Television studios and Dish Network are embroiled in a legal battle over a new ad-skipping technology the satellite broadcaster recently unveiled called “Auto Hop.” The issue also adds to the larger debate of how advertisers will reach viewers who are increasingly taking advantage of DVR, TiVo and Netflix to watch their favorite programs. We asked Scott Swain, an assistant professor of marketing in the College of Business Administration, to discuss whether this technology is threatening television’s business model and how advertisers are finding new ways to connect with consumers.
Is television’s business model being threatened by technologies such as Auto Hop, or will it endure like it did after the emergence of the VCR and TiVo?
Yes, if widely adopted, technologies like Dish Network’s Auto Hop feature directly threaten the current television business model. Traditional advertising heavily subsidizes the production of network programming, so the networks are understandably alarmed. They’ve wasted little time filing lawsuits for copyright infringement and breach of contract. As Ron Burgundy’s character in “Anchorman” might say, this is “kind of a big deal” because while we hear a lot of talk these days about the rise of alternative media and social media, television is still the dominant mass medium.
Will alternative advertising methods, such as product placement and on-screen pop-ups during shows, become increasingly more prevalent in the TV viewing experience?
This is a great question. I’m teaching a course on advertising and brand promotion this summer and we just discussed this in class. Television producers and advertisers are already experimenting with new ways of getting in front of audiences. After a sitcom episode is filmed on a set, virtual products can be strategically inserted to take advantage of the likely visual focal points in a scene. In a rerun of “How I Met your Mother,” for example, a virtual water bottle with the Geico gecko on it was inserted on a shelf near actor Neil Patrick Harris’ head as he talks on the phone. Such product placements can be customized across time and viewing markets. Similar product placement is also common in movies, video games and applications. One would also expect advertising to become a part of augmented reality technologies such as Google’s Project Vision glasses.
What role do consumers play in how and how much they should be exposed to advertising while watching previously recorded programs or TV shows via services such as Hulu or Netflix?
My students made a very interesting observation on this point. While technologies such as Auto Hop, Hulu and Netflix may seem to give consumers the ultimate control over the ads they see, the opposite may be true. In the current television business model, most ads are easily identified as such and are fairly compartmentalized in terms of timing and placement. As brands become more integrated into the content and “real world” experiences, consumers have less control over their exposure to brand images and messages. Perhaps more concerning is that consumers may also be less likely to consciously recognize that they are receiving advertising. This is not an argument against advertising. Indeed, if not for advertising it would be very difficult to learn about new products and services or to become informed about our options in the marketplace. Additionally, brands are carriers of social and cultural meanings and often provide consumers with templates to help construct their social identities. There’s no doubt this is an intriguing and challenging time for advertisers, and technologies like Auto Hop may just accelerate the innovation process.