Is Internet TV Eating Into Traditional Viewing?

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NEW YORK—Two divergent views about the effects of the dramatic rise in Internet TV viewing emerged at the Future of Television conference here Tuesday.

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

People 18-35 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.

But on the following panel, CBS and NBC Universal executives presented a competing view—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 J.B. Perrette, president of NBC Universal Digital Distribution.

He acknowledged that prior to the launch this March of Hulu, the Internet distribution 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.

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.

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.

Compared with the Internet, Perrette said, cable’s video-on-demand services lack dynamic advertising capabilities. “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.”

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.

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