As Not Seen on TV: WebTV Titans Vie and Cut Deals with TV Broadcasters

Audience Platforms Emerge as the New Networks
We are now among 2 billion people on the Internet.  Have you noticed that we’re increasingly spending the bulk of our time on an ever-smaller handful of hub websites?

According to data from Compete in 2001, 30 percent of all Internet traffic went to the top 10 visited sites. By 2006, 40 percent of all traffic did. Today, that number is close to 75 percent.  This is creating a set of networks that will be as powerful as broadcast television once was. And it’s reordering the media landscape.

This is another example of the force of Web 3.0: Taking interactive media off the web and into specialized applications.

Television Networks Today Are Like Music Labels in the ’90s
Just as music listeners no longer have an affinity to specific recording labels , web video viewers have at best a waning connection to entertainment producers (NBC, Showtime, HGTV) and none to which data stream brings it to them.

I’ve long since terminated my cable subscription. Do you think it makes sense to to pay for two data streams, one of which we have so little control over? I like what I find on Hulu and Netflix better and can watch it anytime — often faster, since it has fewer or no ads. This has allowed me to avoid introducing TV to my kids. Never once has anyone in our family asked, “Please wait until this show is over.” My media diet is rather asynchronous.

Just as radio stations and venues that book great acts have become more relevant to consumers than labels, I now pay much more attention to who delivers my entertainment, could care less which  syndicate produces it.

Who is Doing What?
The shift puts these incumbent providers (mostly television and cable networks) at a crossroads.  They can fight these new delivery networks, or make deals with them (including buying in), or, as the recording industry did with music, ignore them until they approach irrelevance. Right now they’re sort of trying all three approaches.

Google TV vs. Everyone
Currently there’s a pre-holiday dogfight between  Google and television networks that are actively blocking Google TV from viewing episodes via their websites.  Hulu, which is owned by some of the same networking, is also locking Google TV out. More on this in the Hulu summary.

Facebook and ABC Are BFFs
ABC has partnered with traffic titan Facebook to livestream 90 minutes of exclusive (not broadcast on TV) political coverage on the social site, along with the rest of its election night coverage.  How strange to imagine ABC as pure content brought to us by “the Facebook network.” Facebook has designs to be a real-time news source.

Hulu vs. Ad Free Formats
Since Hulu is partly owned by television networks, they have lots of content but also ties to a business model that could muddle  their business. One of these is an absolute fixation on selling advertising.

Hulu offers a free service that lets viewers watch recent TV episodes with commercials. Recently, they added a $9/month premium subscription that offers more of the same: more shows, and yes, more ads. This has inspired subscribers to stay away in droves.  (Unlike Netflix, television networks are based on an advertising businesses model, which they desperately want to retain against Google.)

Further, one of Hulu’s owners is NBC, which itself is owned by cable firm Comcast.  Along with a committment to advertising, they may resist any deals that undercut cable as a means for getting video to screens.  I agree with Fast Company that this would be a great time for Netflix to buy Hulu. But an outright sale of Hulu could be the end of television’s best shot to keep advertisers in the digital medium. Its hard to imagine Comcast, a tenacious and occasionally insane competitor, making a deal that would so radically change its core business.

Netflix vs. Success
Netflix has become an audience titan.  It grabs an amazing 20 percent of all primetime U.S. Internet traffic, which makes it as much a network as anything can be. Yet Netflix is also having growing pains, resulting in the crash of their on-demand streaming service just last week.

Apple vs. Adobe Flash
Apple wants in on this video space via AppleTV – as well as to stream media to all those iPhones and iPads.  And it wants to get the world to use its media player, QuickTime, to do all this.  Apple is lined up against Adobe Flash (iPads don’t support Flash, same with AppleTV, and now Apple has stopped pre-installing Flash on its computers.)

TV networks still have a ton of content, and they still have a majority market. There’s a lot they can do to influence and participate in this emerging new media landscape. But like the Baby Bell phone companies of the 1990s, their first order of business may be just to slow convergence down while they finish milking their investment in cable or digital broadcast.

But it is risky to hold back innovation that consumers are eager for. Because once they’ve tasted cutting-edge video, they’ll not be satisfied with waiting. And meanwhile, there’s an audience of people like me, consuming far less video content as we wait for the industry to come up with programs and a distribution model that works for our lives. And we just might find better ways to occupy our time if video streaming falls behind what audiences expect.

Or worse, this demand could reward non-commercial solutions which violate copyright, and plunge television broadcasters in to a can and mouse game with their own consumers. Have a loaf still beats irrelevance, which is what happens when markets demand more innovation that media companies can stomach.

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