In the last few weeks, the line between broadcast and online video has become much more sharply drawn. Free-to-air broadcasters continue to step back from the opportunity of free-to-online distribution, while some of the largest online video companies are stepping up to the opportunities of advertising-supported, broadcast-quality online video. Both camps are betting they can capture or retain a significant audience for their shows; at stake are the billions of ad dollars wrapped up in the television market.
To the delight of Olympics fans around the U.S., NBC announced it would stream all 302 Olympic events live online. Synchronized swimming, archery, underwater basket weaving, whatever your predilection, it’s covered. But there is, of course, a catch. In order to watch any of the non-broadcast programming, you must first prove you are a PayTV subscriber. Despite the fact that NBC will be broadcasting highlights of the events free over the airwaves on local affiliate channels, in order to view full-length programming other than that featured via ‘live’ broadcast, a viewer will need to login with their cable, satellite, or telco credentials to watch online. For the 10 million or so homes reliant on free-to-air alone, they will be out of luck.
As well, The New York Post suggested that Hulu, the marquee website for TV shows online, would begin requiring users to be a PayTV subscriber to watch full episodes. Given that 90+ million homes currently have a PayTV subscription, this means the majority of current Hulu users will still be able to watch shows at the site. However, the bother of the login is sure to dissuade some from continuing to do so.
Clearly, free-to-air broadcasters have made the decision that they are better off with retransmission fees from operators such as Comcast and DirecTV and traditional TV ad revenue rather than just the promise of online ad revenue alone. And who can blame them? It is only very recently that they have been able to tap into some of the PayTV revenue they have been helping to create.
But what does this mean for the consumption of video content online?
Since the vast majority of Americans already have a PayTV subscription, the only difference will be a minor inconvenience of logging in before watching shows online. Perhaps broadcasters will now feel more comfortable with online distribution and put more of their recent (high-value) shows on the web for viewers to watch.
But the online world is certainly not standing still. Broadcast content will sit side-by-side with free-to-online video. And we are no longer talking about skateboarding cat videos.
The list of celebrities enjoying the creative freedom of the web grows longer each day, particularly with deep-pocketed companies such as Google underwriting them (which just announced a $200 million fund to promote such content). With most of connected-TV devices now sporting a YouTube client, there is ample opportunity to deliver this content directly to the biggest screen in the home: the living room TV.
With Google’s financial and structural support and the buy-in of a number of online content providers, rest assured the web will not be lacking for quality content. The majors certainly do not have a monopoly on the creation of compelling TV shows. For example, Machinima’s Mortal Combat Legacy is about as good as action TV gets. As well, the quantity of shows online should grow quickly. Unlike over-the-air broadcast and cable, there are virtually no barriers to anyone producing and delivering their own videos online. The real challenge for web video purveyors is having their content discovered, and there are a host of companies working to solve that problem. For example, on Xbox with Kinect you can do an integrated voice search across all video properties on the box. Now that’s on-demand access!
The question for the Big Four—Fox, NBC, ABC, and CBS—is whether the authenticated content access strategy will keep viewer’s eyeballs and ad dollars on their shows, or instead leak both to new online competition.
The cool thing: we will all have a front-row seat for this show.