Commentary: Is Prime-Time TV Ready for the Internet?

While the dust hasn’t yet settled on the Disney-ABC Television Group’s announcement that it will offer free, first-run, full-length episodes of some of ABC’s top shows, the mediasphere has exploded with articles covering the potential impact of this grand experiment.

Questions remain about what business models will survive and thrive in the Internet-enabled video market, especially relative to established interests of traditional broadcasting. And despite the tremendous potential of Disney’s aggressive push to legitimize online consumer video, this announcement has raised more questions than it has answered.

Is the Internet Really Ready For This?
In this April 11 Financial Times article, author Richard Waters writes, "The design of the internet is unsuited to the sort of ‘live’ online television services announced this week by Walt Disney, according to analysts and industry executives … The internet has already proven itself capable of handling media downloads such as [iTunes] … However, streaming video … has exposed weaknesses in the fundamental design of the Internet … The computing and network stresses created by streaming have led to a number of attempted ‘fixes’ … including services from companies such as Akamai."

Yet, just last month, CBS proved how far CDNs have come in terms of enabling streaming media to serve a mass-market audience. Between the live streaming coverage and archival footage of the first 56 games of March Madness alone, CBS served over 19 million videos. Assuming Disney is not trying to host and stream all of its content in-house, the only potential problem is if millions of people try to access the stream at the same exact time. While this isn’t likely to happen—especially with on-demand content instead of live—it could, and if it does happen it will be interesting to see how Disney’s partner CDNs handle the load.

Later in this same article, Waters writes, bandwidth constraints have "made short, low-quality video streams a familiar feature of the early internet and will present a challenge to TV distributors whose viewers are used to higher quality." While on-demand streaming has certainly been dominated by shorter, lower-quality clips, recent advancements in codecs and increasing broadband speeds have altered this paradigm dramatically. The best evidence for this can be found in the viewership numbers CBS announced from "Amen Corner Live" following its online coverage of the Masters. The average time a user spent viewing the stream: over two hours. That kind of usage speaks volumes about the Internet’s ability to deliver a captivating viewing experience.

Who’s Going to Make Money?
The biggest unresolved issues surrounding The Disney-ABC announcement involve how the various players in the old model of video distribution will share in the profits of online distribution, assuming Disney’s two-month experiment yields a successful ongoing business model.

There are three major categories of players that may try to protect their share of the revenue pie as more dollars slide from broadcast to online. The first category—and arguably the most aggressive—is the people helping to create the content that’s being distributed. In this Time article, author Jeffrey Ressner writes, "One thing ABC (and other networks) can count on is a drawn-out brouhaha with the Screen Actors Guild, the Directors Guild, and other Hollywood unions. Unions are already demanding a boost in residuals members earn for iTunes downloads, and they may ask for additional money coming from the new revenues generated by streaming video ad sales." Later on in the same article, Ressner writes, "For its part, ABC states that its contract allows the network to pay unions for downloads based upon previously agreed rates covering VHS videotape sales."