MAGNA releases 2014 DVR/VOD viewing forecast


IPG Mediabrands agency MAGNA has issued its most recent On-Demand Quarterly, with the latest data and analysis including detailed commentary on advanced TV advertising in the US through Canoe (David Verklin).
The year-end 2014 forecast for DVR subscriber households is 52.3 million (44% of TV households), up from 28.6 million (25% of TV households) as of the end of Q3.  They note that the aggregated impact of DVRs will likely continue to be outpaced by rising population and increases in consumption of conventional TV.

Over the 10 years between 2004 and 2014, MAGNA estimates that DVRs will contribute to a 4% erosion in total viewing impressions across all dayparts.  However, rising DVR penetration will be more than offset by increases in TV consumption (which has been slightly less than1% per household in recent years) and increases in total households (which has been slightly more than 1%).  These latter two figures will drive a 20% increase in total viewing impressions over this ten-year time-frame.

While DVRs will continue to disproportionately impact younger target audiences and network prime time, the aging of our society and the gradually eroding importance of network prime time will likely render such targets incrementally less important in the years ahead.

By 2014, MAGNA expects that true VOD (distinct from the simulated VOD offered by DBS providers DirecTV and EchoStar) will reach 68.8 million households (approximately 57% of television households).  This compares with 40.4 million VOD households (36% of total TV households) at the end of the third quarter of 2008.
They estimate that 68.3 million households had broadband access as of September 2008, 63% of the country’s 117.7 million households.  Total broadband access is expected rise to cover 86.2 million households by the end of 2014.

With recent press around Canoe – the US cable industry’s advanced ad platform – observers have been keenly interested in the venture’s developments.  Said the report: “Although the potential of Canoe holds much promise, short-term challenges are rife: the market-size for advanced TV advertising is presently very small, and likely to be meaningfully impacted by troubles with the auto industry.  Concurrently, operational issues and technical limitations may limit the speed with which the platform can move beyond a stage which would be considered experimental to the largest national advertisers.”

Specifically, Canoe’s potential success requires:
* Identification of advertisers who uniquely benefit from Canoe given a wide range of media vehicles available to accomplish marketing objectives
* TV inventory owners’ ability to tap non-media budgets such as those for CRM or direct mail
* Advertisers’ acceptance of the platform’s limited footprint and limited inventory within that footprint
* Advertisers’ ability to assess advanced TV ‘s impact beyond cost-optimized reach and frequency
* Continued financial support from programmers and MSOs

These challenges can be overcome, but near-term users may not be large advertisers, said the report. “We are optimistic these challenges will ultimately be overcome, but an extended time-frame is necessary for them to be sufficiently addressed for the country’s largest advertisers.  However, as we have previously noted, different sub-segments of advertisers (such as small and mid-sized advertisers) may find these limitations to be non-issues, and to the extent the Canoe platform seeks to expand the market for television to a broader range of advertisers (which may involve the development of alternative creative units and the establishment of different sales processes/tools), the platform may be better positioned to grow in the near-term.”