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Internet Killed the TV Star
by Michael Sutherland-Shaw

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If you have the Internet, you have no reason to watch broadcast TV ever again. Selecting any episode you want, when you want it. Start, stop, fast-forward and rewind at will. Add a network where commercial breaks are just 30 seconds long rather than five minutes and there you have it – online TV.

The most essential of modern possessions, the computer followed in the footsteps of previous technological must-haves like radio in the early 1900s and TV in the 1950s. About five years ago, the face of broadcasting began to change, as networks began to move content from TV screens to computers. But Canadian broadcasters are falling behind their U.S. and U.K. counterparts in terms of turning a profit in this new world of Web-based programming.

Freelance TV critic Bill Brioux, who has been watching as Canadian television broadcasters fight against this change, says the movement from broadcast to online TV has been slow. The broadcasters, he says, “were reluctant because they didn’t want to cannibalize their business.

“They wanted Canadians to watch television,” he adds. “They reluctantly got dragged kicking and screaming into the 21st century because it was join or die – they had to.”

Bill Harris, a Sun Media entertainment critic, says the biggest dilemma for broadcasters is how to make money from online content.

“If all the advertising that went into newspapers and TV simply was moving online, well fine, we’ll just have everything online. But the problem is that advertisers are not moving online at the same speed that is supporting the old TV model,” Harris says.

Advertisers are the lifeblood of the industry and getting them on board is vital to the success of all parties involved. The TV advertising business is based on target markets - the people willing to spend on your product.

Ean Jackson, the president of Analytics Marketing Inc. and a part time Internet marketing professor at Simon Fraser University, says advertising will soon be developed around ‘cloud computing’ – a phenomenon based on sharing computer resources rather than relying on local servers to handle software.

Jackson explains that with free usage you will get advertising in and around the images and type, trying to sell products and widgets to visitors.

Jackson says “advertising will change” and broadcasters will realize they can’t afford to spend thousands of dollars a year to put up a site with no revenues coming in. They need more than just free content on their websites or they won’t survive.

According to the Canadian Internet use survey done by statistics Canada in 2008, 68 per cent of people who used the Internet at home went online every day during a typical month. Fifty per cent spent five hours or more on the Web in a typical week and almost three-quarters of Canadians – more than 19.2 million people over the age of 16 – went online for personal reasons in the year leading up to the survey.

Online advertising works because it allows a direct response, which is beneficial to both the consumer and the seller, says Brioux.

Advertisements may be on broadcast sites, he adds, but the revenue is insubstantial when compared to the traditional broadcast model. “The advertising community hasn’t quite taken the leap to online yet, as they are still clinging to the old model,” says Brioux.

The Internet has “surpassed the traditional advertising model, and that’s really turned the TV industry upside down,” he says. “For years they could produce shows that cost $2 million an hour and know they would get so much money back.”

The Canadian Radio-Television and Telecommunications Commission recently reported that profits for conventional TV networks fell by more than 90 per cent last year. The industry profits before interest and taxes were a mere $8 million in 2008 versus $112.9 million in 2007. This data is proof enough: Canadian broadcasters need to change before the entire industry becomes obsolete.

Comparisons with the U.K. and the U.S. indicate that Canadian TV may be falling even further behind. The BBC launched the iPlayer in 2007, a free-of-charge content distributor for all citizens who pay the annual licensing fee of 139.50 £ (CA$ 263.95). One of the key features of the iPlayer is the download service and use of peer-to-peer technology. Programs are available for download for seven days following broadcast. The user then has 30 days to begin watching a show. Once a user starts to watch a program, it will continue to be available for the next seven days. In 2008, a new version was released for iPods and iPhones, which allows users to stream video to their handheld devices.

In March 2008, Fox and NBC Universal launched a new distribution outlet called Hulu, which allows U.S. surfers to choose from a growing library of top-rated TV shows and movies, from a number of sources. According to a Toronto Star business report by Rita Trichur on March 14, 2009, analysts say Hulu is making money and that advertising plays a major role in its estimated US$12 million in revenues in 2008. Hulu’s success is an excellent example of how professional content can thrive on the Web.

“We’ve raised a whole generation that thinks everything is free, and that’s ultimately the crux. When they have to pay for something they get upset,” explains Harris.

“I’d rather see a scenario where somebody hosts the software and I pay for what I use – that’s the way things are going anyway,” says Jackson.

Major Canadian broadcasters such as Global and CTV have made some programs available online, but the problem is that shows are often geo-blocked. Although domestic broadcasters buy the rights to the U.S. content, they have to negotiate separate digital rights to put it on their sites, says Brioux. Canadian consumers become frustrated when they try to view programs on sites like Hulu or, he says, since they can only access the content if they’re watching from the U.S.
Putting limits on accessibility is another example of how “they’re looking for money as an extension of their content,” says Brioux.

For these reasons, Canadian Internet users have bought into piracy.

“One reason I think that piracy started is because technology made it possible to trade stuff or distribute it in ways that companies or artists didn’t originally foresee,“ says Jackson. “It’s also human nature for some people to try to get something for nothing and technology certainly facilitates that.”

Many people are still slow to make the transition from pirated media to official network websites. This is particularly true in Canada, where broadcasters have not adopted the same changes as U.K. and U.S. networks, such as NBC.

But regardless of how we watch it – pirated, legit, or otherwise – Harris is convinced TV is here to stay. “I don’t think the idea of being entertained by people doing stuff on screen is going away,” he says. “Whether that screen is a high definition TV or it’s attached to a laptop, I don’t think that matters. It’s more a question of who’s providing the content to that screen and how TV is making money.”

By Katarina Lyadova


Fine Cut 2009