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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This makes perfect sense. I just graduated from college recently, and spent three of my four years there without a TV, only my wireless connection to the school network. Nowadays, it makes less sense than ever before to even own a TV. All of my favorite news sources are online, and movies and TV shows can be rented and watched online (I’m in the habit of renting movies on iTunes and then watching them in my living room on a 21″ flat screen monitor that I can connect to my laptop).

Frankly, it’s becoming difficult for me to imagine that television as a medium won’t become obsolete and abandoned in my lifetime.

Posted by Mark Tomarchio | Report as abusive

The TV industry has added an extra nail to their own coffin by requiring the American public to purchase HDTV converter boxes to view something we have had access to for free (except for the cost of our time being consumed by endless commercials). Many folks have resisted the cost of cable, satellite, etc., but now are forced to invest in a technology few have little interest in. What is the alternative? You said it in this commentary — online entertainment.

Posted by Cheryl | Report as abusive

27 yeah old with a family I certainly agree that money wise you cant beat the internet right now. I run a combination of Hulu and Netflix (disc by mail and streaming) and we have had a much higher quality of programming, we end up watching more than we would with cable despite having less quantity

Posted by Kyle | Report as abusive

I cancelled my cable television subscription 15 months ago. I cancelled my land-line telephone about 7 years ago and half of that time havent even had a cell phone – IP phones are much cheaper. Everything goes through my broadband internet connection. I still have my television, but it is connected to a refurbished computer and I watch Hulu or Netflix on it.

Between the cable TV and telephone cost cutting, I save about $100 per month.

I think all communications and entertainment can eventually go through one broadband service for more people than just me. It took a while to get used to not having TV in a classic sense, but now I find I am even better at finding news or entertainment online than I was before and as a result I am (hopefully) more informed about current events.

Posted by harold | Report as abusive

I don’t see any reason to pay for cable. If the media companies want my eyeballs, they’re going to have to come to the medium I’m watching. That’s what real competition looks like, and I hope the media companies realize this sooner than later. It would be sad to watch them suffer the same fate as the music companies who refused to embrace change.

Posted by Josef | Report as abusive

Cable companies will fight tooth and nail to keep their middle man status. I really hope we can get to a high quality/on demand system that charges me only for the content I am engaged in watching.

I’m paying for something I’m not using right now. Doesn’t work this way with Electricity, Heat, water, Phone (well locally it does, but not LD)….Radio, is mostly funded through ads, cable tv somehow has managed to sell ads locally and squeeze a hefty monthly fee out of me.

This change is long overdue…..Too bad the cable providers are figuring it out and capping my monthly data transfer amounts …

Posted by Colin | Report as abusive

Cable companies are the #1 reason that TV is struggling and may networks continue to struggle. We’re paying $80 for hundreds of channels when we only asked for or watch 20. We’re paying for duplicate channels and hispanic programming when we never wanted it in the first place. In order to get HD with Comcast, we HAVE to get all the extra channels that we really don’t need. This is not new. It’s a 10+ year-old fad known as “customized media.” Why cable companies haven’t caught on is beyond me. It’s going to kill TV unless networks get the hint that people want to watch, and are willing to pay for, THEIR programming but not those 10 HSN options and 15 hispanic channels (no offense to hispanic channel watchers, but I think they’d agree with what I’m saying). The internet is the best option right now, but due to outdated hardware and bandwidth restraints, the quality of the image is only so-so. If people are willing to watch low-resolution videos online to avoid paying extravagant cable bills and avoid the ever-increasing number of commercials and commercial breaks, then people would be willing to spend money on full-resolution programming that THEY CHOSE. We’re not talking pay-per-view (a rip-off idea from the 90s). We’re talking customized media. Ok, I’m done…

Posted by Dan | Report as abusive

We cut the cable 5 years ago because we were disgusted being bombarded with nonstop advertising and we are so glad we did it. We read a lot more and spend quality time meditating. If we desire to watch a film, there is netflix, and the web is ane exellent choice for news and blogs. We are planning to drop or newspaper subscription when our paid one-year subscription expires.

Posted by Bye Bye Hillary | Report as abusive

My tv died in Dec 2005 and I never bought another one.

The effects of not having a television have compounded on themselves. Though I have a DVD collection that I watch on the computer when I’m going to sleep, I am forced to find entertainment outside. Since I don’t use a living room to host guests, my domicile is smaller but in a much more central location and is cheaper than if I were to go out and buy my own place on the outskirts (which protected me from the real estate bubble).

I have become more active hiking and biking and occasionally rowing on the lake. Since I can afford to live near work, I rarely drive. I buy gas for leisure trips on the weekend.

I get out for my entertainment. I’d rather catch six matinee showings at the theatre in a month than spend 40 bucks on cable for a bunch of channels that I don’t watch. If there is a good game on, I am forced to get out and go watch it with strangers at a bar or cigar shop, and I’ve met many new people (I am new to this town so this was a huge plus for me).

I could do with never ever having a television again.

Posted by AG | Report as abusive

The geezers have broken the code. I’m 61 and don’t own a television set. My household has an Imac and 2 MBps. We get our content over the internet or off air thru Elgato (using a dipole antenna).

Yes I have tons of discretionary income, and I intent to keep it. Why pay for cable or satellite resident canned content when a la cart HD is virtually free off air and on the net?

Let the revolution begin !

Newton

Posted by Newton Minnow | Report as abusive

I’m fast approaching the “mature” category but stopped buying cd’s / dvd’s / newspapers /magazines and watching tv years ago. The economic downturn may in fact initially encourage some to turn to the web but most will end up paying for online services as they are too lazy to learn how/where free services can be obtained – the online equivalent of a “couch potato”

The music industry’s response to the internet “threat” allowed an entire generation to grow up believing music is free. This should be THE case study for all media industries. Create an online business model that the new couch potato will happily pay for – or die.

And don’t worry about the online veterans – we are doing just fine thank you.

Posted by bobbus | Report as abusive

[...] Read more… [...]

Absolutely Agree!
I am 28
Never had a landline phone. I use cell phone and skype.
I cancelled my cable about a year ago and subscribed to a faster broadband speed instead.

Posted by PwlM | Report as abusive

Dan, I could not agree with you more. IMHO 90+% of the channels available on cable/dish TV are garbage. The cable/dish companies need to offer packages of say, 10, 15, 20, etc. packages at a fixed rate. The customer (who is always right) then has the option to select from the available channels, local, pbs, cable, premium movie, etc that they want in their package. I could see a surcharge for the premium movie channels or for an international channel like Brazil’s Globo, but otherwise the basic charge for the purchased number of channels would apply.
Regrettably, the only way that this would happen is for the government to jump in and require the vendors to do this. Write your congressman!

Posted by John H | Report as abusive

The budget crisis in New York State has forced Governor Patten to propose dramatic increases in taxes. In particular, cable television charges will increase substantially. In our household, the estimated new rate will be approximately $175 per month. Cable would cost us about $1,998 per year.

Long ago, I noticed that our two children (one a teenager, and one in college) dropped out of television. They use YouTube and other online videos. Also, rentals from NetFlix gradually became our principal way to get movies.

Cable TV movies are much more expensive, they have a tax, and the selection is meagre, and full of technology bugs. The subscription movie services are expensive, and they keep playing the same movies over and over.

In the past few months, I started using LiveStation. It uses the Internet as “the world’s largest cable TV system”. It is free.

Finally, with the switch over to digital TV, it will be much easier to use an antenna to get high quality reception, because the quality of the transmission will be superior to the older analogue broadcasting used in the past.

The last factor was iTunes. We receive free news with podcasts, and any TV series we wish.

Last week I returned to TimeWarner Cable their two converter boxes. It was more than one week before anyone in the house noticed it. I told my wife she now has a budget of an extra $1,998 per year to spend on rentals, or anything else.

Cable TV is a bloated, low technology service with lousy technician response times. One Internet outage took 4 days to get someone to fix. Cable TV is the low quality high-cost provider in this market.

Posted by Edward M. Roche | Report as abusive

i cannot get a fast broadband without getting basic cable for my t.v.

how does the person above that comment about quitting his t.v. and upgrading his broadband?
crummy channels here.
no daily show or colbert report nor national geographic

Posted by mickey loyacono | Report as abusive

Honestly, the only reason I keep a landline is so my parents can use the phone(they’re very bad at using computers – for anything). I just use my Internet connection for everything nowadays…

I stopped using long distance AT & T in 2000, and got DSL in the following year. I just made a film and without the web, I couldn’t have given it to my audiences because distribution and other fees would have killed me. Now I can promote my work anywhere as everyone else can. ‘A Permanent Change’ can be shown on my very own $8 a month ipower site, and I can modify it for $50 for verizon fios. I couldn’t be happier.

Makes perfect sense to me, I am a college student and the past year we haven’t had tv, internet alone is $50 a month and with cable through comcast as well is nearly $100 which is ridiculous when I can get movies I want online and entertainment via video games and websites online to watch tv shows (hulu.com) I want to watch.

Most if not all channels that you would watch can be found online, for instance comedy central has all their shows online.

If the cable companies like comcast want us to watch TV they need to lower the cost and make it worthwhile.

Posted by Matt | Report as abusive

Ya know… I just think this article is really really funny. So the rest of the population can’t afford communications anymore??? As a single parent I got rid of cable TV and switched to the web 22 years ago. Raising my kid through his teen years was great… the confusion and teen angst never happened because he knew who HE actually was and wasn’t confused by all the CR_P out there. Yes its on the web too but somehow one doesn’t get as “memsmerized” as when on the couch with a clicker. Also didn’t have to deal with the belief that he NEEDED futurshop’s latest $150 gadget. I could never afford a phone and cell phone either. Ridiculous to spend for phone, cell, TV and web. Frankly I don’t call just using internet and one cell a crisis situation… Maybe we can all get back to sharing one bathroom in a bungalow too and stop using so much power to heat 2500 square feet or more…. Geesh…

Posted by Mic | Report as abusive

The only thing that TV is good for is Live sports that are not on espn360. I get all my news, video and favorites TV shows online. I have a great list of video, news and TV shows on my site at http://www.lookingforadventure.com/adven turevideos.htm

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.

[...] Brazil: social media is big! (^MK) Marketers be aware! Brazil’s social media market is booming. A recent Deloitte study reveals that in Latin America’s largest economy, consumers spend an average of 19.3 hours online for personal use versus 9.8 hours watching TV. Brazil is also leading a global trend: young consumers raised entirely in the digital age say computers offer more entertainment than TVs with its youth asking “What’s on the internet?” rather than “What’s on television?” [...]