This is Tech

Broadcast television is at a crossroads. Today’s viewers have no patience for commercials and expect to watch what they want when they want it. Cable companies practically give away DVRs, to the point that even our parents and grandparents know how to skip commercials. At the same time, Internet advertising becomes more refined every year. Internet ads are less expensive than television ads, meaning you don’t need as large a budget to participate. Internet ads can be more precisely targeted than television ads, and the interactive nature of the Internet leads to better feedback on whether an ad campaign is producing results. It is surprising that television ad prices haven’t plummeted, but I guess advertisers are as slow to see what is happening as the networks.

So what can television producers and networks do to stop the downward spiral? Embrace the advantages of Internet advertising, and use these advances to make television watchable (ads and all). The solution is on-demand streaming video with limited commercials. For a good example, visit www.southparkstudios.com, which started offering every episode from every season of South Park on demand last week.

There are a variety of existing platforms that content providers can already tap into. The Xbox 360 is capable of this type of content delivery, as could be Apple’s AppleTV. Cable companies have similarly started rolling out limited on-demand offerings through modern cable boxes.

If a consumer can pick any show and stream it on demand from the broadcaster, there is no need for TIVO, which requires the user to program and make choices about what to tape. On-demand alone is not enough to solve the problem, since TIVO and other DVR’s offer the additional convenience of commercial skipping. This is where targeted advertising comes in. Ads targeted to the specific demographics of the viewer is old news on the Internet, but surprisingly haven’t yet been implemented by traditional broadcasters, which is why ads for feminine higene products are still viewed by a lot of people without the equipment needed to become a customer.

On demand IPTV will allow video streams to be generated on the fly for each household based on the interests of its viewers. These targeted ads more valuable to advertisers that current blanket ads. All this means that broadcasters can make the same money with fewer ads.

When you combine the convenience of on-demand instant streaming of any show with limited nuisance of two or three ads per half hour instead of 22 minutes per hour, users will take the lazy route and give up on commercial skipping.

Broadcasters, like all content providers, need to figure out how to make getting content directly from them easier and less painful than BitTorrent or Tivo, and they better act fast. My Media Center PC is already hacked to skip commercials automatically, and once that becomes more common, it is going to be awfully hard to convince viewers that on-demand with targeted commercials is more convenient.

[Photo by: confusedvision]