TV's battle with DVRs and downloading -- How your shows plan to win you back

By Jeff Jensen
May 25, 2007 at 04:00 AM EDT

On April 23, few shows were flying higher than NBC’s freshman sensation Heroes. The superheroes-sans-tights drama was the envy of the industry — super ratings, super reviews, super support from its network, and super potential as a lucrative multimedia brand. As the series prepared to return from a seven-week hiatus that evening, Heroes seemed destined to leap to new levels of popularity with a string of much-anticipated season-capping episodes. But the next morning, the producers of Heroes woke up to find a big pile of kryptonite on their doorstep. The overnight ratings were in — 12 million viewers, down from 14.9 million for its March ”spring finale,” meaning nearly 20 percent of the show’s audience had apparently decided that Hiro Nakamura and the entire power pack weren’t as super anymore. ”Alarming” is how Heroes creator Tim Kring describes the situation. ”It was quite difficult for all of us to lose a chunk of the audience. They just literally went away.”

The silver lining for Kring and company? They weren’t alone. From Lost to 24, Survivor to Desperate Housewives, viewership on CBS, NBC, Fox, and ABC is down 4 percent over last year. The mystery of the missing eyeballs — worthy of a joint investigation by the crack investigators of CSI (down 21 percent versus the 2005 — 06 season) and Law & Order (off 22 percent) — has the whole TV universe peering back through the tube and rapping loudly on the glass: Hello? Is there anybody out there? Like some seasonal flu bug, the TV tune-out has bitten hardest this spring, and the timing couldn’t be worse: May is the month that networks hawk commercial time on their fall schedules to advertisers. At stake in this annual ”upfront” selling season is an estimated $9 billion. ”It was very tough on us and bad news for everybody,” says NBC Entertainment president Kevin Reilly of the industry’s dip. ”It was very weird. I don’t think anyone quite knows what it was.”

No, but everyone has a theory about the Great Springtime Slide of Aught-Seven. First up is — duh — the annual cultural disturbance known as American Idol: Not only does it steal attention from other networks, it forces them to disrupt their schedules. ”I think American Idol is bigger than a television show at this point. It’s an institution,” says Preston Beckman, Fox’s exec VP of programming. ”The other guys go to bed every night praying it’s going to go down.” And there’s a technological glitch that should be taken into consideration: According to reports, the devices used by Nielsen to measure TV usage aren’t always compatible with newfangled flat-screen TVs. But among the many possible conjectures, the following four seem to best explain why America just isn’t watching TV the way it used to.

Must See TV? How About ”Musty TV”?
It’s a pretty simple, though not always foolproof, formula for success. Great TV = Big Viewership. But the not-so-simple problem this year was that many of the medium’s signature shows turned in creatively uneven seasons, including last year’s Emmy winners 24 and The Office, as well as Lost, Survivor, and even that seemingly unassailable singing ”institution.” Certainly Heroes, Ugly Betty, and Dancing With the Stars have inspired some watercooler chatter, but overall, the 2006-07 TV season won’t be remembered as the buzziest. ”What it comes down to is this: Is it good?” says Lost executive producer Damon Lindelof, who believes the industry’s current fondness for serialized storytelling leaves it vulnerable to fluctuating ratings. ”The minute [serialized shows] are ‘not good,’ the audience begins to jump ship. There’s a very, very small margin for error for the haters to begin hating. When you live in the zeitgeist, you have to prepare yourself to be out of the zeitgeist.”

The Fluke Factor
Believe it or not, many TV execs honestly think that either you were too tired to watch TV, or you found something better to do, or both. Here’s the rationale: Daylight saving time began on March 11 — three weeks earlier than it did in 2006. The impact during that window was statistically small (overall TV usage was down 5 percent over the same period in 2006), but there may have been cumulative effects, as people started leaving the house to enjoy the longer days three weeks earlier than usual. ”Daylight saving time got people out of the habit of watching TV earlier,” says Beckman. Another anomalous blip: Last year, NBC aired the Winter Olympics in February, while the other networks held their original episodes for later in the season rather than compete with real-life blades of glory. This year, however, viewers got an icy blast of repeats in March and April. Explains David Poltrack, CBS’ chief research officer, ”That’s the biggest factor — the heavy repeat factor — for the ratings decline.”

Hiatuses Hurt
Out of sight, out of mind — and out of your TiVo queue. This is especially true if a show is soggy with serial story lines. In an effort to cut down on momentum-killing repeats, the networks gave Lost, Heroes, and Jericho extended breathers during the season — but the strategy backfired. All the shows took some Nielsen lumps, but Jericho ultimately suffered the biggest blow: After losing 1.9 million viewers when it returned from an 12-week hiatus in February, the post-Armageddon drama never recovered and was recently nuked by CBS. Why don’t the networks simply make more episodes so repeats aren’t an issue? Two reasons: money and time. The average season is 36 weeks long, while the average drama makes 22 episodes — and production limitations mean larger episode orders are almost impossible. (Hey, even actors need vacations sometimes.)

Fortunately for Heroes, the series has a concept that’s flexible enough to create new, repeat-killing opportunities. Next season, NBC will fill the show’s hiatus with Heroes: Origins, a placeholder that’s part miniseries, part spin-off. Kring — who will lead a completely separate creative team to produce Origins — says ”the whole impetus” for the new series was Heroes‘ post-hiatus slide. ”This type of show has an addictive quality to it, and when you break that addiction, you have interrupted part of the reason of its success,” says Kring. ”[Fans] just suddenly have other things they are doing — and they know the DVD is coming.” Which brings us to the big twist in this tricky story…

You Actually ARE Watching TV — Just Later
The industry wonks call it ”time-shifting” — using digital video recorders (now in 17 percent of homes) to watch shows outside of their scheduled time periods. It’s a growing phenomenon that also extends to streaming video online, downloading, and DVDs. Revenue from video downloading is expected to nearly triple this year, while Netflix says that approximately 20 percent of the product it ships is TV on DVD. ”Consumers value the ability to manage their time more than ever,” says Ted Sarandos, chief content officer of Netflix. DVDs and DVRs allow fans to ”enjoy a show at their own pace.”

Indeed, when you factor in a show’s delayed-viewing numbers, the whole story of perceived viewership slippage changes. The ”alarming” situation surrounding Heroes becomes slightly less alarming when you learn that an average of 1.7 million watch it later. And Lost, consistently one of TV’s most time-shifted series, sees its audience swell by over 2 million once you include viewers who watch it on DVR within seven days of the original airing. ”We view Lost as being one of the first shows that is transcending the traditional television-watching model,” says executive producer Carlton Cuse. ”The only way to really [assess] the true audience for Lost is to aggregate all those numbers together.”

And therein lies the rub. The lifeblood of the TV biz is still advertising dollars, and until recently, networks have been unable to get sponsors to pay for DVR time-shifting. Little wonder — the chief selling point of DVRs has been their ability to zip through commercials. But the TV suits may finally be winning out: Madison Avenue execs now appear to be willing to accept ”live plus three” ratings, meaning viewers who watch shows live or up to three days after they air. ”There are some people who aren’t as determined to [skip] every commercial,” says Shari Anne Brill, a VP at media buying firm Carat USA. ”So [live plus three] is a better measure of who is more likely to see your ads.”

In an effort to stay on top of the trends, Nielsen Media Research — which began factoring time-shifting into its number-crunching in December 2005 — will soon begin releasing stats on commercial viewership, too. ”It’s been complicated to get the industry to agree to it, because everyone had different desires,” says Nielsen spokesperson Gary Holmes of the commercial ratings system. ”[But] it allows networks to get credit for DVR playback and allows the advertisers to pay only for the ads that are seen.”

Now comes the network’s slightly harder task: convincing the media (hiya, folks!) to refrain from their usual quick-take analysis of a program’s vitality based on next-morning ratings data. If a show gets prematurely tagged as a sinking ship, it could affect lucrative ancillary products like DVDs, videogames, and webisodes. For example, about a third of all Lost DVD purchases come from newbies who never saw the episodes when they first aired, according to studio data. And if we’re really being honest, bad buzz hurts: Nobody wants to be at the watercooler talking to himself. ”If the story is ‘Ratings are down,’ that perception hurts the show,” says Lindelof. ”If you suddenly feel you’re the only one who’s still watching, that’s going to affect [your desire to stick with] the show.”

All things considered, networks would rather you tune in the night an episode first airs. Underscoring that simple fact are the various adjustments each network will make next season to keep viewers from drifting or waiting too long to watch shows on their DVR. Serialized dramas remain hot, but more and more of them — like CBS’ midseason wife-swapping drama Swingtown — will adopt the 24/Lost model of airing repeat-free runs. They’ll also be slightly less serialized. ”We’re going to be looking at giving people the best way to get hooked,” says Kelly Kahl, scheduling chief for CBS and The CW. ”Most of the talks we’re having with producers are about providing a Sopranos experience — in each episode, there will be a story with a beginning, a middle, and an end.”

Among returning shows, the mantra is maintenance — via aggressive online and offline promotion. Prior to Lost‘s return in early 2008, Verizon customers will finally get a long-promised series of two- to four-minute ”mobisodes” featuring an array of castaways, including Matthew Fox’s Jack. Even advertisers will be working harder to snare your attention. This fall, DreamWorks plans on producing a series of 20 ”minisodes” for NBC starring Jerry Seinfeld to promote his animated flick Bee Movie. ”It’s a galvanizing time,” says Mike Pilot, NBC’s head of ad sales. ”It puts the advertiser, the creator, and the broadcaster all on the same page for the first time ever.” As for Heroes‘ Kring, he’s simply trying to get his head around a strain of mutation that doesn’t involve his superpowered characters: ”I think what happened this spring just speaks to the way people are looking at TV. Things are changing. They’re really changing.” Looks like Hiro and company aren’t the only ones evolving.

TV’s Biggest Hits Take a Hit

Few shows were immune to the Vanishing Viewers Virus. The culprits? Hiatus fatigue Jericho, Heroes); slow, season-long declines (24); and those pesky — but oh-so- convenient — DVRs Lost.

Down 2.6 million viewers (Since its Sept. debut)

Down 4 million viewers (Since its Sept. debut)

The Sopranos
Down 1.7 million viewers (Versus last season-to-date)

Down 2.2 million viewers Since its Feb. return

The Shield
Down .7 million viewers (Versus last season-to-date)

Desperate Housewives
Down 5.3 million viewers (Since its Sept. premiere)

Down 2.2 million viewers (Since its Sept. premiere)

Down 5.2 million viewers (Since its Jan. premiere)