From traditional to online: the “move” of TV

Moving to the Internet is the imminent evolution for traditional television. By this, I mean content will be offered online and cease to be offered through the antenna or cable/satellite. However, more important than getting into the details of this “move” is to analyze whether it’s completely feasible and what it depends on.

For starters, the speed of the evolution of traditional TV depends on the type of content. Roughly, I could say that TV offers scripted shows, live shows & news and sports content. In the case of scripted content, it’s not necessarily important when you watch it, but for sport events or news it is. This could be an explanation to why we see that scripted content is already being offered online everywhere, in both TV sites (ABC.Com and HBO.com for example) and in models like Hulu.com or iTunes. More importantly, this type of content is being viewed online in a way that actually threatens traditional TV. According to Nielsen, time spent viewing video on PC/Mac/laptops from home and work locations increased by 45% from Jan 2010 to Jan 2011.

On another hand, Live content and sports are harder to move online in terms of quality and monetization, because for this type of content users place high importance in the moment when it’s watched. Even though it’s currently available in sites like CNN.com, according to Intereconomía TV, online content does not represent a significant revenue stream yet for TV channels of this sort. In the case of sports, it is the same. Repetitions of soccer games, for example are watched by big fans or by people who couldn’t see the game live. Quality of the live streaming plays a big role here, and there is still competition by the quality offered from the TV screen vs. the quality offered online.

Another important factor that will determine the “move to online” is Internet penetration and usage patterns of the population. According to Comscore, the total Internet audience in Spain was 23.5 million people in March 2011, which represents 63% of the population approximately. According to the same source, Internet users in Spain spent the most time on Portal sites, Instant Messengers and Social Networking sites ranked 2^nd and 3^rd. Multimedia ranked 6^th and no specific mention was made to video watching habits online. We can compare this to the USA, where there are approximately 230 million Internet users (75% of the population). According to Nielsen, Americans spend most of their online time at 36% communicating and networking across social networks, blogs, personal email and instant messaging, and 3.9% of their time watching videos and movies. The source mentions that this activity was the only one to experience a significant growth in share of U.S. activity online growing 12% from 3.5 to 3.9% from 2009 to 2010. We could interpret this as Americans having a higher interest on online videos than Spaniards, which would lead the American market to be more advanced in TV’s move to online than the Spanish market.

So to conclude, I think the traditional-to-online transition depends on the type of content and its costs. How the migration happens seems to still be debatable, as we have many players looking for a piece of the cake: from TV channel websites to other sites like Netflix & Hulu, to companies like Google and Apple with their multiple TV content offers, to social media sites like Facebook that are now looking to become digital hubs. What will be important is which of all of these players will be the smartest in deciding how to make the content available while monetizing it, but most importantly in how to catch the most users.