Bob Kennedy is a senior partner in Flashcut Editing, Toronto, and chair of the PVR subcommittee for CPAT.

Recently, On the Spot took the position in a cover story that personal video recorders could have a net effect of increasing commercial viewing. I can’t see how anyone can reasonably believe this when one of the PVR’s primary sales features is the ability to bypass commercials more efficiently than ever before.

In the story, OTS quoted sources who expect PVRs to attract significantly greater numbers of viewers to television as a whole, in particular, the light viewers who are too busy to watch the shows they want when they are available. Canadians currently watch, on average, 22 hours of television per week. That’s a lot. How much more room for significant growth can there really be?

And since this growth is to be based on time-shifted viewing on PVRs, one has to contend with at least one survey (New York Times) reporting that 88% of time-shifted PVR viewing bypasses commercials. I fail to see the significant advertising opportunity for traditional commercials that others are claiming.

Nobody has the crystal ball that can foresee how this technology will affect our business. It is too unique and there are too many variables yet to be addressed. But there is a great danger of complacency when one is faced with a truly disruptive technology.

No one should think that the PVR will suddenly make the 30-second commercial obsolete. The worry is that it represents a significant advance in the erosion of the value of the TV commercial. Fewer viewers of commercials ultimately has to lead to fewer dollars injected into the broadcast food chain. At the same time, the PVR can also open up long-term opportunities for new forms of television advertising, but we have to hang on long enough to get there.

The value of a media buy is based on how many people pay attention to the message. Since the early days of radio, there has been a pact with the viewer (or listener) that they can get their programming without charge provided that they give some attention to the sponsor’s message. For most of broadcasting’s history, the sponsors had a captive audience with a measurable payback. But with each technological innovation since the introduction of cable, the pact has been weakening.

For the year 2000, Canadian advertisers paid just over $2 billion to media buyers for TV advertising time on national, local and network channels to honor their end of the pact. About 60% of this went to pay for Canadian programming – which is money that otherwise would have had to come from the consumer’s pocket.

Cable introduced the idea of paying for what you watch. This in itself did not negatively affect commercial viewing, but it opened the way for pay-TV. Commercials were no longer the sole potential source of revenue for TV programming. The CRTC inadvertently encouraged the growth of pay-TV by preventing the cable and satellite companies from participating in advertising revenues in a move to protect the broadcasters.

Next, the TV remote control introduced the idea of zapping ads, but one still has a chance to evaluate the first few seconds of the ad before reacting, and often one ends up on another commercial anyway.

The VCR looked like a very real threat to TV advertising. But, according to Hugh Dow, president and CEO of M2 Universal, despite a penetration of 85% in Canada, VCR recordings only command 5.5% of total viewing time. Only a small percentage of those sold have automatic commercial deletion capability.

Now the two newest technologies are the PVR and interactive TV. Video on demand is coming soon. Early usage surveys of PVRs in the U.S. show that viewers time-shift about 60% of their viewing, and usually skip ads on the time-shifted material. VOD will likely have similar patterns.

The latest PVRs are much more efficient at skipping ads – some PVRs do it automatically. It doesn’t matter if you have good creative in your ads if you don’t even know that the machine skipped the ad.

None of these technologies need kill the idea of television advertising – but as significant penetration levels are reached, they cannot help but make advertisers question the amount of money they are spending on conventional TV advertising when fewer and fewer people are seeing their ads.

TV advertising will likely change substantially in reaction to this over the next few years as the technologies become more pervasive. Try the PVR yourself or talk to someone who has. They are very compelling, and surveys in the U.S. reveal a high satisfaction rate with PVR technology.

When I hear people questioning whether these technologies will take off, I remember the doubts about DVD two years ago. It had come onto the market and was selling below expectations. ‘Why would anybody buy a VCR replacement when you can’t record with it?’ This year, DVD sales exceeded VCRs and DVD rentals matched tape rentals. It was largely an issue of price point and consumer awareness. When the critical points are met, the changes can happen quite quickly.

The technology is evolving fast. Integrated DVD/PVRs are coming soon. One of the hottest products at the recent Consumer Electronics Show was the Moxi Media Center – a souped-up digital media server/set-top box with an 80-gigabyte hard drive. It can deliver video recorded from a TV signal and video or audio stored on the hard drive (or from a built-in DVD/CD player) to as many as four televisions simultaneously. It supports interactive TV, instant messaging, MP3 and e-mail, and it can also feed computers. It is also designed to be cheaper to produce than current set-top boxes.

It is important that our industry engage those who are implementing these technologies so that everyone wins. What’s happening will affect us all, but only a few players are currently involved in working out how the new technology will be implemented.

It is also important that all those concerned be ready to express their point of view to the regulators. Some are already assuming that regulation will protect them from the effects of the PVR. This means that there is a risk that a single powerful interest group will sway the regulators to their advantage because they were ready to engage the CRTC and others were not.

While it is possible that the risks of the PVR and similar technologies are being overstated, the effect of underestimating them would be devastating. And since these new technologies do offer opportunities for interactive advertising, commercials on demand and long-format commercials that you can pause your programming to watch, now is the time to start investing some time and effort towards the future. Now is the time to start working out strategies with all concerned parties (such as ACTRA, the advertisers and the carriers).

We should work in concert to be proactive rather than risk being unprepared for what is surely coming in one form or another.