Watch Out Broadcast TV, Here Comes Online TV

What is the most important thing to you that you can do on the Internet? Forget communicating and gathering information; according to results from a just-released study, for ten percent of all U.S. online households, entertainment is the single-most important thing that the Internet offers. In fact, the study indicates that nearly 20 percent of all U.S. households are now watching TV broadcasts online. This matches the results that came out of a similar study about a month ago that said that 20 percent of primetime TV is watched online.

"Most consumers are pressed for time and require flexibility in their daily schedules and TV viewing habits," says Lynn Franco, Director of The Conference Board Consumer Research Center. "Being able to watch broadcasts on their own time and at their convenience are clearly reasons why we are seeing a greater number turning to the Internet. And, it is the reason why we would expect to see this trend continue."

The study reports that the majority of online TV viewing is taking place on "the official TV channel homepage, accessed by 65 percent of viewers." Another 41 percent claim that their primary source is YouTube. Sources such as Hulu, iTunes, and file sharing are still in the single digits percentage-wise. The study states that "few consumers are willing to enroll in pay per download and subscription services." The fact that Hulu--an inline-video advertising-based, free TV- and movie-streaming site--has quickly grown to be the eighth largest video site in the U.S. bears this out. Neilsen's July numbers show that Hulu had more "streams" than CNN and Turner Networks, with almost 106 million video streams.

For those who watch TV online, about 90 percent say that they watch "online broadcasts at home." Approximately 15 percent of online TV viewers claim that they watch online TV in the workplace. As to what they are watching, the study breaks it down this way:

  • News: 43%
  • Dramas: 39%
  • Sitcoms/Comedies: 34%
  • Reality shows: 23%
  • Sports: 16%
  • User-generated content: 15%

It's a safe bet that as online TV content increases in availability and quality (in both image quality as well as the quality of the available content), online TV viewership will continue to grow. With the greatest demand coming from those seeking free content, the challenge will be for content providers to figure out how to best monetize online TV streaming. Another recent study shows, however, that as many as 82 percent of online TV viewers feel that it is reasonable to expect there to be advertising in full-length online TV shows. Therefore transferring the advertising-driven TV model from broadcast to online might be a fairly seamless process. With some TV shows premiering on Hulu, such as Knight Rider, before they are even available on regular broadcast TV, we might be witnessing the beginning of a new revolution of how TV content is consumed.