More People Turn to the Web to Watch TV - New York TimesAugust 1, 2005
More People Turn to the Web to Watch TV
By SAUL HANSELL
For two decades, media company executives and advertisers have been talking about creating fully interactive television that would allow viewers to watch exactly what they want, when they want it.
It looks like that future may well be by way of the computer, as big media and Internet companies develop new Web-based video programming and advertising that is truly under the command of the viewer. As Americans grow more comfortable watching programs online, Internet programming is beginning to combine the interactivity and immediacy of the Web with the alluring engagement of television.
The Nickelodeon cable network, for example, recently created TurboNick, a free Internet service that offers 24-hour access to popular programs like SpongeBob SquarePants and Jimmy Neutron. It offers some original programs, too, because the young audience of Nickelodeon, which is owned by Viacom, is increasingly spending time in front of computers.
CBS News, which has no cable network and is also owned by Viacom, uses the Internet to offer video news updates and reports that do not fit in the 30-minute time slot of "CBS Evening News."
And for America Online, offering a wide array of free video programming - from coverage of the recent Live 8 concerts to programs hosted by business gurus like Stephen R. Covey and Tom Peters - is a way to attract an audience to its new Internet portal at AOL.com. AOL, a unit of Time Warner, is also producing with the Warner Music Group an Internet-based reality program called "The Biz." It will seek to find the next music mogul, according to people involved with the program.
For all of them, and many more media and Internet companies, investing in new Internet video programming is a way to cash in on the demands of advertisers who want to put their commercials on computer screens, where new viewers are watching. And on many Web sites, viewers can't skip the video commercials, the way they can when using TiVo and other video recorders.
Of course, there have been bits of rough, jerky video on the Internet for years. The new video services, however, can count on better software and faster connections to deliver pictures that are nearly as crisp as those delivered by a typical cable signal. This year more than half of the homes with Internet access have high speed, or broadband, service.
"There is critical mass with high-speed Internet connections, so video is a good user experience," said Jim Walton, the president of the CNN News Group. "And that means there can be critical mass for advertisers."
With the cost of the network connections needed to broadcast video over the Web falling and advertising rates rising, CNN, also a Time Warner property, just replaced a small, fee-based Internet video service with an expanded offering of free videos intermingled with commercials.
"Television is a very straightforward, passive, linear medium," said Lloyd Braun, the former chairman of ABC's entertainment group, who now oversees the development of a sprawling campus for Yahoo in Santa Monica, Calif., that will largely be devoted to creating original video programming for the Internet.
"What I find so compelling about the Internet is that it is not passive," he said. "It is a medium where users are in control, can customize the content, personalize it, share it and tap into their communities in a number of ways."
Mr. Braun said he was exploring dozens of video ideas, including original Internet programming in nearly every genre that has worked on television: news, sports, game shows, dramas, sitcoms, even talk shows. But these are likely to be made up of short video segments that users can assemble to their liking rather than half-hour or hourly programs. "If you try to do television on a PC you will fail, because television does television very well," he said.
In addition to its own programming, Yahoo will feature programming from others in its video search service and on its other pages. For example, Yahoo is expected to announce today that it will add video clips from CNN and ABC News, along with video ads, to its existing Yahoo News site.
A watershed event in the development of Internet video was AOL's live Webcasts of the Live 8 concert series earlier this month. Some five million people tuned into the Webcast on AOL, where they could instantly flip among the concerts in London, Paris, Philadelphia, Toronto, Rome and Berlin.
Three times as many people watched the televised version on MTV, but many of them were dissatisfied with the way the network, a division of Viacom, selected which songs to play and had its announcers talk over the music. (AOL also offered users all sorts of commentary - blogs from backstage, user comments, photos - but these were accessible alongside the Webcast and did not interrupt the music.)
While MTV's TV network is being criticized, its new Internet video service, MTV Overdrive, is being praised as perhaps the slickest attempt yet to combine the packaging of television with the interactivity of the Internet. With one click, users can view dozens of shows - music video collections, newscasts, artist interviews and supplements to MTV's signature programs like "The Real World."
And with a second click, users can see the various segments that make up those shows. They also can assemble a program of their choosing, mixing and matching parts of any of those shows, as well as videos and older programs from MTV's archive of thousands.
For Alisha Davis, who joined MTV two months ago to anchor its afternoon Web newscasts, the medium offers opportunities and challenges that traditional television does not. With no fixed time slot to fill, her afternoon Webcast can run anywhere from 10 minutes to 20 minutes, depending on the news of the day. (That's far more than the three minutes that the MTV network now devotes to its newscasts.)
While she still begins each newscast with an upbeat rundown of stories, Ms. Davis also understands that is not necessarily how Internet viewers will watch the show.
"On a linear broadcast, you can refer to something that happened before," she said. "We can't do that. We'll set up a show for people, but a lot of people will create their own show."
"We always said, 'I want my MTV,' " said Judy McGrath, the chief executive of MTV Networks. "Today that means a very personal relationship to whatever it is you are interested in, so you can talk about it, you can generate it, and you can critique it."
The flexibility of the evolving medium also applies to advertisers.
Services like MTV Overdrive typically show 15-second or 30-second commercials - which users cannot skip - before viewers start watching and then again every few minutes. Moreover, when a commercial plays on Overdrive (and on many other new video services) a static graphic ad from the same advertiser appears on another part of the screen. This graphic ad remains even while the program plays. If users click on it, it opens the advertiser's Web site.
"A commercial on broadband is emotional and impactful," said Matt Wasserlauf, the president of Broadband Enterprises, which sells Internet video ads. He said that Internet video ads already produced 100 times as many clicks as static banners on Web pages.
An Internet commercial typically costs about $15 to $20 for each 1,000 viewers, nearly as much as broadcast networks charge. The price is high because there is more demand from advertisers than there is Internet video programming available. Broadband Enterprises estimates about $200 million will be spent on Internet video this year, up from $75 million last year. That pales in comparison to the $65 billion or so spent on broadcast and cable television advertising, but it is growing faster.
While much of the development of Internet video is now being driven by advertising, there is a growing crop of pay-per-view and subscription video services.
In the fall, CNN will introduce CNN Pipeline, a new fee-based Web service that will give users a choice of four live video programs, as well as access to its extensive archive of video clips. And CourtTV's new $4.95-a-month service on the Internet lets users see as many as three live trials simultaneously and also lets hard-core fans replay testimony and arguments from dozens of past trials.
Already, half a million people pay to watch live Webcasts of Major League Baseball games at $3.95 per game, or an unlimited package at $14.95 a month. That's double the paying audience last year.
In time, industry specialists say, longer, more elaborate programs created specifically for the Internet will also emerge. But how quickly that happens may depend in part on the development of technology that can play Internet video on television sets, on which people are used to watching longer programming.
"It takes time to teach consumers what they can do with this medium," said Kevin Conroy, the chief operating officer of its AOL Media Networks Group. "Now we are in a wonderful position to begin to expand to longer-form content. New video programs will include a live music performance series and a show where movie stars interview one another. AOL is also scouring Hollywood to buy the rights to old TV shows and movies it can fill with ads and show free on the Internet, said Mr. Conroy, who sees the Internet starting as akin to the ultimate UHF station.
One thing AOL will not offer on Webcasts is the most popular programming from its Time Warner cousins, such as HBO and its shows like "The Sopranos" and "Sex and the City."
"Everybody says why don't you have 'Sex and the City,' " Mr. Conroy said, "but 'Sex and the City' is already in first-run syndication on Turner. It will be on the Internet some day, but for now there are thousands of hours of programming that can't get on the air anywhere."
