The state of Internet TV: Consumers may pay for content; Aggregators win

The state of Internet TV: Consumers may pay for content; Aggregators win

Summary: Bernstein's annual consumer survey reveals that folks may be interested in cutting their cable connection for sites like Hulu, but are unlikely to make the move. Meanwhile, consumers may even pay up for professional content.


Bernstein's annual consumer survey reveals that folks may be interested in cutting their cable connection for sites like Hulu, but are unlikely to make the move. Meanwhile, consumers may even pay up for professional content.

Those takeaways were the high level items in a report from Bernstein analyst Jeffrey Lindsay. The survey, based on more than 500 consumers, is used by Lindsay to justify his questions about YouTube's business model.

Among the findings:

  • Thirty five percent of respondents said they would contemplate cutting their cable connection over the next five years. Lindsay writes:

Only a relatively modest 35% of respondents said they might contemplate cutting their cable connection over the next five years – again this under-indexes the share of the U.S. population who typically say they will consider cutting their cable or satellite connection in the next 5 years for other reasons – mostly cost-related. Interestingly, in this survey the major consideration was not cost, but rather increased content choice. Of the 35% who are contemplating "cutting the cable", only 28% (or 10% of the total) said that cost would be the major consideration.

Also see: The cure for YouTube's ills: Charge for uploads

  • Internet TV viewing appears to be a "second screen experience" as 74 percent of consumers view content on their computer monitors without connecting to the TV. In other words, Internet TV doesn't supplant the traditional stuff.
  • Hulu appears to have the best model now that it has three of the four major networks on board. In fact, Lindsay reckons that Hulu is the only legitimate threat to cable distribution.

  • Internet TV viewers skew younger, but increasingly match the U.S. population overall. Overall, the demographics of cable TV and Internet TV viewers are roughly the same.

  • Aggregators rule Internet video distribution, but surprisingly search engines don't.

  • Surprisingly 35 percent of consumers said they would pay for professional video content.

  • In addition, these consumers don't mind ads overall.

  • Add it all up and the shakeout in video appears to favor the aggregators. Here's how Lindsay sees the pecking order developing.

And the winning models.

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  • hulu works because there is no set schedule...

    i have anywhere from a couple of weeks to a couple of months to find and watch my favorite tv shows. if life interferes then i can watch a marathon over a day/weekend off. after all, who really has primetime off anymore? i don't mind ads that are less than 45 seconds per segment. i don't like it that usa network pulls their shows so quickly.
    • Yah, what you want and when you want it

      *I* would be willing, cheapskate that I am, to pay for Hulu if A) there were only advertisements at the beginning and end of shows to keep my costs down and B) I was paying a low monthly front end, say $24.99, and $.99 a program. It would be so much cheaper than Cable or a Dish and would fit MY schedule...

      As for "pulling shows", I just FINALLY got around to seeing all 14 episodes of "Firefly" on Hulu, something I would not otherwise be able to do without owning the DVDs...Squeezed it all into my whacky schedule!
      ReadWryt (error)
  • RE: The state of Internet TV: Consumers may pay for content; Aggregators win

    Hulu and other sites allow me to pick what to watch and when to watch it. I dont need a DVR or VCR,etc to save programs myself.
  • Magic Formula: Give me what I want, when I want it.

    The key to exploding future content distribution via the Internet comes down to one simple statement. Give people exactly what they want when they want it. Internet content will replace cable when it gives me the same content at the same quality and lets me watch it whenever I choose.

    With that said, the pricing logic will also obviously be an issue. If you plan to charge $1 per show, you had best not put any commercials into the content. If you want to put commercials into the shows, then you better not charge me to watch them.

    People don't view paying for cable as paying for content. They view it as paying for a connection to a content feed. With the Internet, the connection is their ISP cost. The feeds are the web sites. In both cases, they feel like the content is (and should be) free because of all the commercials they sit through. They won't put up with double dipping. Either charge for the show without commercials or offer the show for free with commercials intact. You can't do both.
    • Exactly! Thanks for the great analysis. (nt)

    • spot on

      BillDem, Your last two lines nailed it to the floor - well done.

      IPTV is 'pull', broadcast is 'push'. Push is infinitely easier than pull... push is like 3rd grade school: do something when teacher says it, not before, not after. IPTV is like visitng the 7/11...whenever you want (thats why you pay a premium).
  • Ignores what is happening outside the USA

    This survey completely ignores what is happening outside of the USA where significant technologies are already very well established

    - BBC iPlayer
    - Sky TV's Sky Player
    - 4oD - where this week they have announced that their owneed programme archive will be available free of charge
    - BBC Driven cross broadcaster standards 'Project Canvas' in development

    Much of this is in the UK, but there are other significant technologies in the EU and Asia.
  • RE: The state of Internet TV: Consumers may pay for content; Aggregators win

    Watch the tv streaming was free, but was disrupted by bandwith internet if listen radio not many disrupted.

    just click and listen
  • Something's wrong someplace

    Ok, I'm missing something someplace.
    I'm not defending Cable or Satelite companies. But, how much do you pay for TV? I'm paying $126 a month for TV, Internet, Phone, the DVR, remote and taxes. I can DVR anything, and watch it when I want, pass by all the commercials. I can add any of the premium channels for an additional fee. But, why, when for less than $20, I can get what i want from Netflix?
    And then, on top of all that, IF i want to actually pay to watch TV shows, why pay a buck or two per episode when I can find just about any show on DVD for $15-20 a season. A few never drop in price, so if I want them badly enough, I have to pay $40. Still $2 or less per episode, no commercials, and I can have it as long as DVDs are playable on some format.
    Seems to me if people are paying $1-5 per episode or per movie, they are spending far more than they should be. So, nope, I don't get it. About the only thing i MIGHT consider paying to watch is sports; but, it isn't even that big a deal to me anymore. It's not like very many Cubs or White Sox were raised in Chicago. Maybe a Bear or two were. The Bulls? nope. Blackhawks? nope. So, why should I have pride in my team, when the only real bragging rights is, the owners (also not born or raised in Chicago) spent more money than someone else to get a player that won the championship? Or, worse, can't even win, when they're the best team in the league? Why pay for that? (Cuz its fun, I know).
    And, that's my opinion on this whole this.
    Anyone care? I didnt think so. But, at least it's free. For now.

  • RE: The state of Internet TV: Consumers may pay for content; Aggregators win

    I might pay for hulu if I dropped Dish first.
  • RE: The state of Internet TV: Consumers may pay for content; Aggregators win

    It?s true, consumers are concerned with costs. However, they?re also concerned with quality, access and portability. And while online video is usually free, you get what you pay for; the show you want to watch might not be available, or you might not be able to watch it on the device you?d like to use (such as a mobile phone). While free online video is an effective supplement to traditional TV programming, ultimately, viewers want to watch the content they pay for via cable subscriptions at any time and place of their choosing. And they?re not out of line?in this increasingly mobile world, there?s a heightened expectation of portable content, and cable companies are figuring out how to deliver this to compete with sites like Hulu.
  • Paradigm shift needed among content providers

    Online will not replace cable and broadcast until the content providers decide to let it. Bonnie Hammer, president of NBC Universal Cable Entertainment, said in an interview on the April 4, 2009 episode of C-SPAN's "The Communicators" that for the foreseeable future providing internet content will not be allowed to affect their broadcast and cable strategies. That means access on the internet will continue to be limited, since allowing anytime, anywhere access to all their content will upset their established profit models -- and nobody likes having to create another spreadsheet.

    Like their counterparts in the music industry, these bean counters are still under the illusion that they have total control over their viewers. Unfortunately, with illegal filesharing that is far from the truth and they could suffer the same fate as the music industry if they don't get ahead of their audience.