In Depth

The Real Reason the Networks Are Blocking Goggle TV: It's All About Ad Rates and Protecting the Integrity of the Multiple Billion Dollar Ad Revenues the Networks Get For Ads on TV

In this very insightful piece by Michael Learmonth, the Digital Editor at our sibling publication, Advertising Age, we learn the very real business reason that the networks are blocking Goggle TV. 

A must-read.

By Michael Learmonth
Advertising Age

The Wall Street Journal reported on Friday, Oct. 22, 2010,  that the nation's big broadcast networks are blocking Google TV, triggering quite a bit of speculation over why this might be the case.

These are the same networks, after all, distributing shows on the web and through distributors like Hulu, right? Google is not, as Searchengineland pointed out, "knocking down firewalls, eating small children nor sacrificing animals." They're not stripping out the ads, after all, just packaging shows -- which are already being made available online -- in Google's handy TV interface.

But that's the problem. The networks aren't blocking Google TV because it's Google.

They are blocking Google TV because it is putting a web TV show, with web TV show economics, on a TV, which would be incredibly disruptive to their business. The reason the networks are blocking Google TV and Boxee (and Hulu is still PC-only) is about ad revenue: they don't get enough of it from the web. And letting you watch "Glee" on your TV, but via the web and Google TV, means substituting high broadcast revenue for lower digital revenue.

Let me explain: today all the broadcast networks and a good many cable networks distribute shows and clips on the web. Those shows and clips have a fraction of the advertising that they would have on television. Until recently, a typical hour-long show on Hulu would have two minutes of advertising, compared to 12 to 14 minutes on TV.

While all the networks would like to raise that to parity, there are not enough advertisers willing to pay for the comparatively small web audiences and the networks are wary of turning off viewers who can easily click away.

Right now the web allows the networks to make those ads unskippable, but once they become a burden, and the free content-for-ads trade-off goes out of balance, ad-skipping software will proliferate.

Ultimately, the networks would like to either normalize the number of ads on the web and TV or increase the revenue per viewer-minute on the web through new, targeted or interactive ads. So far, networks like ABC, CBS and The CW have been increasing ad loads slowly, as the market and viewers will support it. Nielsen and others have systems in the works where the networks could measure or sell audiences across both TV and the web -- if the ad loads were the same. Once there is parity on the revenue per viewer per minute, then you will see web shows on Google TV or Boxee, and Hulu on your TV set.

Until then, though, the networks will do everything in their power to keep TV shows distributed on the web on PCs and TV shows sold for TV on the big screen. No conspiracy of old media to stop technology or thwart user choice here; it's a rational business strategy, pure and simple.#