Networks Get the Net
TV's online surprise: Shows on the Web build audiences and lure advertisers
"This new network is very much in the category of things that are easier said than done," says James McQuivey, who analyzes television and media technology for Forrester Research. "To announce a website for which you have no name, and to say in four or five months that it will be fully operational, is very ambitious."
The site, like others, is expected to help drive viewers back to their TV sets by creating additional communities on the Web around shows like Heroes and Grey's Anatomy that keep fans connected, reel in new ones, and offer the networks a forum to cross-promote their other entertainment content. While it's still too early to determine exactly how much the Web is contributing to primetime ratings, research shows that when the online audience grows for a show like Ugly Betty or 24, the TV audience tends to grow along with it. "These are not just typical Internet users who happen to be catching a video stream," says Jeff Gaspin, president of cable and digital content for NBC Universal. "This is a TV viewer who is using the Internet to stay up to date on what's happening in TV."
Early birds. At NBC, 78 percent of online users have watched an episode they had missed on broadcast television, 26 percent have watched an episode after originally watching it on TV, and 34 percent have gone online to watch a show they had never seen before. The Web also is helping snag viewers before a show debuts, by making episodes available early.
Last fall, for instance, CBS made season openers of nuclear-apocalypse mystery Jericho and other shows available online and to some TiVo users before their fall broadcast dates. Of those who said they had screened a version of a new program early, more than half said they went on to watch the show during the regular season, according to CBS research.
And where viewers go, advertisers are happy to follow. Online video advertising jumped to $410 million last year, an increase of 82 percent over 2005, making it the fastest-growing segment of the Internet ad market, according to eMarketer, an online advertising research firm. Although it is expected to explode to $6 billion by 2010, it will still be just a fraction of today's $65 billion TV-advertising market. Nonetheless, much of the online revenue could be pure profit for content providers since they would be simply making shows already created for television or the big screen available online.
"While it's still early, it's clear that there is a demand for online video," says Albert Cheng, executive vice president of digital media for Disney-ABC Television Group. "There is an audience for our shows, and it is an effective vehicle for advertisers to reach our customers."
And not a moment too soon. With network audiences continuing to shrink and digital video recorders allowing viewers to fast-forward through commercials, advertisers have grown increasingly frustrated with network television. At next month's "upfront," the annual ritual where advertisers buy commercial time for the upcoming fall season, there won't be a single new show without a highly developed online component.
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