Digital Entertainment, which delivers on-demand content via cable and cellphones.

Young men are watching Ripe's auto and lifestyle content all the time, says CEO Ryan Magnussen, himself a USC graduate. The spikes occur between 10 p.m. and midnight, though some traffic highs come as late (or as early, depending on your perspective) as 3 a.m.

"Old media are saddled with an old infrastructure," says Mr. Magnussen, whose company's backers include Time Warner. He says the web has destroyed business models from financial services to travel and is now bearing down on TV.

"Will it be that dramatic?" Mr. Magnussen asks. "I don't think the big entertainment companies are going anywhere -- they have the access to the talent and marketing. But there will be new entrants that program for this new prime time."

Content is key
"Prime time is evolving," Ms. Brill says, "but live viewing is alive and well. It still accounts for the preponderance of viewing -- DVRs are never going to be what VCRs are [as far as the number viewers using them]. It all starts with good content, and that comes from the network. Viewers are only migrating because they missed the linear programming."

Look at NBC's "Heroes," she says, adding that its creators and writers have done a fabulous job of extending the mythology of the show through various video points: TV programming, a digital comic book, blogs. It's available on cellphones. It streams on NBC.com for free with pre-roll ad breaks.

"I believe that the networks have a great opportunity to establish new kinds of advertising opportunities and business models," says Mr. Wertheimer. "There is still an important role for networks and programming, but it will require a different kind of thinking in an IP-enabled world. The result will be more choice for consumers and new models for creators and distributors."
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