/ 30 November 2007

Bain sees TV time growing faster than web

Time spent watching television will rise faster than leisure time spent on the web until 2012, while a major audience for internet video could take even longer to develop, consultancy Bain & Co said on Thursday.

According to data exclusively released by Bain at the Reuters Media Summit in New York, United States viewers on average will spend nearly two more hours per week watching television by 2012, fuelled by growth in video-on-demand choices and the use of digital video recorders.

In that same time frame, internet use outside of the office is expected to rise by less than half an hour per week.

The data could be sobering to TV networks and web media companies, which are investing heavily in internet video sites and testing ways to make money off them through advertising.

David Sanderson, head of Bain’s global media practice, said the prospect for internet video to become a viable alternative to the broadcast, cable or satellite signals into viewer’s homes could take five years or more to materialise.

”There are capacity constraints, the technology isn’t quite there … and frankly the business models for the content owners, all of that still needs to be worked out,” Sanderson said at the summit. ”Until that’s worked out and until the internet can deliver that same experience, then it’s still going to be delivered over the traditional multichannel video providers.”

Sanderson noted that uptake of video services provided by telecoms companies — such as AT&T’s U-verse or Verizon Communications’s FiOS — and further growth in the market for high-definition, flat-screen television show that the traditional TV market should remain durable.

”The TV experience delivered by the multichannel video providers continues to get better, so it’s going to take a while for that to really change,” he said.

News Corporation, General Electric and Vivendi’s NBC Universal are testing a joint online video service called Hulu, while rival Viacom aims to put as much of its video as possible online. Walt Disney’s ABC also puts prime-time shows online.

Web search leader Google bought fast-growing video-sharing site YouTube last year based on expectations that online video would become a strong competitor to television.

While the internet should become a more robust outlet for video in the future, people today are mostly using it to watch clips of shows they missed on TV, Sanderson said.

”People are spending time watching YouTube videos, but the amount of time they’re spending is … almost negligible relative to the time they’re spending watching professionally generated television,” Sanderson said. — Reuters