Special Report: The TV Technology Conspiracy

Jupiter's DVR Study Needs Rewinding
The research firm's claim that Digital Video Recorders could wipe out $8 billion in advertising is another example of industry companies conspiring to put hype ahead of the facts.
By Phillip Swann

Washington, D.C. (May 5, 2006) -- JupiterResearch, the New York-based research firm, issued a press release yesterday with this attention-getting headline:

"JupiterResearch Estimates DVR Commercial Skipping Could Threaten $8 Billion in TV Advertising"

The release, or at least its headline, seemed to confirm the growing perception among advertisers and some journalists that ad-skipping Digital Video Recorder owners are not watching commercials. Consequently, several online publications immediately published articles that echoed Jupiter's claim. Multichannel News offered this lead paragraph with its story:

"About 53 percent of (DVR) subscribers are zipping through ads, and if that holds true, as much as $8 billion in cable and broadcast TV advertising revenue could be at risk..."

However, a TVPredictions.com investigation has determined that Jupiter is purposely pushing the "worst case scenario" of DVR ad-skipping rather than offering a realistic forecast based on the data. (See the proof below under the header, "The Jupiter Facts.") 

I can't prove why Jupiter is doing this. But the company stands to benefit financially if the study generates widespread publicity and, therefore, greater interest in Jupiter's research. And there's no doubt that a press release suggesting that $8 billion in advertising could be wiped out is more likely to get attention than one that says $2 billion or $1 billion could be lost. (Or even less.)

In addition, the Jupiter release is more evidence of how technology companies, research firms and technology journalists often conspire to create a perception that new products and services are having a certain impact, or will be wildly successful when first launched.

Forrester Research, for instance, predicted seven years ago that DVRs would be in approximately 50 percent of U.S. homes by now. But the actual number is now less than 20 percent. However, Forrester's findings were reported unchallenged in the trade and consumer media (and still haven't been questioned in updated articles) and were often cited as fact by technology officials at industry conferences. The goal of tech officials and others was to create the perception that DVRs would sweep the nation so that more people would buy them.

It didn't happen.

The Conspiracy
This conspiracy of companies, albeit a loose one (and perhaps even a sincere one) actually hurts the industry in the long run. Thanks to overstated forecasts, many products are burdened with expectations that can't realistically be met. Consequently, some companies are forced to abandon certain products when they fail to measure up -- or change their marketing strategies prematurely -- due to shareholder and management anxieties.

But the short-term benefits of over-hyping new products are too irresistible for technology companies to resist. You can bet that advertising officials will begin to use the Jupiter study as leverage on the networks to lower their advertising fees.

When I say this is a TV technology conspiracy, I don't want to suggest that the companies are actually meeting behind closed doors to develop a strategy to spread hype rather than fact. I don't have proof of that occurring. But I am saying that the companies are individually doing things that help each other create a certain perception.

Why?

* The tech companies (and advertisers) want consumers to think their products are the next big thing or they are having a certain impact.

* The research companies want the tech companies (and advertisers) to buy their research studies. Studies that suggest that products are achieving certain results will get more publicity and more interest from the tech companies.

* The tech journalists want to write stories that seem interesting -- and perhaps reinforce their existing biases.

Together, their actions make up a conspiracy.

The Jupiter Facts
Now let's examine why Jupiter's claim that $8 billion in advertising is in jeopardy is based on hype rather than facts.

1. Are They Really DVR Owners?
Multichannel News reported that Jupiter says that 53 percent of DVR owners are skipping ads. Actually, that's not true. Jupiter's release says that 53 percent of "online DVR subscribers used their DVRs to skip ads."

What's the difference?

Jupiter's research studies are based on a survey of 2,991 people who participate in surveys on the Internet. Of that group, 414 say they subscribe to DVR services. The Jupiter DVR study was based on the responses of the group of 414. However, Jupiter's Todd Chanko, the study's author, tells TVPredictions.com that the firm doesn't know if the respondents are really DVR owners.

"They say they are. We have to rely on what they say," Chanko says.

In addition, it's unclear how many of the 414 "DVR Owners" actually responded to this particular survey question.

2. If They Are DVR Owners, Do They Accurately Represent the Total DVR Audience?
Many research experts say that Net-based surveys may not accurately reflect what average people do. Due to the interactive nature of the Net, online survey participants  are more likely to experiment with new products and services, such as an ad-skipping feature on the DVR.

Chanko says that's not an "unreasonable" conclusion but he says Jupiter is confident that the results are representative because it's a "large group."

3. Jupiter Didn't Ask How Often the DVR Owners Skip Ads
Chanko says Jupiter asked the respondents if they have ever skipped ads with their Fast-Forward buttons. But he says the firm didn't have the "resources" to inquire how often they skip or even if they are still skipping. He says there wasn't room for additional DVR questions in a study that included several other topics.

4. So Jupiter Based Its $8 Billion Estimate On People Skipping Ads "100 Percent of the Time"
That's right. Jupiter says $8 billion in advertising could be threatened -- IF:

"The 53 percent of people who say they are DVR owners -- and who also say they skip ads -- skip ads 100 percent of the time," Chanko says.

Told that that is an unlikely scenario; that it's rare for anyone to do something 100 percent of the time,  Chenko said:

"I'm agreeing with you that it's not likely. I'm not saying it's realistic. It's the ceiling of what's possible. We have posed the 'worst case scenario' for advertisers."

To Jupiter's credit, the firm's release notes that the estimate is based on the 53 percent group skipping ads 100 percent of the time. However, the Multichannel News article (and others) did not mention that fact. Many publications often fail to look beyond a study's attention-getting headline.

However, both journalists and technology officials should be more careful when examining research studies and offering them as fact. Failure to do so will just lead to more hysteria that clouds any serious discussion.

© TVPredictions.com

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Phillip Swann is president and publisher of TVPredictions.com. He has been quoted in dozens of publications and broadcast outlets, including CNN, Fox News, Inside Edition, The New York Times, The Washington Post, The Chicago Tribune, The Financial Times, The Associated Press and The Hollywood Reporter. He can be reached at swann@tvpredictions.com or at 703-505-3064.

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