Screen wars: stealing TV’s ‘eyeball’ share

Television, the long-dominant medium, becomes just one of many video outlets.

Is this the summer that the Internet finally kills television as we once knew it?

Most industry observers are stopping short of that prediction, citing some significant hurdles still in the way. But the growing number of new deals and new devices being announced suggests that a profound change in the way people watch video – and what video they watch – is under way. The line between “television” and video via the Internet already has blurred and may disappear in coming years. At least one industry analyst has declared “TV is dead” and welcomes Americans to a new age of video everywhere.

Increasingly, Americans are watching video when they want to, and on the screen that suits them at the time. And more programming is from new sources that threaten to unlock Hollywood’s domination of content. Video is now delivered on displays and devices of every shape and size, from gigantic theater screens and ever-larger home projector screens, to flat-screen HDTVs, to desktop and laptop computer monitors, to tiny personal screens such as those found on iPods and mobile phones.

Meanwhile, NBC Universal is touting its coverage of the Summer Olympics in Beijing as “the single most ambitious digital event coverage ever.” Along with video coverage on several of its cable TV networks, NBC is streaming 2,200 hours of live competition in 25 sports on the NBCOlympics.com website.

“The Olympic viewer will be able to define his or her own Olympic experience like never before,” said Gary Zenkel, the president of NBC Olympics, announcing coverage plans last month. Press coverage has speculated that heavy viewing of Olympics on workplace computers may cause systems to bog down or crash.

“NBC is certainly taking the right approach by stepping back and trying to look at [the Olympics] as a holistic suite of [video] offerings and then trying to figure out what pieces best go where,” says Kendall Whitehouse, senior director of information technology at the Wharton School of the University of Pennsylvania.

NBC concedes that this unprecedented blanket of coverage across TV, Internet, and mobile devices amounts to a giant experiment. “I have no idea how people are going to use this stuff,” said Alan Wurtzel, the company’s research chief, in an interview with the Associated Press.

This spring and summer, deals to make video more ubiquitous across screens have popped up with more and more frequency:

• Netflix, the video rent-by-mail company, has struck several new agreements to deliver its content online. A new $100 box from Roku the size of a paperback book lets users stream any of about 10,000 movies from Netflix to their TVs (though the vast majority of Netflix’s library will still be available only through DVDs by mail). South Korea’s LG Electronics announced it will offer a high-definition (HD) disc player that also will be able to access movies from Netflix via the Internet. And Microsoft will stream Netflix video to its Xbox 360 videogame consoles.

• Sony said it will offer a movie and TV show download option for its Playstation videogame console.

• Apple Corporation, which sells millions of videos online through its iTunes store, relaunched its Apple TV player, which can send that content to a TV set.

• Amazon, the online retailer, is offering Amazon Video on Demand, which will give users immediate streaming access to 40,000 movies and TV shows. This video is now available only on a computer.

• At least a half-dozen TV manufacturers, including Sony, Hewlett-Packard, and Samsung, have announced they will sell sets that are continuously connected to a broadband Internet network, allowing Web content, including video, to move easily to the biggest screen in the house.

• TiVo, the digital video recorder, will supply video from YouTube, the online video site famous for short, often amateur videos.

• In March, hulu.com went public. The website streams online free, high-quality video including a growing selection of TV shows and movies.

While these new services get video moving to new screens, none is a complete solution on its own, says the Wharton School’s Mr. Whitehouse. “There are a lot of different companies supporting different file formats,” he says. What you don’t have is the one device that can “get content from all the major services like hulu and Netflix and iTunes.”

There’s a kind of convergence between TV and Internet that’s happening, “but not really a friendly one [for consumers], I think,” says Bobby Tulsiani, an analyst who tracks developments in internet video for JupiterResearch.

TV networks, he says, have a time-tested model for making money through advertising and the fees cable TV companies pay to carry their programming. Online distribution presents potential new revenue sources, but also the danger that viewers will slide online, where profits are more uncertain.

YouTube has popularized video viewing online. But the conventional wisdom has been that people won’t watch anything longer than two or three minutes on a computer screen. That as­­sumption has been proved wrong with the huge popularity of TV series online. “We’ve moved from TV on this biggest screen to TV on this middle screen,” the computer, says Mr. Tulsiani, which he calls “a critical change.” “That’s the fastest-growing segment of who’s watching TV content,” he says.

Nearly 80 million Americans (43 percent of those who go online) have watched a TV show on the Internet, according to a February survey by Solutions Research Group in Toronto. Just a year ago, the figure was 25 percent. Total video viewing will rise from about six hours a day today to a projected eight hours daily by 2013, Solutions forecasts, and fewer than four hours of that will be spent watching conventional TV.

The Internet is producing more and more polished original content. This summer Joss Whedon, creator of the critically acclaimed TV shows “Buffy the Vampire Slayer,” “Angel,” and “Firefly,” produced “Doctor Horrible’s Sing-Along Blog” (drhorrible.com), an Internet-only “TV series” that’s become an online viewing phenomenon. It’s also the kind of Internet video that viewers may wish they could easily shift to their TVs so they could watch it on their sofas.

But not everyone is convinced that Internet video and TV are about to converge. “It’s the most overrated, overhyped story in the tech world today,” says Phillip Swann, president and publisher of TVpredictions.com. “It’s simply not convenient yet.”

Mr. Swann also disputes the idea that network TV schedules are going out the window as people call up online video whenever they want it. “People like routine, they like to able to know what is going to be on at 8 o’clock,” he says.

Also standing in the way is the need for true HD-quality video to be available over the Web. “They’re a long ways from that,” Swann says.

But Forrester Research analyst James McQuivey, who declared “TV is dead” in a June white paper, says the new “video everywhere” era is just beginning to emerge. He foresees a “cocoon of video experiences that follow [people] from morning until night.” Video shipped to small devices we carry will be displayed on bigger screens that surround us, such on the table at a cafe. Portable devices will “talk with” nearby screens, such as one on the back of the airline seat in front of you, that will display your video.

By 2020, Mr. McQuivey says, video will become a kind of customized “white noise” behind users’ lives, as well as a companion “that will combine personal video, slide shows from your digital camera, music videos, and clips from favorite movies, sitcoms, and sporting events.”

While that may sound far out, just a couple of years ago users were marveling at being able to view tiny, grainy YouTube videos on their computers. Today’s online video quality already rivals that of old-fashioned analog TV. In a very short period of time, “the progress has been pretty striking,” Whitehouse says.

Although computers are rapidly becoming a mainstay of video viewing, the picture for mobile devices is less clear. According to The Nielsen Company, more than one-third of all mobile phone subscribers – some 91 million Americans – own a video-capable phone. And 6 percent of US cellphone subscribers (about 14 million) pay for a video plan.

“The jury is out on mobile, but it seems likely that some experience will emerge there,” Tulsiani says. People said consumers would never watch video on computers, but they do, he says. Now they’re saying they’ll never watch on a mobile phone. “We’ll find out if that’s true or not.”

[Editor's note: The original version of this story misstated the video quality of Internet movies from the LG/Netflix box. The streaming video will be in standard definition.]