TV on the Web Embraced by Viewers and Advertisers

TV on the Web Embraced by Viewers and Advertis

If you don’t watch TV shows on your computer, it's probably only a matter time before you do. And the networks would love for you to do so, since your eyeballs are worth as much as 40 percent more when they’re parked in front of a computer than in front of a TV.

Today, 18 percent of the nation's online population watches TV shows on their computers.

That's double the rate of last year, and the figure is expected to double next year, said James McQuivey, an analyst at Forrester Research in Cambridge, Mass. McQuivey notes that the online population is about two thirds of the total U.S. population.

Access methods

Currently, the main way to access TV shows on the Internet is to go to the Web site of one of the big four networks (ABC, CBS, NBC and Fox) where they post their shows a day after they are broadcast, and leave them typically for a month, McQuivey said. The shows are free but are streamed, meaning they are displayed as they arrive on your computer and not stored there.

The far less popular second option is to buy and download individual episodes from iTunes or Amazon for $1.99 each. You then own the file and you can watch it at any time on any device you own, McQuivey explained.

A third option is to stream programs from third-party Web sites, such as Yahoo, MSN, MySpace, AOL and any other service that has elected to carry them to boost traffic and get a share of the show’s ad revenue, he added. Services such as Joost and TVU Networks are also experimenting with inserting new advertisements into programs for local markets.

Networks embracing it

Instead of seeing the Internet as competition, the TV networks have come to see it as the light at the end of the tunnel—a dark tunnel in which television advertising revenues have been falling while Internet ad revenues have been rising, McQuivey said.

"It's being embraced by the big boys," he said. "Because of it, there is real hope emerging among the broadcasters and the advertisers."

He explained that those who watch programs on their computers are “self-targeted,” meaning they actively want to watch the show, and are not just settling for what’s on at that hour and indifferent to its advertisements.

Computer watchers also sit closer to the screen, are likely to have money (since they have broadband connections) and are typically young, he noted.

“In other words, they’re an advertiser’s dream,” McQuivey said. Consequently, advertisers will pay 20 to 40 percent more for computer viewers, he explained.

Across the pond

In Europe, broadcasters have been looking to the BBC, which is experimenting with a service that Adam Daum, an analyst with Gartner Inc. of Stamford, Conn., calls a "seven-day catchup service."

Anyone who has paid their UK television tax can download a client called iPlayer from the BBC site and then download any program that has run during the previous week and keep it on their computer for 30 days. After that, the software's digital rights management feature erases it.

The problem with the scheme, Daum noted, was that the BBC does not run advertisements and therefore gets no revenue from the downloaded programs. However, the network is in talks with the UK's several commercial networks about offering their downloads as well, and sharing revenue.

Where do you sit?

As for whether anyone really wants to watch TV programs on their computers, Daum said that his research shows that there are two groups who do: men and teenagers.

"A lot of men are alienated from their main TV set," he said. "Their wives and kids may be watching soap operas or reality TV, but they're not interested in that. So they go to their computer and watch the scuba or cycling channel in another room."

As for teenagers, many have game consoles, computers and TVs in their rooms, he noted. They will often have their TV connected to the game console and use their computer to access TV programming.

"It remains to be seen whether they will take that behavior with them after they grow up, or just flop down [in front of] the TV like today's old folks," Daum said. "But our research indicates that people prefer to watch long-form programs on a proper big-screen TV."

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