Computers crash into TV viewing time

NEW YORK - A string of groundbreaking deals struck recently has been heralded as the beginning of a media revolution.

NBC and CBS abandoned age-old policies and chose to make top shows available via video-on-demand services. Yahoo! said it would enable television fans who are away from home to programme their TiVo digital-video recording devices remotely.

"The computer has crashed into the TV set," says Brian Roberts, chief executive of Comcast, the largest US cable operator, which will let customers order CBS prime-time shows just hours after they are on the air.

But amid all the hue and cry about the growing consumer disdain for the daily TV schedule and enthusiasm for DVRs and iPods, one thing was missing: the business model. How will the producers of entertainment replace the profits they made from selling advertising aimed at a mass audience?

Media giants are worried that audiences are fragmenting and that advertisers won't keep paying for general audiences, who are turning away from their messages. The internet and hand-held devices provide access to all kinds of entertainment for a small fee.

Internet ad revenue amounts to only a fraction of the US$17.8 billion ($25.3 billion) that network television ads generate, but the online take is growing 40 per cent a year. Network dollars are up only 2.6 per cent and that's the result of price increases that will be difficult to sustain.

"We have great content," says CBS chief executive Leslie Moonves. "What we need are new revenue streams."

Even scarier for the networks is the growing competition from free content on the internet. File-sharing websites such as eDonkey, which don't charge anything, already account for half the volume of data - TV shows, movies and music - sent via the web in a given day. Some 3 million people are using eDonkey at any given time.

"There is no doubt that the merger of the living room TV set and the worldwide web is coming soon," says Rishad Tobaccowala, chief innovation officer at ad agency Publicis Groupe.

So even though they don't yet have a clear profit plan - and they risk cannibalising some of their traditional TV fans by dangling 99USc downloads - the networks are ploughing ahead.

- INDEPENDENT