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Summary:

Two headlines from this week sum up the state of the online video/TV world nicely: “Free Online TV a Threat to Industry,” proclaimed one. “Death Greatly Exaggerated: TV Key To Media’s Future,” countered the other. The first is from a Variety article recapping the view, espoused […]

Two headlines from this week sum up the state of the online video/TV world nicely: “Free Online TV a Threat to Industry,” proclaimed one. “Death Greatly Exaggerated: TV Key To Media’s Future,” countered the other.

The first is from a Variety article recapping the view, espoused by TV industry types at Screen Digest’s PEVE Digital Entertainment Conference, that more viewers will move from broadcast and cable TV to ad-supported online video. But not everyone shares this doom-and-gloom about traditional TV. MediaPost, author of the second headline, recapped a panel at Online Media, Marketing and Advertising’s Global Hollywood Conference, “How Online Is Reshaping The TV Advertising Marketplace (and Vice Versa).” Speakers at this conference said they believe that traditional TV will continue to play a huge role in how we consume video, pointing to a recent Nielsen study that showed TV watching was at an all-time high.

So which is it? What does the future hold for traditional TV and online video?

Unfortunately, the data points in many directions at once. The Nielsen study referenced above also shows that more people are watching video on the Internet, as well. And in a recent survey of its users, NBC found that not only were more full episodes watched online at its site year over year, but users were also setting up computers in the living room and “co-viewing” online video with other people. Not to mention the impressive growth curve that premium content site Hulu is experiencing.

Perhaps looking to burst a few web video bubbles, though, the Telco 2.0 Initiative put out a press release on March 24 with the attention-grabbing headline, “Online video not commercially viable, new report says.”

Even though it predicts the market for online video (including both services like YouTube and IPTV) will reach $28 billion in 2013, Telco 2.0 says that forecast is less than 10 percent of revenue earned by traditional TV and movies. The research firm envisions three potential scenarios for online video. The entrenched players traditional video reassert themselves online (a la Comcast and Time Warner’s authentication plans); piracy destroys the value of copyrighted content; or telcos and Internet service providers (ISPs) move from their current passive role to one in which they become more like FedEx, offering different distribution tiers.

But this whole online video vs. TV debate is fast-becoming antiquated, as the lines between traditional TV and online video continue to blur. Just about every network TV show can now be watched online. YouTube and other web video can now be accessed through TiVo and other set-top boxes. And televisions are increasingly plugging directly into the Internet to access new forms of content and interactivity.

The industry is going through growing pains right now, and no one is sure where it will settle out. At the end of the day, the audience just wants to watch something that entertains; those who create entertaining content will want it on as many screens as possible, and those who own the entertaining content will make sure they get paid for it.

This article also appeared on BusinessWeek.com.

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  1. The whole argument is misguided. Of course ‘online video’ is not commercially viable. Hulu, for example, puts 1/6th the amount of ads compared with TV. I doubt they’re charging 6 times as much for them. [Aside: the CPM metric is outdated. It should be a CP1 cost (in fractions of a penny, if necessary) to capture the non-communal/user controlled viewing options.]

    Frankly, I hate the term online video. It’s better to use something more descriptive. Online video connotes YouTube/Break/CollegeHumor stuff, which is short-form idiocy (not that its not hilarious). But, Hulu is mostly long-form content.

    The cablecos have a real opportunity to end this whole debate right now and stop everyone from ‘cutting the cord’ by launching a full ondemand offering comparable to Hulu with the full amount of ads in it, that you cannot skip. Put up Youtube ondemand, collegehumor ondemand, etc. It’s the same pipes coming into my living room, why not just make the cable box actually capable of delivering?

  2. What to Read on the GigaOM Network Friday, March 27, 2009

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  3. Eventually, I believe, that major networks will buy out on-line sites such as LiveLeak, Metacafe, Reever and use them as tools to promote their network fare.

    So, one day LiveLeak will be NBC/LiveLeak. IMO.

  4. I believe the tipping point will be when we’ll be able to have our social network selecting videos pretty much like reccomendation engins do with music and zip them to the TV screen from any source to any set top box. AFAIK reeplay.it is the only service so far in this direction.
    Does someone know similar services?

    1. @Joseph – You could check out ffwd.

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  8. Yes.. as you see iptv (interactive personalised television) will redefine the way we watch television

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