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Guest Commentary: Internet TV Isn’t Coming; It’s Here and Growing

Feb 1, 2009  •  Post A Comment

Internet television got off to a slow start in the early 2000s, but as soon as technology was developed that enabled high-quality, television-like viewing experiences, it was quickly embraced by mass audiences.
In particular, Internet television growth since 2006 has been swift, but also carefully calculated by network executives who started out leery of the idea of putting their premium shows online.
The earliest providers of Internet TV have worked to offer programmers solutions to many challenging issues. For example, upgrades to technology now allow for Internet TV of the highest quality, with quick starts, no buffering and high-fidelity images that meet the specifications of high-definition quality.
With the ability to deliver these traditional television experiences, programmers are presented with a new channel for reaching significant audiences who can watch entire episodes online. Consistent, large audiences—many of whom were not watching shows when their only option was “appointment TV”—are great news for both programmers and advertisers.
According to Nielsen, the average American watches more TV than ever before—127 hours and 15 minutes per month—and online viewership is increasing at a similar pace. In May 2008, Nielsen reported that 119 million viewers watched 7.5 billion video streams. And while Nielsen did not directly report on its sample audience’s total minutes viewed, the report did indicate a related trend: The majority of the total time spent viewing online video was not on user-generated content sites like YouTube, but came from professionally produced, long-form TV content offered by major broadcasters.
With this increased viewership, the question that naturally arises is, if significant numbers of viewers are finding their entertainment online, how will it be monetized? And can ad revenue on the Web compare to that of traditional TV?
In fact, ad revenues are already a reality for programmers who stream their content online in a high-quality viewing experience to large, longer-engaged audiences on the Web.
Moreover, these three components have led to the monetization of Internet television as a business. Longer viewing times, which can be described as viewer engagement, are leading to higher CPMs. On the flip side, the absence of quality delivery and lengthy viewing times on short, user-generated video makes them difficult to monetize.
“Media buyers are buying every bit of inventory that’s available,” said media industry consultant and adviser Jack Myers. Internet TV, he observes, is “sold out at high CPMs. So there’s a lot of appeal to it right now and I don’t see that demand diminishing.”
Why then, does a case still need to be made for Internet television, especially since the biggest event in recent American history—the presidential inauguration—was watched by more people online (39.7 million) than on television (37.8 million), according to Nielsen?
Frankly, it’s because of the myths propagated about the Internet TV industry: that it cannot accomplish the vaunted goals of being a true convergence platform, that it cannot deliver on the requisite business opportunities for programmers and advertisers, that consumers will not abandon the living room TV.
This exposes a misunderstanding of the marketplace, particularly among media buyers. “Most clients don’t understand what [Internet TV] is, or how it can enhance the more traditional elements of online marketing,” said a media buyer who asked to remain anonymous.
But like any platform across the digital landscape, Internet TV should be part of the overall analysis a media planner or buyer makes for clients. As viewers grow more engaged with the shows they watch online, they also become engaged with ads that are delivered during the show.
Internet TV inventory will only grow, as it has just begun to scratch the surface of its potential as a powerful, engaging interactive entertainment and advertising medium.
The future is now. The power of Internet television has arrived.
John Edwards is CEO of Move Networks, a provider of Internet television services for broadcasters and publishers.

7 Comments

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