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Is Internet an extension or disruption of TV?

Little did Google envisage the popularity of live online sports matches while signing the IPL deal. IPL is the Indian Premier League of cricket and is hugely popular amongst the cricket playing nations but there are only 12 cricket playing countries across the world (mostly countries that were colony of British empire at some point of time). Google beamed all 60 matches on Youtube with a 5 min delay (apart from US where the match telecast was after the completion of the match) for free supported by advertisements. With over 55 million views on Youtube from 200 different countries, the statistics surprised Google as well as the analysts. The viewers came from not only the cricket playing nations but also from many other countries, a fine example of long tail at work. The matches were played after office hours in India and hence Google had anticipated higher traffic from other countries but in the end, the highest traffic was from India. This was another learning that most of the households are single TV households and hence the online TV increases the media consumption. Despite the popularity of IPL on You Tube, the views on the traditional TV increased from the previous two editions of IPL.The matches were blocked on mobile phone and hence there is no data point available on its impact on mobile TV.

Internet TV is not a new concept. Hulu is a hugely popular online TV service in US with close to 20 million visitors to its site in US last month giving 662 million page views (source: Comscore). The popularity of Hulu has been on the upswing and if unique visitors is any criteria, then its visitors have increased by a huge 140% in last one year. The average time per visit is 4.7 minutes which indicates people are watching short videos on Hulu.

The inferences that can be drawn from the above two examples is that the internet channel is complementary to traditional TV and should not be seen as a competition by the TV industry. Internet is likely to bring in additional viewers as there are hundreds of channels but only 1 or 2 TV sets in a house and hence not everybody can watch their favorite programs. With internet, people can either watch multiple shows or different family members can watch what they like for short durations, e.g. during IPL, my wife wanted to watch her regular TV serials while I did not want to miss out on the cricket match; I watched the match intermittently for short durations on You Tube to know the score and how is the match progressing (cricket unlike football need not be followed for the entire match) while my wife watched her serials on television. The advantages of internet TV to the traditional TV are as follows:

1. Higher viewer ship: It has been observed that the number of people watching television have been increasing despite the advent of other media.  In 2004 the Kaiser Family Foundation reported that the average person aged 8-18 was spending almost six-and-a-half hours a day taking in some kind of media—television, films, music, video games and so on. By multitasking, they were able to cram eight-and-a-half hours of media consumption into that time. The researchers concluded that young people were “filled to the bursting point” with media. Whatever, responded their subjects. When the study was repeated in 2009, young Americans were spending more than seven-and-a-half hours with media each day, an hour more than they had done five years earlier (see the chart alongside). Into that space they packed an astonishing 10 hours and 45 minutes of consumption. Among other things, they were watching more television (source: Economist).

The internet TV can easily be beamed across the globe which means additional viewers. Also, people can watch it even when they are not at home which means additional time on TV.

2. Additional Revenues for broadcasters: TV channels should look at internet as an additional advertising revenue source. Hulu generated $100 million in revenues in 2009 purely from advertising and now it is starting a subscription services at $9.95 per month. Internet TV may not be able to sustain itself on its own in the near future but it can always act as an extension to traditional TV.

3. Better services to Viewers: Internet TV can offer services like personalization, interactivity, ubiquitous availability that are not possible in television. With internet, it is possible to make television viewing experience very social. I envisage multiple applications being developed just the way it is happening to the mobile world.

4. Targeted Advertising: The advertisers would benefit from targeted advertising on internet TV. On internet, it is possible to track the behavior of the viewer leading to better returns through targeted advertising.

Converging technologies are blurring the difference between different media. The trend towards convergence started with Direct to Home and set-up boxes on cable to facilitate digital transmission but now IPTV is in a way internet TV. Google is also set to transform the set-up boxes by brining in its Android platform to enable application development. There are ample opportunities for the TV industry to innovate and become more interactive and internet TV is the step in the right direction but the real fun would be to bring the internet TV on mobiles.

Today’s consumer is exposed to a lot of digital media and entertainment in multiple formats and over mutiple mediums. Broadcasters should aim at unifying their service offerings and provide a unified lifestyle to their subscribers. Mobile phones and computers would complement the TV viewing experience in future and all the strategies of the channel owners should be keeping this reality in mind

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