Phillips Patents No-Ad-Skip Technology
John Gartner of Marketing Shift made a posting on Thursday, April 20th reporting that Royal Phillips Electronics Company, who owns TiVo, has applied for a patent on technology that would prevent people from skipping through advertising on their DVRs. The consumers would be allowed to either pay a premium to see the program sans advertisements or be forced to view them at regular speed like the rest of the huddled television watching masses.
A few days earlier, John made a post that called out the need for an invention that bridged the gap between advertisers and consumers via DVR. He said “TiVo and the other DVR manufacturers must craft a difficult compromise that satisfies advertisers and the TV networks on one side while also mollifying consumers on the other.” The situation as it currently exists jeopardizes the trusted model of television advertising both from the side of advertisers who are experiencing diminishing reach, and networks who will ultimately have to slash costs for slots as a result of the shorter reach.
Similar to what happened with the Mp3 file sharing epidemic that threatened the music industry, the obvious alternative was to simply charge people. The central benefit of DVRs is not that they allow people to skip commercials (although no DVR owner would complain about this) it is that they enable their owners to record television and view it at your convenience. John says “I would still use my DVR even if I was forced to watch the commercials, but right now it is just too easy to avoid them”.
The trick is going to be implementing this technology universally. If some DVRs have the no-ad-skip technology and others do not, consumers are clearly going to choose the models that allow them to fast forward. Which company is going to be the first to restrict this feature voluntarily? My guess is that it will not happen until someone makes it happen. There will have to be a central mandate from the government (or other all powerful organization) that declares that ad skipping is illegal. They might say that it falls under the category of cable theft and by a certain date will have to be totally phased out. According to the article from the AP, found on Yahoo! News, “Philips wanted to provide the technology and seek the patent only as part of the broader developments within the industry, Philips spokesman Andre Manning said.”
In terms of strategy, this seems to be a great move for Phillips. Whether or not they can leverage the patent technology to other DVR makers, Phillips has made a stride for the industry as a whole and will benefit as a result.
As far as a critique of the piece, I applaud Gartner’s foresight in proclaiming the need for the technology before any of the companies in the industry publicly addressed it. It was a thorny issue with a seemingly simple answer. We will have to wait and see if people stop using their DVRs because they can not skip ads. John and I both agree that they probably will not.