How the Dish Networks' Ad-Zapping 'Hopper' Could Change the TV Industry, But Not Yet

May 30, 2012 — -- The broadcast industry "upfronts" were held earlier this month. Advertising agency media types put on their best dresses and Sunday suits and attend lavish presentations complete with TV stars, food and beverages. Kelly Clarkson, Robin Thicke and John Legend performed at ABC's Upfront VIP Party.

During Upfront presentations, networks roll out next season's television programming and present their best cases for why they should get their share of the more than $60 billion spent annually on television advertising. In spite of the growth of internet and mobile advertising, television is still the number one platform for advertising and up to 80 percent of commercial inventory is sold during the upfront season. So you can imagine why Dish Networks unveiling of the "Hopper" – a DVR device that would allow subscribers to "auto-hop" (skip) the commercials they record –was considered hard, cold rain on the parade.

This is big, right? The ability to watch a show when you want to and without commercials, well that's like cake and ice cream with no calories. Not so fast there, cowgirl. Although the idea of skipping commercials spurs an interesting debate, in the end not so much is happening …yet.

The networks are bent out of shape because free TV is built on the advertising model. That's where the money comes from to make and air the shows. Subscription services, like cable TV are another revenue model, but advertising plays a big part in that as well.

The networks argue that if advertisers begin leaving TV, subscription prices will go up and less content will be made. Plus, they argue, it is a copyright infringement for Dish Network to allow the recording, saving and airing of content without the commercials. Dish Network dismisses the allegations out of hand arguing that if they make it easier, more TV will be watched and that's better for the networks. Further, they state, since the user is taping the program, they can choose to watch the commercials if they want and that makes it no different than fast-forwarding.

The battle of words took a turn for the worse when Dish Network sued the networks. Dish Network is looking for a ruling on whether or not the device infringes on copyrights. Fox, CBS and NBCUniversal subsequently sued Dish Network alleging copyright infringement.

In reality, everyone may be out of the gate a little early. According to Neilson, only 12 percent of broadcast homes have Dish and only about half of those have DVR's. Add to that the fact that over 80 percent of viewers view recorded shows the same day and with the Hopper, you can't actually skip the commercial until the next day and you realize that there very little to fight about right now. But, devices like the Hopper and online sites like Hulu (savvy web users have been using programs like Firefox's AdBloc to skip the commercials) are bringing in to question whether we are experiencing the warning shots in the coming battle that will give more control to the consumer about how they will view sponsored content.

This work is the opinion of the columnist and in no way reflects the opinion of ABC News.

Larry Woodard is a director on the Advertising Week board and chairman of the American Association of Advertising Agencies' New York Council.

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