'Lost' DVR viewing hurts advertising

"Lost" looks like an advertiser's dream, drawing in the sought-after young viewers who carry their obsession to the Internet, videogames and DVD sales.

But that often fickle audience has grown up with the ability and predilection to time shift their viewing, undermining the traditional way networks earn money for programs.

" 'Lost' has a very young audience that consumes things how and when they want it," says Jeff Jensen, Entertainment Weekly senior writer specializing in "Lost." "It's a show where people want to take the time to savor it. But when the audience says, 'I love you but I can afford to wait to watch you,' you're kind of screwed."

"Lost" is one of the most digitally recorded scripted TV series on the air, with about a third of the viewing time-delayed. That presents an economic puzzle for ABC working in an advertising environment that buys commercial time according to a live-plus-three-day calculation.

Advertisers are leery of buying time on shows that are heavily DVR'd, says Deana Myers, SNL Kagan senior analyst.

"It's not just skipping the commercials, but even if viewers watch the ads, the timing of sales or movie openings is important. If I have a movie coming out that weekend, and that ad doesn't hit people until maybe seven days later or more, what good does it do me?"

Charles Kennedy, senior VP of research at ABC, hopes to unlock the monetary potential of shows such as "Lost."

"What's lagging are the measurement systems and models that are in sync with how (the audience) is changing. About 70% of the audience doesn't have DVRs, so there isn't a big impact on us right now from the time-shifting," Kennedy says. "But we'll need to adjust as more people come into that world."

Kennedy says without DVR capabilities, ABC would lose that extra 30% of viewers who could potentially watch those commercials.

"Of that small slice of the pie representing people who DVR, about 36% of commercials are viewed," Kennedy says. "If Coca-Cola places an ad that runs in six hours or six months, it doesn't matter."

Product placement has been touted as a way to work around viewers' fast-forward tendencies, but "Lost" has never attempted to cash in on that.

"'Lost' takes place in its own reality, plays with time and the mythic, so it can live for the ages," Jensen says. "Product placement runs the risk of dating it from a creative point of view, and that could hurt future DVD sales."

While jokes have been made about Coke bottles washing up on the island, producers and the network have shied away from anything that would take viewers out of the "Lost" experience.

"This is all new territory for us, but the mantra at ABC Disney is to get the quality first, and we'll figure out how to make money after that," Kennedy says. "Our challenge is to make a business model that works for both our viewers and our advertisers."

Source: Variety