The Integrative Stream

TV Online

Fox Network just announced a contract renegotiation with their affiliates. The new deal will allow them to offer 60% of their prime time schedule online the day after the show first airs. ABC, of course, has just announced that they will be airing shows for free on the web, funded by unskippable advertising. ABC and NBC shows are available on iTunes.

There’s been a lot of talk about this trend, so I won’t waste time recap. However, it’s a great idea. The general consensus is that the networks are “under assault” by digital video recorders. People skip ads, and the whole television broadcast model will fall apart. This is broadly true. I wrote about the future of digital television back in 2002, arguing that DVRs would, all else equal, encourage a drive towards subscription channels like HBO. At that point I didn’t expect video on demand to come to market so quickly. My current Comcast cable system gives me a surprisingly large menu of programming options, and the selection is only going to grow. Without Comcast On Demand I would never have seen Marlon Brando in “The Appaloosa.” So the jury’s still out.

It’s worth looking at ABC’s move from a product development perspective. Why do consumers purchase DVRs? To time shift programs, and to skip commercials. These are not equal imperatives. It’s easy to determine which is more imporant – how much would you pay for a machine that let you do one, but not the other? I’m not sure I’d pay very much for a machine that only skipped commercials (or for scheduled programs that didn’t have them in the first place). But I know it’s much less than what I would be willing to pay for a service that would let me time shift programs but wouldn’t let me skip commercials. The fact that I’d pay even more for both is somewhat irrelevant.

ABC is solving the problem that affects the consumer the most, and doing it in a way that seems sustainable. That’s smart business. The iTunes project is complementary – viewers who are willing to pay a little more to skip commercials can do that. We’ll see what things look like in a few years, when bandwidth and video quality are higher and more PCs have the connectors that link them to TVs (Apple’s iMac is a step in this direction).