Wednesday, April 2, 2008

Networks see little profit in online broadcasting

There is no surprise in this article for me; online “broadcasting” is so new and ad models are still emerging. It’s going to be a while until this kind of service draws the audience and revenues (and develops the right ad models) that are more effective than what’s online today. I also doubt that it will replace TV (why is there always this mention in articles?) - but will find its place along side broadcast media – at a larger scale than at present, as people’s behaviors shift to match new content availability... And at the end of the day, it can be profitable, just not as much as TV — which is the same as how selling music through iTunes is profitable, but not as profitable as the old CD/in-store sales model.


From The Globe and Mail -- The biggest thing keeping television networks from wholeheartedly embracing the Internet is that online programming does not make nearly as much money as traditional TV, a new report says.

The report, to be published today by Convergence Consulting Group Ltd., indicates online broadcasting, despite its growing popularity, is still viewed by networks as a complementary business, rather than a replacement for TV.

"There is no current economic rationale for broadcasters and cable networks to abandon traditional TV or attempt to accelerate a transition to a total online model," says the report, which looks at the North American broadcasting and telecom sector.

The findings indicate why online TV in the U.S., though growing much faster than in Canada, still lags behind the prime-time offerings of network television, even though the broadcasters hold digital rights to most of their content. In Canada, where broadcasters don't own those rights, much less content is available online.

Smaller audiences and fewer commercial minutes during Web episodes and clips make it difficult to earn ad revenues comparable to television, said Brahm Eiley, president of Convergence Consulting. | Read full article

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