Not So Fast CBS: Web Cuts TV Viewing

The BBC reports that people who use online video services like YouTube are watching less broadcast TV:

• 43% of Britons who watched TV on the web or cellphone said they watched less regular TV;
• 20% said they watched a lot less TV;
• 9% of people regularly watched TV on the web;
• 13% said they do it occasionally.

The survey results follow recent reports that CBS has won back audiences by promoting its shows on YouTube.

At the unofficial UTube blog, law prof. Edward Lee of Ohio State asks, "Will YouTube replace TV?" Because of YouTube's popularity among teens, "One should hardly doubt that there’s a business to be made in online videos," he writes.

There may well be a business to be made in online videos, but it is still early days and it is not clear what the right format is or how a business can make money from video on the web. So, far YouTube and other online video services have not proven their validity by generating sustainable profits, let alone substantial revenue. These sites do attract a lot of viewers who want to watch someone else's copywritten content free. 

Perhaps YouTube may change the TV industry, but it serves little business purpose to destroy an industry without actually creating a valid business that earns revenue and profits.

To see how badly these things can go, look at Vonage's continued losses and a host of dead VoIP companies. These are examples of what management guru Michael Porter calls destructive competition. Consumers win, but suppliers die.

Perhaps a more broad question is whether the Web is disrupting the broadcast business. For some advertisers, the question has already been answered.

But there is an important issue to consider and that is consumer behavior. People like watching TV in a passive way with less interaction than the web demands. Not everybody wants to hunt and surf for three-minute video snacks at all times. Look at the trends for large screen TVs and gear related to HDTV and home theater systems.

There is a great opportunity to deliver web-based content and mega-choice to living-room viewers in simple, easy ways. My betting is that Apple's new iTV iPod video system fits the bill. It changes how people select and pay for their shows (using iTunes), but it doesn't change how they watch them (big-screen living room experience).

**Other Views **

Mark Cuban warns that the economics of web-based video will change:  "Right now the new money and easier money is on the web. CPMs can be comparable to network. For now. But that will change as a glut of video comes online and CPMs fall like a rock in the next 18 months."

Author Shelly Palmer looks at how the broadcast industry is being disrupted in his book "Televison Disrupted"

NewsWeek reported hints that Google would supply video to Apple's iTV. Excerpts were carried on MacRumors.

Michael Porter article and podcast on Destructive Competition.

Music producers are experimenting with YouTube as a promotional channel for music sales. U2 seems to think this is a good way to sell new albums, as shown from their official posts to YouTube.

Comments

[Alfred]

A music group called OK GO created a home-spun video for $10. They filmed it in one of their backyards and uploaded it to youtube.com. It outstripped the Barenaked Ladies "Speaker's Corner" loonie music video. Their label was quite upset that they had not asked for permission, but soon shut up when they realized the video had been downloaded some 900,000 times. The video,“A Million Ways” Dance, was the most downloaded music video ever this past august with over 9 million downloads. Their next youtube video was their "Here it goes again" and was downloaded a million times in the first six days of its posting. All this poularity drove up sales on iTunes, and no doubt elsewhere. It is easy for me to see why U2 would try the same thing.

Also, to give George an answer, I would have to say TV viewers are getting pickier in general - watching specific shows on either the internet or TV - shows that match their interests - rather than just turning on the TV and channel surfing until bed time. That is hardly a definitive answer, but it is a starting point.

Just a couple of cents worth ...

[Al Brown]

Someone will figure out that enabling people to cobble together their own 30/60 minute TV shows of their favorite clips is the way toward profits.

Such shows could carry ads just like network tv. Ads targeted at each viewer (just watch what they click on) will be worth a lot more than ads that waste viewer attention and advertiser dollars. Google has got to be eyeing such an opportunity.

[George Nimeh]

Hi,

Amongst other things, I think there is a need for folks like the BBC to ask the right questions.

Of course people who watch more online video will watch less TV. There are only 24 hours in a day. But, what TV do those folks choose to watch? Are they influenced by what they've seen on the internet? Are they more likely to check out a show that they've seen/previewed online? Do they tell other people about what they've seen.

More here:
http://www.i-boy.com/weblog/2006/11/bbc-vs-cbs.html

~G~

[Ian Delaney]

I haven't written on this yet because it's really hard to reconcile these two pieces of contradictory research. I think partially, people don't necessarily do what they tell researchers that they do.