As television executives try to predict how the industry will evolve in 2011 as more viewers watch shows online, they're cognizant – and perhaps a little worried – about the painful lessons learned from the music industry's digital revolution.
They know all too well that once consumers can access free content on their own terms, it's awfully difficult to return to the status quo.
Few think 2011 will be the year Canadians cancel their cable subscriptions en masse and start watching TV exclusively through the Internet, but it may mark the start of that seemingly inevitable future.
“We're not jumping off our buildings worried about it ... but I don't believe any of us are naive enough to believe that we alone can halt the inevitable progress of technology and the merging of multiple screens,” said Alon Marcovici, CTV's executive vice president of digital media.
“We have to be in the right spot to monetize that or create a long-term monetization plan that isn't just relegating ourselves to the trash heap of (industries killed by) disruptive media, like classifieds in the newspapers, or the music industry.
“That's what we're all collectively as an industry trying to avoid being.”
These days, Canadian networks post virtually their entire prime-time lineups online for free. Apple's iTunes store also sells single episodes of shows, typically $3.49 for the most popular titles.
The wealth of content, along with a spate of new products that make it easy to watch web content on a TV, have led to speculation that many frugal and tech-savvy viewers will soon start calling their ISP their TV provider.
That prospect has been hyped in the United States as a burgeoning trend that threatens to blow up business models – although there are many skeptics within the industry.
ESPN released a report last week suggesting only 0.11 per cent of American TV subscribers have cut their service in the last three months, and theorized that they cancelled because of recession-related reasons, not because of their streaming habits.
Given that Canadians have access to less premium online content than Americans, the prospect of a mass cable cut-off seems to be less of a possibility here. It's something networks have been talking about since the early days of online video, said Bob Kerr, CBC's director of digital programming and business development. Still, traditional TV viewing hasn't been cannibalized just yet.
“It appears that it's another option and people that watch video online also continue to watch television,” Kerr said.
Rogers says it has seen little evidence that growth in web watching is hurting its TV business.
The company is actually seeing the opposite effect, noted Claude Galipeau, Rogers Media's senior vice president and general manager of digital media.
“The evidence from us and from many of our peers – not just in Canada but around the world – is that ... our ability to maintain audience loyalty is in fact increased as we give them more convenient access to this content,” Galipeau said.
CTV eagerly embraced the concept of web-viewing at the beginning of 2010 with its online coverage of the Vancouver Olympics.
The network had 14 different online channels streaming coverage of live events, in high definition and with PVR-type controls to pause and rewind the action. Sports fanatics could run live stats and leaderboards in another window, and chat with other viewers at the same time.
Roughly 12.3 million unique online visitors – about half of Canada's Internet users – checked out CTV's site during the Games and viewed 28.5 million videos, the equivalent of 7.2 million hours of content.
Those numbers surely would've been even larger if most Canadians had a handy way to view that web programming on a television, Marcovici said. But simply handing over that premium content to be viewed through a set-top box – like the Boxee Box, Google TV or Roku – or an Internet-connected TV would've been risky, he added.
“If we're delivering content and can't monetize it, or content is seeping away from either our platform online or on air and ... we can't get a return on that, I think that makes it a foe,” said Marcovici.
In the U.S., the recent launch of Google TV offered consumers an interface with which to watch web content on their big screens. But the major networks quickly blocked their content from the device. Boxee had similar problems last year when it was blocked from accessing Hulu.com, a popular U.S. streaming site that consolidated shows from different networks.
Hulu recently mused about international expansion plans but did not mention Canada specifically.
“While we have every intention to make Hulu's growing content lineup available worldwide sometime in the future, we don't have a timetable or any news regarding expansion at this time,” the company said in a statement to The Canadian Press.
Boxee offers access to almost 400 shows in Canada including “Big Bang Theory,” “Conan,” “Glee,” “House,” “Modern Family” and “Weeds.” The number of episodes available depends on what networks are posting to their websites and streaming quality also varies. Some look pretty good, even on a big screen TV, while others are compressed so badly they're tough to watch.
Boxee CEO Avner Ronen admitted the experience is still quirky since there's no real uniformity from one show to the next. And trying to access episodes can still be buggy at times, so the device may still be suited more to early adopters.
But he said the product will come into its own with time and demand for the service will certainly grow in 2011.
“I think you're going to see the major broadcasting networks offering – behind paywalls or with advertising – their (web) content on TVs,” Ronen said.
“The fact that there's going to be a significant number of connected devices out there is going to help in making that transition for the video companies from treating the Internet as catch up or supplementary to seeing the Internet as a premium platform for their content.”
The Canadian networks all say they're committed to moving forward with new ideas in 2011.
Claude said it simply makes sense to keep up with web viewing trends because advertisers are eager to attach themselves to the popular content.
“We're seeing the agencies want to place ads in these formats and I know that because we are often sold out, the take up from the advertising community has been very strong,” he said.
Kerr said CBC believes that it's part of its mandate as a public broadcaster to stream content online if that's what Canadians want.
“The idea is if you missed it you should be able to go – for at least a period of time – to another CBC platform and watch that show, that's the strategy in a nutshell.”
Marcovici said the challenge networks face is in trying to plan ahead when the future is so uncertain and technologies are constantly evolving.
“The world moves so fast and no one can foresee what's coming,” he said.
“What we can do to be ready for it is to be nimble, to try things out as opposed to just sit still and wait till it's fully baked. But at the same time, not jump right into every sexy, shiny new toy – that's the risk.”