Is Online Video a Threat to TV?

Two headlines from last 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 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?

The Nielsen study referenced above also shows that more people are watching video on the Internet. 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.

Antiquated Debate

Perhaps looking to burst a few Web video bubbles, though, the Telco 2.0 Initiative put out a press release on Mar. 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 amounts to less than 10% 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 (à 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 (GOOG) 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 experiencing growing pains, and no one is sure where it will settle. 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.

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