Future May Be Less Televised

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Is the dramatic rise in Internet-TV viewing eating into traditional television audiences? Two divergent answers to that question emerged at the Future of Television conference here last week.

BBC Worldwide America president Garth Ancier (pictured, below), in a keynote address, unequivocally said he believes Internet viewing is additive to the overall audience.

“Many people fear cannibalization of content. I disagree. It’s about popularization,” he said. “There’s no way to turn this clock back.”

That sentiment was echoed by CBS and NBC Universal executives, who maintained that traditional TV viewing has been steadily on the rise, even in light of the tremendous growth of additional sources for video content.

“It’s early days still, but the good news is that multiplatform exploitation seems to expanding audience, not cannibalizing it,” said NBCU Digital Distribution president J.B. Perrette.

Despite the increase in TV content online, Perrette said, “we continue to see historic ratings on television.” He noted that NBC’s 2008 Olympic Games coverage garnered record audience numbers on TV — 214 million total viewers — even with an additional 3,000 hours of video available online.

He acknowledged that prior to the launch this March of Hulu, the Internet-TV venture set up by NBCU and Fox, the plan had caused “a lot of concern and heartburn from various folks about the effect on linear television.” Since then, Hulu has grown to be the Web’s sixth-largest video destination for September, and in October its audience jumped 87% to 5.3 million unique visitors compared with 2.9 million the previous month, according to Internet measurement firm ComScore.

CBS chief research officer David Poltrack, on the same panel, asserted that even while 75% of Internet users are watching some video online each week, television viewing has gone up 8% in all demographics since 2000. Teenagers, he said, are watching 7% more television over that time.

But in an earlier session, media consultants from Accenture and IBM outlined research about the growing propensity of consumers — particularly younger people — to find TV content online and their overwhelming preference for free, ad-supported content as opposed to paid content.

People 18 to 35 are “significantly dissatisfied with regular linear television,” said David Wolf, who leads Accenture’s global media and entertainment practice, citing the firm’s consumer research. “We’re seeing a massive shift in consumer behavior.”

Among those in this “Internet-fluent generation,” according to Wolf, about 60% are more likely to watch video on a PC or a mobile phone than on a TV. In addition, he said, most consumers do not believe traditional media companies can deliver a complete “end-to-end” experience that would allow them to access the content in the ways they want.

Bill Serrao, leader of IBM Global Business Services’ Americas media and entertainment industry group, provided similar empirical research.

An IBM survey of 2,800 consumers in six countries, conducted online in the third quarter, found that 76% of people have watched PC video in 2008 compared with 60% in 2007. Of that 76%, Serrao said, more than half said they are watching less traditional TV.

In Ancier’s view, however, the immediate and serious threat to programmers is the profound effect the digital video recorder continues to exert on TV advertising.

The ability for viewers to fast-forward through ads using a DVR is the biggest challenge cable programmers face — and they must work with operators to figure out a solution, according to Ancier.

“Commercial-skipping is severely threatening the economic model,” he said. “This is our biggest challenge … and this is frankly what is killing the broadcast networks as we speak.”

BBC America, distributed to 63 million homes in the U.S., has an upscale audience that disproportionately uses time-shifting services like digital video recorders and video-on-demand, according to Ancier. For example, 65% of its audience has watched Top Gear on DVR.

While some industry research has indicated DVR viewers watch half of all ads in a recorded program, Ancier said he’s never seen that. “We’ve seen more like 30% of people watching our commercials on DVR, if that.”

Because BBC America is in the position of “being the most DVR’d network,” it has to work with Comcast and other operators to figure out how to insert commercials that are timely and relevant, and then determine an agreeable ad-revenue split, Ancier said.

NBCU’s Perrette also alluded to the lack of dynamic advertising capabilities with cable’s video-on-demand services. He suggested as a possible solution that programmers could provide content for VOD services within the window that Nielsen counts DVR viewing and have the audience numbers combined. “With the Web, you can actually monetize content,” he said. “Canoe is trying to figure that out [for video-on-demand advertising], but it’s not going to be overnight.”

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