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ARE ONLINE TV SHOWS A MIRAGE?
Monday, May 5 2008
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Mark Cuban, who became a billionaire when he sold broadcast.com, the first company to offer music, movies, and TV shows on the Internet on a massive scale, has suggested there is no future in providing individual TV shows to the public online. On his blog, Cuban quotes Sanford Bernstein analyst Craig Moffett as saying, "Five years into the video-over-the-Internet revolution, we have learned two things. First; consumers won't pay for content on the web, so it will have to be ad supported. And second; it won't be ad supported." Cuban refers to research concluding that online consumers will click away from a program if they are forced to watch more than 30 seconds of commercials at the front end of a program or more than 90 seconds within the program -- resulting in approximately 1/8th as much revenue per viewer. In addition, he observes, the networks supplying the programming receive nothing akin to the fees they receive from affiliates for the right to air the shows. Moreover, he notes, much of the popularity of online videos is "viral," so an advertiser has no idea which ones will catch on. Cuban also asks some trenchant questions about the effect of online video on conventional TV, among them: "Are TV networks making a huge mistake by putting their current TV schedules online for free? If a streamed TV show only has 2 [minutes] of commercials, will that drive some viewers to prefer watching online? Will it force networks to reduce their TV show ad load? If so, by how much?"
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