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Lisa Napoli May 8, 2007

KAI RYSSDAL: I know I’m not alone when I say digital video recorders have changed my life. Forget not having to worry about setting a VCR anymore. I can’t tell you the last time I watched a television commercial. And the fact that I’m not alone is partly responsible for what’s happening in Las Vegas this week.

Cable TV executives are gathered for their annual industry confab. And there are a lot of long faces. Because one of the big issues they’re worried about is all the time-shifting we’re doing to avoid those commercials. And how because of that, they’re bleeding money.

Marketplace’s Lisa Napoli reports now on what might be a solution.


LISA NAPOLI: ABC and ESPN said today they’re going to offer some of their programs to Cox Cable free, on demand.

There’s a catch. They’re going to disable the fast forward button on your digital video recorder so that you have to watch the ads.

Don’t panic. This is only a test for the moment.

But media professor Ken Wilbur of the Marshall School of Business says if you’re gonna watch a TV show whenever you want, the industry has to get creative in order to make money.

KEN WILBUR: Deals are being done virtually on a daily basis. And I can’t remember a time when the television industry was in a more dynamic state of change.

TV watchers are forcing that change by recording programs and skipping the ads. But why would anyone pay for a digital video recorder if you can’t do that?

Analyst Brahm Eiley of Convergence Consulting says there doesn’t appear to be a win-win solution to this problem.

BRAHM EILEY: I mean, something has to give one way or another. These shows exist on advertising revenue. And if they’re not going to see that type of advertising revenue, then the cost of making these shows are going to be passed on to the consumer .

In other words, ultimately viewers will pay somehow — either with their time or by having to pay for shows that might otherwise be free.

The business of TV may be uncertain, but one thing is for sure: Right now, about a quarter of homes with TV have digital video recorders. That number is expected to more than double by the year 2010.

In Los Angeles, I’m Lisa Napoli for Marketplace.

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