Will the internet kill television?

much television, right, Yeah, there's Um, it's interesting. I've always said, or since we started these podcasts, I've said that the internets were going to be the future of distribution for entertainment and information and in all formats, not just you know, text or music or whatever, but also video, and um, we've seen that continue to escalate over the past year. We've seen you know, of course, you know, YouTube has been popular for years now. YouTube. I feel like I've

heard that somewhere before. Yeah, I don't think you edited that one, did you. I don't know know that was one of my articles too. That, but things like Hulu, you know, Hulu being a service that does streaming deliver streaming video, and it's commercial streaming video. It's not just you know, it's not user generated, it's studio generated video um ADS supported in most cases. And uh, you know that that's become very popular over the last year as well.

So part of the conversation we wanted to have today was sort of about is this an increasing popularity and streaming video and online delivery, is that making an impact on regular television viewing trends? So, in other words, should should television executives be scared of the Internet? No? Al right, excellent, Well,

I'm glad we had this conversation. It's a little more complicated than that, actually, um well, one of the things about Hulu was it when it came out, it was sort of rushed out the door and people people weren't really sure of it. A lot of the critics I remember reading a lot of the critics saying, you know, what a dumb name, This thing is never going to

take off, very dismissive. Uh, you know, the the TV executives at the time, we're really concerned about this because they said, well, you know, this has taken eyes away from our our TV screens, you know, but it won't really matter because it's this little bitty screen and nobody's really gonna care ha ha. Yeah, people cared a lot. I mean, I use Hulu. Yeah, I viewed quite a

few shows on Hulu. UM. And I think part of the uh, the reason why Hulu really got popular very quickly, besides the fact that a couple of studios started to actually support it, like NBC and Fox, UM, was that you it gave users what they really wanted, which is the the opportunity to consume entertainment on their own schedule. So you weren't tied down to your TV at specific times. You didn't have to sit down in front of your television at eight pm on Thursday night to catch you

know whatever. You could catch it on Hulu at your own convenience. And granted, yeah, you're watching it on a computer screen. It's not in high definition. UM. If you had a high definition television at home, you might be saying, well, you know, this quality is much lower than what I'm used to. But at the same time, you can watch it whenever you want it. And it's the same sort of philosophy as the DVR right where you can use a DVR to record a show and then watch it

at your own convenience. You're not You're not a slave to the programming schedule of a cable or broadcast television station. Yes, I'm the proud owner of a DVR and have been for many years. Yes that's a TiVo Series one, as I do have a TVO Series one, and I also

have a Dish Network. Uh, Dish Player five twenty two. Um, and my former co workers at Dish Network will probably wrect me because I don't think I got the name right, but it is a five two um, and uh, I gotta say it completely changes the way you watch TV because, as you were saying this, this frees you from the broadcasters schedule. And I would think if I were a TV executive, yes, this would be a little scary at first, but when you realize that the schedule becomes a little

less important. Um, you can run things at different hours and have people still tune in because their DBR is going to automatically schedule it and record it for them. Then you're still getting a lot of the uh the advertising revenue. You're still getting the eyeballs, but you don't have to have it in that you know, particular time slot to to make that work. But that that does raise another problem, and that traditionally it was easy to designate which slots UH cost more money for advertisers to

purchase time on UM. You know, the the eight o'clock and nine o'clock hours traditionally, I would say, would be the most expensive, apart from special events like the Olympics or Super Bowl or something like that. UM. But you know, you would say, like, okay, well a thirty second slot at eight pm costs you know, two dollars whatever, you know on this major network. Well, if you have DVRs in play, then suddenly people are going to say, well, now,

it's not so much the time slot that's important. It's the specific programming that the advertisement is tied to. So the programs that are the most popular would be the ones that would UM, that would that advertisers would want to get connected to. Also, the other problem is that a lot of DVRs allow you to fast forward through commercials UM, so that adds a new element to it.

And on top of all of this, we in the United States and actually most of the world really we're entering a recession and UH and so consumer UH confidence is way down. Um purchases are way down. That means that a lot of companies are looking very seriously at their advertising budgets and tightening up. You know, they're saying, Okay, we gotta be a lot smarter with how we spend

our advertising money. Uh. And so that's got television executives worried too, because suddenly their business model isn't as as tenable as it used to be. I mean, it was before people were clamoring to get this time, and now they're saying, well, if the Internet and DVRs are becoming

a big deal, you're becoming less relevant. And why should I pay this much money for what you offer when when people are consuming their entertainment in different ways, shouldn't I really look at other ways to spend this advertising money that will reach viewers instead of just be you know, it just happens to be there product product placement, that's

one of them. It turns out consumers don't like that. Really, I find it difficult to believe there was a I looked at a lot of studies before we did this podcast, and one of them specifically said that the the overwhelming preference among viewers of of online content at lea East was that you would have either a pre roll or a post roll or both advertisement, but you wouldn't use advertisement in the middle of your programming, so there will

be no interruptions and there wouldn't be like obvious product placement throughout the entire show. So yeah, that uh well a big surprise there, right. I mean, come on, who wants to have their favorite show interrupted by commercials? If you are given the choice of watching it all the way through with no interruptions or with with interruptions, I'm

pretty sure you're gonna pick no interruption option. True, Drew well like it sort of harkens back to the early days of television when you had the you know so and so are presented by sponsored name here you know, yes, various hair creams, true, among other things. But um, yeah, I mean this is this is one of those things. I don't I don't think you're gonna be able to to kill off the advertising. But you know, services like Hulu are able to put ads at the beginning and

end and in the middle. And you can actually see if you if you haven't watched a video on Hulu yet, um, you'll be able to see a little dot in the stream and that's exactly when the break up and you can't skip over it, and uh, you know you have to watch it if you're watching the Hulu video, as I recall. But the question is, if you're getting access to some of this programming for free, are you willing to sit through three or four ads? And I have

the answered to that yes. Again, another survey says that that that viewers of online content are more than willing to sit through um ads supported content. They're not as thrilled at purchase having to purchase content. So in other words, we're looking at people favor Hulu the Hulu model where you have these ads in the middle of some programs. Um. For instance, I think I tend to every now and then catch an episode of the Office on Hulu and it has three ad breaks. It's one ad per break.

UM so it's you know, a fraction of what you would see on televison. But then they prefer that model to say, the iTunes model, where you would purchase a television show and then poured it over to your iPod or watch it on your computer. Either way, they prefer they add supported one. Again, not a big surprise, because in essence it's free to the consumer and free versus having to pay for it. Again, not a not a big puzzler there, So I have a question then, okay, shoot,

what well? Okay, with streaming services like Hulu, you have your watching this once and you have two or three ads to watch, versus something like the Apple Store and other services like that, where you spend three or four dollars to buy this particular episode and you can watch you can watch it as many times as you want with no commercials. Does that not make a difference. I

think it probably would normally make a difference. But because again we're going into this recession period, people want to spend less money on their entertainment budgets. They're trying to find ways where they can they can still they still want entertainment, especially in our recession. Actually, entertainment's very important because it helps keep your mind of the fact that you're in a recession. Um, otherwise you have, you know,

go from recession to depression. I guess. But uh, yeah, the so people still want entertainment, but they still they want to pay less for it. So they're looking at the best opportunity to get entertainment without paying very much. Money. Um, I've read a study. It was on the website Seeking Alpha as Actually it was an article written by Diane Mermagas.

I hope I'm saying that name correctly. Um. She pointed out that DVD sales are down four this year compared to last year the third quarter when they that's when the economy was really starting to tank. They were down nine uh for the third quarter compared to the third quarter last year. And the higher price titles, the stuff like you know, the big DVD sets and the special editions,

they were down twenty. So we're talking about you know, that's obviously a format that what you you buy it and then you can watch as many times as you like, and you know it's yours. People aren't buying that as much.

They're going into the streaming content stuff more because it's it's free, and you know, of course again also the DVR route as well, where they can record they then they can record something and watch it as long as you know, they want to keep it on the DVR, or they could if they have the right equipment, they can burn that to DVD or you know, transferred to VHS. If anyone still does that, stop looking at me. Like that.

How many VHS machines do you have? One? Too many? Um? Yeah, okay, But the question is this going to cause I mean, the recession is something that could have a profound effect on this whole thing, because it could actually make this a permanent change. People get used to doing this. When we go back to a normal or more normal economy. You know, people might get hooked because I mean they've got access to classic TV shows and in some cases movies,

music videos, music videos TV un of the MTV exactly. Yeah. MTV found out that they can make more revenue and keep audience members engaged longer by switching from music videos

to too longer format work. So that's kind of why you saw all these shows pop up and MTV and all the music video shows kind of disappeared because people would watch a music video show for a while and then they'd see one of their favorite videos and they're like, Okay, let's watch something else, and uh, you know that only keeps your attention for like ten to fifteen minutes, whereas a full length show can keep you there for a

half hour or an hour or whatever. So um, they launched the service online where you can actually go to MTV's web page and watch hundreds of different music videos there, and uh and MTV, you know that was that was the right choice for them from a business standpoint. From those of us, for those of us who remember and loved MTV back when they showed music videos, it doesn't

seem like the right choice. But now, again convenience, we have the opportunity to go on MTV's website and and watch music videos and you can, you know, pretty much any music video you can think of, you can type it in there and there's a good chance it's going to be there, So you can watch the ones you want when you want. You don't have to sit there and say, uh, and it's another Pink music video. I was trying to get my grunge rock on and now

I'm watching Pink. I figured all of them were going to go to Rick Athletes, never gonna Yeah, that's you know, April one, totally. Yeah, except for the fact that that that that meme has to be dead by now. I mean, if nothing else, the Macy Thanksgiving Day Parade killed it this year. Um, but you know what had died an honorable death. But getting back to the idea of this, this whole television issue. Um, you make a good point. I mean, this recession could irrevocably change the the very

nature of entertainment. It's kind of crazy to think about that. But according to uh, to Diane again, there was the penetration for broadband is something like of the US households. So is that of all Internet households or households you know what? It doesn't say it just has of US Holmes. I bet it's Internet, because I can't imagine that of all homes have broadband. Maybe they have access, but not necessarily have it installed. I mean maybe, I don't know,

because that that does seem rather high to me. But at any rate, it does mean that there's increased access to this kind of entertainment. And that's what really starts to get people worried in the in the TV biz, because once you reach that tipping point where you're no longer in the majority, you're no longer catering to the majority. Now you're playing you know, catch up or you're eventually

petering out in dying you know. Uh, since you mentioned the tipping point on through a different tech business book in there and ay, but the long tale as as a really good aspect of this, because this is going to enable companies to make money off of properties that they've had in their vaults for so long and haven't really been doing anything with them. Um, you know. And I I think anything that allows time shifting or place shifting you know where you can it gives um viewers

more opportunities to watch TV on their terms. I just I can see where they might be a little concerned, But ultimately, the copyright owners have the control over this, and they set the standards for the most part, um, you know, because they're broadcasting the original content uh for people to watch, so you know, and and nobody I know, people can take video cameras into the movie theater and then put them up on YouTube for the you know, don't do thirty minutes that they can get away with

it before getting caught. But it's just you know, awful video. Nobody really wants to watch that. And having high quality video from these companies you know, offered to them on their own terms, I think that's a win from studios. I think piracy is is much Yeah, it's a much

smaller issue than the studios would necessarily have you believe. Um, the big issues are things like, well, just recently, back in November of two thousand and eight, they had there was a Future of Television conference and um, this conference they had some real doom and gloom panel titles things like is there a future for television? Which I think might have been a little pessimistic, But um, there were a couple of interesting surveys that came out of this.

IBM did one what that found that a lot of younger viewers claimed they were using the internet uh more often than they had in the past to get entertainment and it had impacted their television doing so. They were saying that we are consuming more entertainment online, not not necessarily more than they were watching on TV, but then

TV watching had decreased as a result. Um, Whereas CBS and NBC Universal came out and they said, that's kind of silly because our figures show that television viewing is up the among all age groups. So it's two surveys that are contradicting one another. Now, Grant. The IBM survey was, like I think, it's survey people in six different UM countries, So it was slightly different than Nielsen, which was looking at television ratings and that's what CBS, uh, NBC we're

kind of quoting. But and Nielsen says that the average household still watching eight hours and eighteen minutes per day of television. Yeah, it's a lot of TV. That's a whole lot of TV. Four hours and forty five minutes

per person per day. I just like to add one little thing that I thought about as we were preparing for this podcast, and that's um, even if you believed that people were turning to the internet to get away from TV, or maybe not necessarily to get away from and getting away from let's say, and then they turn to the internet and are getting away from TV, uh,

they're not. Because you know, if you go to virtually any content provider's website, for example ESPN, the first thing that happens after the page loads is a little TV window pops up and they start playing you know, a Sports Center clip, or if you go to uh uh you know, I went to a newspaper website just the other day and you know, click on a story, it's got video clips. Uh. They're partnering with TV stations, local news. I mean, there's there's TV on almost any website or

at least some kind of moving video. Um. So you know, I think there is a future for TV, it's just not necessarily going to be long form and coming from that box. And also, I mean, again you know my favorite little little theory of convergence. I do think that that computers and televisions are getting closer and closer together to the point where or before too long, you know, Internet will be delivering our television to our TV sets,

which essentially will be a computer monitor. Well, actually it really is depending on who your provider, right, And I mean you know, just look at all the TVs that have HDMI inputs now. I mean there's if you buy a television now, Um, I bought one recently and it had I think three h d m I inputs. Um. And you know the television I I bought four years ago didn't have any at all. So it's definitely you know,

it's it's it's getting there. And I think the main thing television executives need to keep in mind is that Internet isn't going away, that that video delivery system is there. People have become used to being able to to consume entertainment when they want, where they want, and the important thing is not to try and hold onto an old business model that used to work in an old environment

and hope that it's still in the new one. But to develop new business models that specifically take these things into account and uh, you know, adapt and and then you'll thrive. If you don't adapt, you will eventually find yourself without any customers. Change is a good thing. Yes. Wow, that was a heck of a conversation. Yeah, alright, well, I guess we can wrap this up. I would like to to do something new though, that we haven't really done before. I'd like to give a shout out to

some of our fellow podcasters here at How Stuff Works. Yeah, so I'm giving a shout out to our buddies Josh Clark and Chuck Bryant. It's so, it's not Brian and Chuck. I hear that that's a big problem. That's Chuck Bryant and Josh Clark. It's true. It's problematic because their names all sound like first names. I blamed them anyway. They host a show called Stuff you Should Know, and it's an excellent podcast. Uh, it's so good that they kicked me off. Chris used to be a host on Stuff

you Should Know. Um, and now he's been relegated to tech stuff with Me. One might ask, what did he do wrong? But uh, no, Stuff you should Know is an excellent show, and uh, there are tons of episodes already live on iTunes if you want to start with one that kind of ties into what we've been talking about today. There's this great episode called is the free market free if it's regulated? And they answered that question and uh, and very well, I might add, so definitely

go check that out. And remember there's we have tons of content on how stuff works dot Com that that ties into what we've been talking here today, including things like DVRs and streaming video, and you can read all of those articles live on our site how stuff Works dot Com right now, and we'll talk to you again really soon for more on this and thousands of other topics. Is it how stuff works dot com? Let us know what you think, Send an email to podcast and house

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