Do tough times draw TV-viewers to Web?

January 12, 2009

— Eric Auchard is a Reuters columnist. The opinions expressed are his own –

In the first global recession of the Internet Age, budget-conscious consumers are showing they no longer have an endless appetite for every new gadget or media service.

Many users are looking to eliminate overlapping services that offer more of the same old formula entertainment in a different package or on another device.

With iPods, digital TVs, video recorders, multimedia PCs and broadband connections in many households, consumers considering their options now find a range of cost-effective online substitutes for broadcast, cable or satellite TV.

TV programming, not just short-form entertainment, is served up on video sites in markets around the googleglobe at Google Inc’s YouTube, Daily Motion, Joost or at Hulu in the United States.

Could 2009 then be the year we seriously ask “What’s on the internet?” rather than “What’s on television?”

A study released last week by the consulting group Deloitte on media consumption habits suggests that this digital switchover may be occurring before our eyes.

The survey, completed in October, of U.S. consumers aged 14 to 75 found that a majority of consumers already see their PCs as more of an entertainment device than they do TVs.

The data is part of a five-country study of nearly 9,000 consumers that found parallel shifts toward online entertainment formats from TV, albeit with a more pronounced focus on mobile phone usage outside the US. In Brazil, consumers spend an average of 19.3 hours online for personal use versus 9.8 hours watching TV.

In the United States, three-quarters of so-called “millennials” — young consumers aged 14 to 19 raised entirely in the Internet Age — say PCs offer more entertainment than TVs.

About half of Baby Boomers agree that PCs offer more. Even a surprising 42 percent of the “Reading generation,” people aged 62 and above, see PCs as more entertaining than TVs.

U.S. “millennials” typically spend 18.8 hours a week online, nearly twice as much time as they spend on TV, the report finds.

They watch DVDs on computers for an average of almost two hours. They are nearly five times as likely to listen to music on a PC, phone or music player than to the radio, the data shows.

This all may come as news to “mature” adults — those over 62 — which the U.S. survey found watch 21.5 hours of TV per week, double the time they spend online.

But the shift has already happened, however long it may take older generations to catch up, says Ed Moran, Deloitte’s director of product innovation in New York, who led the study.

DIGITAL SUBSTITUTES

Forced to consider budgeting their once free-spending media habits, consumers may find getting better connected online to be the best way to cut their entertainment and communication costs.

Market researchers have seen a pick up over the course of the past year in switching behaviors as consumers cut back on premium movie or music packages or video rental subscription services.

For active consumers looking to watch more for less, there are abundant alternatives, albeit ones that may require several hours of battling “customer service” operators to extricate yourself from subscription traps, or in Europe, TV licensing fees.

Savvy consumers are finding “good enough” digital substitutes online that allow them to forego subscribing to pay TV or online video rental services.

That’s true already among the young, but is likely to spread among other age groups as they see the value for money.

To be be sure, only as these older generations with far greater discretionary spending power switch will the trend spell the end of older media models.

Gartner analyst Mike McGuire says young people with newer PCs are increasingly taking over the functions of programming their own media, given the amount of TV, movie and music content they can stream or download.

TV over the Internet is sneaking up on us, slowly, unlike the music revolution set in motion by online file sharing service Napster a decade ago and laid low the music industry. Internet bandwidth limitations probably limit how many can be channel surfing online at any one time.

But Broadcasters are getting into the act. In Britain, the BBC iPlayer lets Web users replay the last week of broadcast TV and radio programs and ranks as the second most popular multimedia site behind YouTube. For now, overseas users can only hear BBC radio on the iPlayer.

True, watching TV on the web will be held back until consumers can pick and choose on what device and when they see any particular program. Regulators could do more to help break down media bundling in favor of a la carte pricing that allows consumers to pick and choose what they watch while freeing up programming for the Web.

While “live TV” is still a work-in-progress on the web, a growing amount of legitimate news and entertainment is free to view, via laptops or on smaller digital TV displays hooked up to computers.

For all but the most premium film or sports content, there is a growing variety of quality online substitutes.

It’s not high-definition on a fat screen but it’s playing when you want, at a price that’s hard to beat.

– At the time of publication Eric Auchard did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund. For previous columns, Reuters’ customers can click here. –

29 comments

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I am a boomer. I am on to the ideas put forth here and love the freedom of no cable. I have a cell only and I use my laptop with a wireless card for tv shows and movies. My next purchase is a flat screen monitor. Cable has crippled itself while asserting a “screw all of you attitude”. Let them continue to self-destruct. Our media choices are so much better than the drivel that is offered on cable. Eventually, the better channels (and there are few) will be available on the net.

Posted by Diane Myers | Report as abusive

The reason TV is dying out is threefold. Quality of shows (networks out of ideas), too many commercials (a person can only take so much of these mindless repetitive commercials) and finally, the viewer is getting screwed by the cable companies offering bad packages, too many channels, repeating and time shifting channels and high prices for all. Paying for channels that advertise makes no sense. I’d rather pay more for a channel that has no commercials, but it’s always bundled with advertising channels that I don’t want. Now that the future is here, I just want to pick high definition, commercial free channels and the rest can go the way of the dinosaurs. Actually, there are some good shows, but a person certainly has a rough time making a night of TV these days and I suppose most aren’t even trying anymore. The internet will be exposed eventually too, for the empty wasteland experience it really is, but only when teenagers open their eyes and get some real life experience will they see how much time they’ve wasted doing basically nothing. I know this criticism messes up TV’s system of creating little mind controlled shoppers who ring up big credit card bills and live beyond their means but so what – nothing’s working anymore – not just TV.

Posted by Mike Wayne | Report as abusive

We have the Roku box through Netflix and we use it all of the time to stream movies in high quality. It’s both wired and wireless ready, and Netflix just announced we will have the ability with the Roku to stream Internet TV and other media soon. Our total cost for the Roku box was $99.00 U.S. plus shipping with a month to month cost of $18.00 U.S. . This also includes unlimited DVD rentals each month at four at a time. In our opinion it’s the best deal out there right now.

Posted by panamarick | Report as abusive

Didn’t they predict the end of newspapers when the radio took off?

And the end of radio when TV took off?

TV may not be #1, and it’ll adapt, but it’s not going away.

Posted by Drewbie | Report as abusive

There is so much rubbish on TV – most of it is just not worth watching – consequentially I spend most of my ‘TV time’ reading articles on the Internet . It’s got nothing to do with costs – I only watch free to air dogital terrestrial – however I would not pay for cable or satellite as I would be paying for much more rubbish .

Posted by Kim | Report as abusive

I own a 55″ TV, but haven’t had cable in over 2 years. I took my old computer, put it in an amp-sized horizontal case, and use the net directly on it. There are several sites that offer decent quality streaming of all my favorite TV shows, past and present, and I don’t pay anything extra above my monthly internet bill. I can watch it whenever I want and there’s no commercials. Why would I pay $50 a month for cable to schedule my life around Heroes when I can download the episodes commercial free and watch them whenever? What we’re seeing now is exactly what my friends and I predicted almost 15 years ago in high school when high-speed internet was announced. The TV studios need to get on board with this ASAP. I would be more than happy to download a higher quality version of these shows with commercials if they made them available on the network sites. Then they wouldn’t lose marketing dollars, and I’d still be happy.

Posted by Steve West | Report as abusive

I’m a 28 single father. I ditched tv about 2 years ago. Cable is just a rip off. I watch all my shows online now, cnn.com, comedycentral.com, nbc.com, history etc. It’s good and a hell a lot cheaper than a 100 bucks more a mont.

I guess Cable News Network (CNN) needs to change it’s name to INN (Internet News Network). LOL. I have to have high speed internet for my work, but TV? Just a digital antennae for the the local stations. Forget cable or satellite.

Posted by John Catron | Report as abusive

TV manufacturers like LG and Vizio are developing networked HDTVs. They get it and will fight hard to keep people glued to their glass. As I read the comments above it occurs to me that the real story will be content loyalty – not form factor.