Will Tv Succumb to the Internet?
Widespread use of high-speed Internet access, powerful PCs with high-resolution display screens, iPhones and other mobile handhelds, and leading-edge file-sharing services have made downloading of video content from movies and television shows faster and easier than ever. Free and often illegal downloads of some TV shows are abundant. But the Internet is also providing new ways for television studios to distribute and sell their content, and they are trying to take advantage of that opportunity.
YouTube, which started up in February 2005, quickly became the most popular video-sharing Web site in the world. Even though YouTube’s original mission was to provide an outlet for amateur filmmakers, clips of copyrighted Hollywood movies and television shows soon proliferated on the YouTube Web site. It is difficult to gauge how much proprietary content from TV shows winds up on YouTube without the studios’ permission. Viacom claimed in a 2008 lawsuit that over 150,000 unauthorized clips of its copyrighted television programs had appeared on YouTube.
YouTube tries to discourage its users from posting illegal clips by limiting the length of videos to 10 minutes each and by removing videos when requested by their copyright owner. YouTube has also implemented Video ID filtering and digital fingerprinting technology that allows copyright owners to compare the digital fingerprints of their videos with material on YouTube and then flag infringing material. Using this technology, it is able to filter may unauthorized videos before they appear on the YouTube web site.
If infringing videos do make it online, they can be tracked using Video ID. The television industry is also striking back by embracing the Internet as another delivery system for its content. Television broadcast networks such as NBC Universal, Fox, and CNN have put television shows on their own Web sites. In march 2007, NBC Universal, News Corp (the owner of Fox Broadcasting), and ABC Inc. set up Hulu. com, a Web site offering streaming video of television shows and movies from NBC, Fox, ABC, Comedy Central, PBS, USA Network, Bravo, FX, Speed, Sundance, Oxygen,
Onion News Network, and other networks. Hulu also syndicates its hosting to other sites, including AOL, MSN, Facebook, MySpace, Yahoo, and Fancast. com, and allows users to embed Hulu clips in their Web site. The site is free to viewers and supported by advertising commercials. CBS’s TV. com Case Study Article Trimester 49 7 Chapter 3: Kenneth C. Laudon & Jane P. Laudon, Essentials of Management Information Systems, 9th Edition, Prentice Hall, 2011 and Joost are other popular Web television sites. Content from all of these sites is viewable over iPhones.
What if there are so many TV shows available for free on the Web that “Hulu households” cancel their cable subscriptions to watch free TV online? Cable service operators have begun worrying, especially when the cable networks posted some of their programming on the Web. In July 2009, cable TV operator Comcast Corporation began a trial program to bring some Time Warner network shows, including TBS’s My Boys and TNT’s The Closer to the Web. Other cable networks, including A&E and the History Channel, participated in the Comcast test.
By making more television shows available online, but only for cable subscribers, the cable networks hope to preserve and possibly expand the cable TV subscription model in an increasingly digital world. “The vision is you can watch your favorite network’s programming on any screen,” noted Time Warner Chief Executive Jeff Bewkes. The system used in the Comcast-Time Warner trial is interoperable with cable service providers’ systems to authenticate subscribers. The same technology might also allow cable firms to provide demographic data for more targeted ads and perhaps more sophisticated advertising down the road.
Cable programmers also stand to earn more advertising revenue because viewers can’t skip ads on TV programs streamed from the Web as they do with traditional TV. Web versions of some television shows in the Comcast-Time Warner trial program, including TNT’s The Closer, will carry the same number of ads as seen on traditional TV, which amounts to more than four times the ad load on many Internet sites, including Hulu. Many hour-long shows available online are able to accommodate five or six commercial breaks, each with a single 30-second ad.
NBC universal Digital Entertainment has even streamed episodes of series, including The Office, with two ads per break. According to research firm eMarketer, these Web-videos ads will generate $1. 5 billion in ad revenue in 2010 and $2. 1 billion in 2011. Will all of this work out for cable industry? It’s still too early to tell. Although the cable programming companies want an online presence to extend their brands, they don’t want to cannibalize TV subscriptions or viewership ratings that generate advertising revenue.
Customers accustomed to YouTube and Hulu may rebel if too many ads are shown online. According to Oppenheimer analyst Tim Horan, cable companies will start feeling the impact of customers canceling subscriptions to view online video and TV by 2012. Edward Woo, an Internet and digital media analyst for Wedbush Morgan Securities in Los Angeles predicts that in a few years, “it should get extremely interesting. ” Hulu and other Web TV and video sites will have much deeper content, and the technology to deliver that content to home viewers will be more advanced.