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Report: 85% of DVR Owners Skip Commercials - August 6, 2008

Ad-supported TV is losing value fast, with 85% of consumers with a DVR skipping 75% of all commercials on TV, according to a new report from consumer research firm Oliver Wyman. The firm surveyed 1,000 consumers in the U.S., Europe and Asia to study TV habits for its report.

Ad-skipping is expected to be even more prevalent in coming years as DVR prices continue to drop. Oliver Wyman found that 25% of consumers now own a DVR, while another 20% plan to buy one this year.

Consumers said after convenience, ad-skipping was the most important factor in using a DVR. Just 5% of DVR owners didn't skip any ads.

Ad-free TV is also becoming expected. Two-thirds of those surveyed said they wouldn't be willing to watch any advertisements at the beginning of the show to watch the rest of the program uninterrupted yet 85% said they wouldn't pay to skip ads altogether.

"With such prevalent ad skipping and format substitution, prices for ads will inevitably decline, as advertisers question the value of traditional TV commercials and reallocate their marketing spend to new channels with better targeting and measurement capabilities," said John Senior, a partner in Oliver Wyman's Media and Entertainment practice.

Nearly one-third of consumers now watch TV shows on non-linear formats – either on the Internet, DVD, video on demand, or a DVR, according to the report. Among those considered early adopters, 57% watch TV in other formats.

Senior said content owners and others will have to re-examine their business model in coming years given the shifts in behavior. One of the biggest opportunities will be in search and discovery services to help consumers find shows they want to watch, he said.    -- Jennifer Netherby
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