TV networks online a hit

The online web-based TV services of the four major US TV networks – ABC, CBS, NBC and Fox – together with Hulu, the joint venture between NBC, News Corp and Disney, accounted for a combined 53 per cent of an ad-supported US online TV market that generated $448 million in revenues in 2008. The remaining share of revenues was made up of the online video services of major sports leagues, video services from traditional online portals, and direct services from other major channel groups and content owners.

The findings have just been published in a report by Screen Digest which goes on to state that the combined dominance of the leading broadcaster-supported platforms will drive the total ad-supported model for the distribution of online programming to more than $1.45 billion in revenues by 2013.

In contrast, third party platforms such as YouTube, Joost and other portals, which have no direct vertical affiliation with major rights holders, nor direct access to premium content rights, will struggle to aggregate ad-supported movies and TV shows. The Hollywood Studios and major rights holders will continue to limit such deals, instead preferring to build their own syndicated ad-supported online video services – such as Crackle, developed by Sony Pictures, and the CBS Audience Network. This is a trend that will gather momentum. As a result, third party ad-supported video platforms may have to either diversify into new forms of their own original programming, exit the content aggregation business and offer technology and advertising solutions to the content-owners' and broadcasters' own services, or settle on the low-margin business of becoming affiliates of the player-platforms distributed by the content rights holders themselves.

According to Arash Amel, author of the report, "With better targeting and increased ad inventory, online TV services could be generating per-viewer revenues comparable to an average TV broadcast viewing in as little as three years. However, based on the current online ad strategies implemented, it will account for 2.2 per cent of all US TV advertising revenue by 2013, but definitely won't be generating enough to offset the $2 billionn we expect total US TV advertising to have declined by during in that period.

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