3 Ways Streaming Video Will Change the TV Industry

Last Updated Apr 1, 2011 9:43 PM EDT

On VideoNuze, Will Richmond has an interesting piece on what he learned about the future of TV from the program Dexter. The points he makes complement things I've lately heard from sources in television and advertising. The nature of online media will ultimately force changes in all aspects of television, including how video producers and advertisers approach their businesses. Here are three interesting ones.

1. Traditional programming disappears
Richmond was watching Dexter streamed from Netflix (NFLX) to his iPad. He noticed how different the experience was. Unlike DVD or even VCR recording, streamed viewing is oriented around the viewer, not around the programming schedule. Not only is the rerun over, but the concept of a show that exists in a particular frame of time goes out the window.

With previous episodes available online for the price of watching commercials, a show becomes a series of individual episodes, not of seasons. There is no need to buy boxed sets. That means another form of bundling content for additional profits disappears. Someone can watch one or two or seven or any number of episodes.

Television producers that once depended on making big dollars when several years of a show finally went into syndication have likely lost an important source of income. The concept of residuals gets hazy when are always available. When does programming move out of its first run when there are always people newly coming to it?

2. Story structure changes
Hulu claims that it will soon generate more ad revenue per half-hour episode than traditional distribution through broadcast or cable. If that happens, producers will start looking at online as the financially sensible vehicle for their material. So, it may be that more TV will move to streaming, not less.

Any medium constrains how you tell stories. Television writing and production assume the concept of seasons, of the need to bring people back to the same place week after week, and the difficulty of creating enough dramatic tension by the end of a season to convince viewers to take up the show again next year.

But when there are no seasons, no barriers in moving through episodes, you approach stories differently. The hyped season end becomes melodrama. Tricks used to retain an audience through a long commercial break become unnecessary when there are fewer and shorter commercials.

And that doesn't even touch the question of how do you produce video when you're not sure on what size screen it will appear, not on the proportions of the final image or the quality in which it will show.

3. Advertising buying shifts
As commercials are shorter in streamed media, and there are fewer of them, advertisers can actually see better results, as some in the industry tell me. But then they have to learn to buy ad time differently. Right now, they look to demographics of shows, ratings to indicate audience size, and then calculate how many of the people they might want to speak to will watch.

Online, the dynamics are different. Behavioral marketing means that you know far more about people than rough demographics. Your primary focus isn't on shows, but on the types of people you want to reach, and the unit of purchase will be individuals who match a profile, not everyone who watches a particular episode of a show at a given time.

It's a completely different way of looking at buying and ends up affecting everyone, from the advertisers who want to know where to place spots to the producers who must begin to collect different metrics to identify the types of people who watch their programs.

Related: Image: morgueFile user jppi.
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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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