Watch Out TV Execs: More People Are Watching Your Content Online

(MoneyWatch)  The Great Recession we're in has caused me, and others, to ask, whether cost-cutting consumers would connect the dots on how to cut their entertainment budgets and consume entertainment too, by cutting back or cancelling their cable subs and watching some of the same shows online. Now, new research from the Pew Internet and American Life Project confirms that it's happening -- given Pew's credibility, consider this your wake-up call, TV industry. Says the report:

Over time, online video has become more integrated into daily life, and has started [to] move into the spaces that are typically reserved for more traditional television viewing.

Here are some of the new Pew statistics:

• Thirty-five percent of all Internet users have viewed a TV show or movie online, as compared with 16 percent in 2007.
• Twenty-two percent of those who watch such content online are doing so by hooking up their PC to their TV, creating a TV experience using online video.
• Of the 22 percent of Americans who have cut back or stopped getting cable altogether (that stat is from Pew's "Home Broadband Adoption 2009" report), 32 percent have hooked up their PC to their TV to watch online video. (Pew's broadband report also notes that only nine percent have taken a slash to their Internet service.)
• Ninety percent of adults 18-29 use video sharing sites, as compared with 72 percent a year ago, and online video consumption is up among all demographics.

Yes, a healthy number of people are indeed connecting the dots, and finding online ways to get their video entertainment fix.

There are at least two conclusions any reasonable TV executive should come to when seeing these statistics:

1. That the "TV Everywhere" initiative -- and ones like it -- can't get off the ground fast enough. (The program, as I've said before, gives consumers the perception of getting online as a value add, since it requires having a cable sub to access online video that's part of the program.) Even though cable operators can, at this point, relatively easily put the kibosh on those who are "stealing" their content online, it never goes down well to create a free habit, just to have it rescinded later because of someone's need to make money. Just ask the newspaper business.
2. That the broadcast nets, in particular, have to make building out the model for online video advertising, particularly on net-owned Hulu, a top priority, if it's not already. In an earlier post, I detailed the multiple hurdles at Hulu to maxing out the advertising on the site. (YouTube, which does have some TV series, has similar problems.) Way too much content is still going unsold, and, I'd argue, putting one measly 30-second ad at the front of a full episode of "30 Rock" still under-monetizes the content. Not that there should be as many commercials on a Hulu program as their are on a broadcast net, but as of right now, there is simply no way the ad dollars that Hulu does bring in will compensate for the viewers, and ad dollars, that might be lost from broadcast TV.

Again, just ask the newspaper business.

Previous coverage of online video at BNET Media:

• Time Warner and Comcast's TV Everywhere Smartly Creates Perception of Free
• Jeff Bewkes Thinks He Knows How to Keep the Paid Model Alive
• TBS Prepares for Cable TV's Day of Digital Reckoning