TV viewers turning online

Canadians already are going online in significant numbers to watch TV shows and some say it’s just a matter of time before the Internet permanently weans viewers from their cable or satellite connections.

The chairman of the CRTC

Canadians already are going online in significant numbers to watch TV shows and some say it’s just a matter of time before the Internet permanently weans viewers from their cable or satellite connections.

The Canadian Radio-television and Telecommunications Commission held another round of hearings this week into the fee-for-carriage debate — the bid by broadcasters to get money for the content cable and satellite systems distribute.

But analysts say the hearings are ignoring the future: within a matter of years, although no one can say how many, the Internet will become a major threat to many of the companies that currently dominate the TV world.

It’s already easy for Canadians to find many of their favourite shows streaming online for free, while some use peer-to-peer networks to effortlessly download others, often in high definition.

“What’s being talked about at the CRTC hearings is how do we tweak the existing system to keep it up and running? It’s not really looking at the broader fundamental question of is the existing system even heading in the right direction? And is it going to be viable in five to 10 years time?” said Alan Sawyer, a digital media consultant with Two Solitudes Consulting Inc.

Right now, North Americans are spending only a fraction of their time watching TV content online but that will certainly change, said Duncan Stewart, director of research for Deloitte Canada.

“Watching TV a year from now is not going to be enormously different from where it is today,” he said.

“But 10 years from now, it will almost certainly look enormously different. Now, whether that happens nine-and-a-half years from now or one-and-a-half years from now is a little more difficult to tell, but the good number to use is probably three years from now.”

Change “is going happen sooner than most people think it will,” agrees Jonathan Lister, head of Google Canada.

Compared to web users around the world, Canadians are extremely plugged in to online video, Lister said, noting that YouTube has a larger per capita audience in Canada than in any other country.

“The amount of video that Canadians consume online is fantastic,” he said.

“Forty one per cent of Canadians watch Internet television and half of those watch television online once a week. Those are pretty material statistics, at that point you’re dealing with mass media, that’s not a small niche fragmented audience.”

The desire to watch content online is already there but the advertising dollars aren’t yet, Lister said, which is impeding the growth of online content.

“One of the things we struggle with and grapple with is why — when we have this incredibly powerful and engaged consumer base — why do we have a challenge with advertisers buying into the marketplace?” Lister said.

But Stewart doesn’t foresee a change in advertisers’ attitudes toward online video.

“Anything that is advertising-only supported is not doing well and that trend is unlikely to change — that’s actually probably going to keep getting worse,” he said.

“Advertisers know you’re zipping through those ads and they are paying less and less money as a result.”

He said the real future will lie in charging user fees — like the U.S. video streaming website Hulu.com has already hinted it will have to do.

But if consumers are willing to pay for content they value, they may eventually find new opportunities emerging to purchase it directly from creators, like the way Radiohead sold its album In Rainbows directly to fans through its website.

“They’re wondering, what do we really need the cable companies for? (What if) people use their modems to go on the Internet and watch our shows?” Stewart said.

He noted that a recent report by the Canadian company Sandvine suggested web traffic for streaming is exploding and it appears BitTorrent downloading of shows is decreasing as web users are given more legitimate options.

“The much bigger issue for cable companies isn’t piracy, it’s people watching legal content over their network,” Stewart said.

“I currently get the basic cable tier, it is entirely possible that at one point I would cancel it and those shows I watch I would watch directly.”

There are certainly hurdles to overcome before the Internet becomes the preferred way for Canadians to watch television.

Sawyer said one current problem with Internet-based TV viewing is bandwidth restrictions imposed by most Internet providers, which would make it costly for consumers or families that watch a lot of different shows.

Some customers might need to upgrade to a higher tier of high-speed access to get around those download limits.

That could lessen the blow of lost TV revenue for companies like Rogers and Bell, which also supply Internet service.

Many Canadians also still lack high-speed Internet connections and can only go with conventional TV options.

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