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The “Upfront” DVR Battle – and Other Advertising Skirmishes

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As a DVR user since 2001, I can feel the ground shifting beneath my feet.

Last week Cox Communications announced a trial with ABC and ESPN to offer new content on-demand, but with the fast-forwarding function disabled (i.e. no ad skipping). This week networks are negotiating “upfront” deals with advertisers and arguing that they should get paid for viewers who watch their shows on DVRs in the first seven days after broadcast. Finally, Forrester has a new report out today suggesting that the “paid video download market is a dead end.” Instead, according to Forrester, the market will shift completely toward ad-supported video streaming with set-top makers like Motorola offering Internet-friendly hardware so operators can compete with online offerings.

What does all this mean? It means advertisers and content providers are feeling their way toward a new compromise in TV distribution, and they’re getting closer to figuring out the solution that will work.

As a consumer, I want the best of both worlds – free TV with no ads. However, I do understand that ultimately that model won’t keep anyone in business. DVRs aren’t going anywhere, but content providers will continue to make Video-on-Demand and Internet video streaming more attractive to draw audiences to a platform where they can make money. They’ll do this by offering larger content libraries, exclusive content and even new viewing applications. (Think Time Warner’s “Start Over” service, which, oh yeah, uses Motorola technology…)

The technology to keep content providers in business will occasionally go to war with the technology that keeps consumers happy. But because there continue to be advances on both sides, we can count on a pendulum that swings around what is hopefully a happy medium. Of course, that won’t prevent some turbulence in the process.