MediaPost Publications Broadcast Nets Should Program Digital Risks 10/19/2009

by Diane Mermigas
MediaPost Publications Broadcast Nets Should Program Digital Risks

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Is Online Video Going to Kill the TV Star?

Can TV survive in its current state? That question was hotly debated at this years Digital Hollywood.

TV economics don't look promising. The broadcast audience is steadily declining and migrating online. Furthermore, ad spending is slowly shifting online and costs are rising for TV production.

TV has the advantage of aggregating its audience more efficiently than online video for the time being, but as innovation arises and technological breakthroughs occur, TV will no longer have a distinct advantage.

The major TV networks look to be hedging their bets. NBC, Fox and ABC are partnering with Hulu and providing the online platform with premium content. For those that don't own TV sets and that number seems to be increasing in a weak economy, alternatives will abound to view premium programming online.

2009 Digital Media Trends

With ad sales drying up, it is safe to say that digital media companies have to look for other revenue streams. Subscriptions are clearly an alternative. Fee-based business models provide a much more stable revenue source. Surely it is working for Netflix. It is one of the few companies that have thrived in this economic environment. As packaged media declines, Netflix will continue to roll out online streaming services and charge a premium.

There will be consolidation in the online video space. How many players can compete with YouTube and Hulu? Look for secondary players to fall by the wayside.

As businesses cut costs during these lean times, profit margins will improve. When the economy improves, the thriving companies will have more operating leverage than ever before.