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Broadcasters Generate Half of Ad-Supported Online Video Revenues

LOS ANGELES: The four major U.S. TV networks accounted for more than half of the revenues generated by ad-supported online video last year nationwide, according to U.K.-based media researcher Screen Digest. Even so, the Internet won’t be the answer to imploding ad revenues, expected to decline by $2 billion over the next four years.

NBC, ABC, Fox and CBS, along with by the first three, churned out 53 percent of the $448 million ad-supported online video market for 2008. The remaining revenues were generated by major sports leagues, traditional online portals, and direct services from other major channel groups and content owners. Screen Digest said broadcast-supported platforms would drive ad-based, online video revenues to $1.45 billion by 2013.

During that same period, total TV ad revenues (broadcasting and cable) are expected to fall by $2 billion, the researcher said.

“The challenge right now is to maximize the ad-supported online video business model,” said Arash Amel, author of the Screen Digest report. “[To] see how new forms of short form and traditional long form content can drive growth, and explore more advanced methods of video advertising while there are still revenues from the traditional business to support the transition to multiplatform. In this regard, the next few years will be critical.”

Amel said that “with better targeting and increased ad inventory, online TV services could be generating per-viewer revenues comparable to an average TV broadcast viewing in as little as three years.”

That’s actually happening now in some cases (See “‘The Simpsons’ Costs Advertisers More Online”), but that doesn’t make for higher overall revenues from streaming video. Amel’s findings concur. Based on current online ad dynamics, those revenues will account for just 2.2 percent of all U.S. TV ad revenue by 2013, he said. -- Deborah D. McAdams