In the near future, TV is going to be available anywhere, on any device, at any time. Just don’t expect it to be free.
That’s because of the big, unanswered question being asked by networks, cable companies, advertisers and technology providers: How do we make money from it?
Viewers are already taking full advantage of online television. Broadcast networks make many of their shows available on Web sites like Hulu and YouTube a day after they air, and many cable stations also put their shows on the Web.
In December, more than 178 million Americans watched TV online, streaming 33 billion shows, according to online data tracker comScore.
But the business model for free Internet television doesn’t work yet. Networks can’t get advertisers to pay the same as they do for broadcast and cable TV, and networks and cable providers are reluctant to lose their mutually beneficial partnerships.
In the traditional TV model, networks get paid tens of billions of dollars by advertisers and billions more in retransmission fees by cable and satellite providers. Satellite and cable providers get paid in subscription fees by customers.
The free Internet TV model cuts out the middle man: Networks post their content directly online and advertisers pay for the right to place their ads on the Web site and within the video. Satellite and cable providers aren’t part of the equation, and networks lose out on their licensing fees.
The loss of revenue from cable and satellite companies isn’t the only reason why free Internet TV isn’t working yet. Advertisers remain coy: Broadcast and cable TV advertising is a $70 billion a year business, but Internet TV advertising has yet to crack $1 billion, according to Matt Wasserlauf, chief executive of online advertising network BBE.
Many advertisers are wary of sponsoring online TV, primarily because the measures of those ads’ effectiveness and reach are still up in the air, say media analysts.
“Advertisers aren’t going to pay for the right to sponsor content unless they know how many people are watching it,” said Todd Dagres, general partner at Spark Capital. “The technology is available, but it is still in the process of being implemented.”
FULL STORY: http://money.cnn.com/2010/02/24/technology/future_tv/index.htm
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