television's shift to the internet
DESCRIPTION
How online video web sites are gaining momentum between viewers and advertisers alikeTRANSCRIPT
TELEVISION’S SHIFT TO THE INTERNET:
HOW ONLINE VIDEO WEB SITES ARE GAINING MOMENTUM
BETWEEN VIEWERS AND ADVERTISERS ALIKE
Alex Baker.Taylor Hass.Andrew Kay
INTRODUCTION
Due to the popularity of new and interactive media on the rise, more and
more television content is becoming easily accessible to viewers through the web.
With networks putting popular content on their web sites, as well as additional sites
and programs such as Hulu, iTunes, and AppleTV, people are turning to their
computer screens in addition to their television sets to enjoy their favorite shows.
While this new business model is certainly a step in the right direction that adapts to
the fast-paced lifestyle of the 21st century, there are a few glitches that still need
adjustment. There is a huge concern over whether or not networks are making
nearly enough money off of advertisements shown on shows accessible through
the web. With the total number of videos watched online up 41% from a year ago,
according to reports from the internet measurement firm ComScore, networks need
to make sure they are not allowing viewers to completely alienate their television
sets. Overall, however, this new platform is taking technology to another level. While
some of the networks are major contributors to this online shift, cable companies
should be careful not to make all of their content available on the web, or they will
have to start charging subscription fees to stay in business, as customers might
start to cancel their monthly cable subscriptions. (Fritz)
HULU
Hulu is an online video service co-owned by NBC Universal, News Corp. and
Providence Equity Partners. The website offers TV shows, movies, and video clips
at Hulu.com. The company is all for free for anyone in the United States. Founded
in 2007, Hulu made it their mission to assist people in finding and enjoying premium
video content whenever and wherever they wanted it. (Hulu)
Beyond their own website, Hulu videos are accessible through AOL,
Comcast, MSN, MySpace, Yahoo!, as well as personal blogs, and fan sites. The
content
brings
together a
wide selection
of videos from
over 130
content
providers. (Hulu) FOX, NBC Universal, MGM, and Warner Bros, are just a few that
provide the site with more than 1,000 current primetime TV hits.!Hulu’s user
experience is focused on providing the browser with quality and convenience. The
system is easy to use and simple to share. The website does not require the viewer
to download any software. All that is needed to view the high quality videos is Flash
9.0 and an Internet connection. (Hulu) From here the user is able to share full-length
episodes or short video clips via e-mail, posting to a Web site, or on their social
networking page.
Due to these commitments Hulu has done well since their public access
debut March 12, 2008. Hulu has grown from a small video streaming company to
Photo from Hulu.com
now streaming around 308 million videos a month. (Fritz) Another reason why the
site is successful is because it is free and videos on the site contain fewer ads than
on cable TV. With the acceleration of Hulu’s popularity it could cause the shift of
advertising dollars to online formatting from broadcast and cable TV. In 2007,
Forrester Research estimated that marketers would spend $471 million on online
video advertising, with about that amount transferred directly from broadcast and
TV ad budgets. (Learmonth)
While cable television might be
dwindling in viewership, advertisers are
shifting their medium to a more focused
internet-based version rather than losing
money on cable ads. Advertisements on
Hulu run for two minutes per every half-
hour of content and are unskippable.
With broadcast TV there is no guarantee
that advertisments are being watched, on
the Internet there is no doubt that the
viewer has to watch them. (Learmonth)
Todd Dagres, principal of Boston-based Spark Capital is invested in a
competitor of Hulu and believes that television is dying out. “Eyeballs are shifting
away from TV not because people want to watch TV on their computers, but
because they don’t want to watch TV.” (Learmonth)
2.3millionHuluplayers
onover82,000websites
with1,000+prime‐timehits!!!
To confirm these statements, The Council for Research Excellence, has
executed a $3.5 million dollar project titled “Video Consumer Mapping Study.” The
project does just as it says, the initiative is described as, the largest and most
significant observational study of media activity ever undertaken. (Atkinson)
The goal of this research funded in part by Nielsen Media Research, is to
find out what really is going on in the consumption of video and television. The
research includes what age groups do the most media multi-tasking and if younger
viewers are in fact shifting away from traditional TV. (Atkinson)
Steve Sternberg, the executive Vice President of Magna, stated that, “multi-
tasking is not a young person’s phenomena.” The results from this information will
help marketers ask the right questions about their fears of the rise of DVR and
online television. (Atkinson)
NETWORK VIDEO SITES
Perhaps the most well known way to enjoy television content through the
Internet is simply by visiting the Web sites of major television networks. While only a
percentage of viewers may be informed of sites such as Hulu, almost everyone who
watches TV is aware that the stations they tune in to have their own web sites with
a surplus of video content, including full episodes of
popular shows.
Major TV networks such as ABC and NBC
began putting episodes of popular shows such as
“Lost”, “Desperate Housewives”, and “The Office”
online for free around April of 2006. What started off as a two-month trial has now
turned into a major model for the television industry that has contributed greatly to
the online shift. “It’s really an opportunity for us to learn about a different model,”
Disney-ABC television group
president Anne Sweeney shares.
“We should not allow the industry
to have only one business model,
and the trend of declining television viewers must be remedied.” (Reuters)
Similar to the idea of Hulu, iTunes, and other technologies such as DVR and
TiVo, online content allows viewers to chose when they view their content. They no
longer have to stop what they are doing and set aside a time to watch new
episodes of their favorite programs. They too run short ads 2 to 3 times during a
show, forcing the advertisements upon the viewer but for a much more tolerable
period than basic television. Like Hulu, advertisers should be much more confident
that their ads are being viewed, since they are not able to be skipped, and therefore
will hopefully be more inclined to buy slots from the networks, allowing the business
model to be successful despite little to no subscription fees.
While advertisers should be fighting to get slots on the internet-based airings
of shows, some are questioning the networks ability to make nearly as much
through advertising as they do through traditional television methods. Part of the
problem comes from the fact that when ABC first launched their program, they
allowed consumers to get used to the low-volume ad model. It is a model that goes
hand in hand with the fast-paced lifestyle of the 21st century, as people who are
sitting in front of their computers are less likely to be patient when it comes to load
time or in this case, advertisements. Although advertising rates per viewer are
higher on the Internet than on broadcast TV, the lower volume of ads makes it
nearly impossible for online ad revenues to catch up to that of standard television.
Since viewership through traditional TV has not yet dwindled, this has not yet posed
a serious issue. But with more and more people becoming familiarized with the
internet revolution of television, the number of ads shows every thirty minutes may
have to change in order to keep the networks from losing too much money and
going out of business. While this could pose a serious threat to the loyalty of the
viewers, it is something that people may just have to get used to if they went to
enjoy premium television content on the web. (Fritz)
iTUNES
Apple’s iTunes, one of the most popular digital media player applications,
has brought a challenge to cable television and DVD sales. iTunes library provides
hundreds of movies and television shows. Viewers are able to download these
programs directly on their laptops and iPods quickly and at a reasonable cost.
iTunes offers programs that aren’t easily found on cable or in video rental stores.
With the click of a button one can download anything from vintage films to movies
made by independent filmmakers to TV shows and documentaries from all over the
world. Not only has iTunes increased variety in television and movie viewing, but it
has made watching these programs more portable then ever.
Many people believe that Apple will lead to the demise of cable television.
They predict that people will no longer be inclined to pay a cable company when
they can get what the company offers and more straight from their laptops. Blogger
Bill St. Arnaud comments, “the speed of cable TV’s demise will depend on how fast
Apple can get films and TV shows from all over the world on iTunes.” (Macenstein)
The recent launch of the product’s second version has already led to a 17% slump
in Blockbuster's share price. (Walmsley) iTunes users can rent movies for a similar
price that they could at a video rental store.
Some may wonder why you would pay $1.99 to watch a television show on
iTunes when they could watch it for free when it airs on broadcast TV. Many
people, especially college students and busy 20-somethings find that this “on-
demand” style viewing fits their lifestyle perfectly. They don’t have the kind of
regular schedules conducive to watching their favorite show at the same time every
week.
Recently, the introduction of AppleTV has revolutionized “on-demand”
viewing and even further contributed to the downfall of cable. AppleTV, which
began shipping in March of 2007, is essentially a tiny white box that wirelessly
transmits the shows and movies you've downloaded from your computer to your
TV screen. You can also access your entire iTunes library including your music,
movies, podcasts and photos. AppleTV also allows direct access to YouTube. "This
is the biggest realignment of the distribution of entertainment in history," says Colin
Dixon. "I don't think that traditional broadcast – cable and satellite – are going away
tomorrow, but they must change to maintain market share." (Gerson) Many analysts
believe that consumers eventually will shy away from DVD’s and turn to the Web
and their computers for movies much like they have for music. Online music
services have had a major impact on falling CD sales, which may be an indication of
things to come in movie and television industry. (TECHWEB)
The shift of focus from the television sets to computer screens is certainly
one that could potentially change the industry. Despite the potentially advertising
issues, which can easily be combated despite upsetting consumers, the
convenience as well as low cost makes it the optimum choice for television viewing
for the majority of viewers. While many are used to the comfort that comes from
sitting on the couch in front of the television set, others are becoming more and
more reliant on the many possibilities that are available for free on the internet. In
addition to the many legal options discussed throughout this paper, many other
underground and illegal sites provide full-length episodes available to those who
missed out on the broadcast debut of their favorite shows. The legal websites we
have discussed are aware of these other possibilities, and are doing everything they
can to stay on top of their game and provide the best quality video for the best
price. Networks and cable companies need to account for the obvious shift that
stands before them. The shift to online video is one that is inevitable, and cable
companies as well as the networks need to do everything they can to
accommodate for these changes and provide content on the web that is high
quality and easily accessible to viewers.
Works Cited
Atkinson, Claire (2009, March 17). Major Research Report Expected To Explode TV
Viewing Myths. Content Agenda, from
http://www.contentagenda.com/article/CA6644644.html?industryid=45173
Fritz, Ben (2009, March, 13). TV goes overboard with Internet. Variety, from
http://www.variety.com/article/VR1118001234.html?categoryid=14&cs=1
Gerson, Jen (2007, January 16). Apple TV. Retrieved March 1, 2009, from The Star
Web site: http://www.thestar.com/article/171324
Learmonth, Michael (2007, October 29). NBC, News Corp. unveil Hulu.com.
Variety,
http://www.variety.com/article/VR1117974896.html?categoryid=14&cs=1&n
id= 2567
Macenstein, Dr. (2007, April 3). Is iTunes changing the way 20-somethings watch
TV?. Retrieved April 1, 2009, from macenstein Web site:
http://macenstein.com/default/archives/573
No Author (2008, November 26). Blockbuster Takes On Netflix, Apple With Direct-
To- TV Player. TECHWEB, Retrieved March 30, 2009
No Author, (2007, March). Media Info. Retrieved April 1, 2009, from Hulu Web site:
http://www.hulu.com/about
Porch, Scott (2008, January 22). Will Apple TV kill cable/satellite? Netflix? Retail?
Rental? Retrieved March 1, 2009, from Apple Zombies Web site:
http://applezombies.wordpress.com/2008/01/22/will-apple-tv-kill-
cablesatellite- netflix- retail-rental/
Reuters. (2006, April 11.) ABC to put TV shows onto its Web site. Retrieved March
1, 2009, from The Hollywood Reporter Webs site:
http://www.hollywoodreporter.com/hr/search/article_display.jsp?vnu_conten
t_id= 1002314574
Walmsley, Andrew (2008, January, 30). Scene is set for global TV revolution.
Marketing, pg.14, Retrieved March 30, 2009.
Whitney, Daisy (2008, October 13). Daisy's digital diary; Cast a Vote: Should I Go
TV- Free?. Television Week, Media & Tech, Retrieved March 31, 2009