Viewership of and advertising on web TV shows is soaring, but don’t expect it to become mainstream anytime soon. By 2011, just 23 percent of TV viewers will have watched an online episode of a broadcast or cable show, compared with 14 percent this year. That’s according to a new study from Convergence Consulting Group, a Toronto media consultancy, which predicts that online TV revenue will grow from $1.4 billion in 2006 to $6.8 billion in 2011, still less than 10 percent of net broadcast and cable TV ad spending. There will be several factors limiting the growth of this medium, both in terms of viewers and advertising, and one is DVRs. Online viewers can’t fast forward through internet ads as they can through those recorded on their DVRs, and viewers will almost always choose the medium where they are subjected to fewer ads. Also, while web shows have fewer minutes of advertising than TV, viewers are simply less tolerant of it. They generally prefer their online content in short bursts, and that goes for video clips as well as advertising. Brahm Eiley, president of Convergence, talks to Media Life about online TV hype, when it will hit mainstream, and what percentage of households will have DVRs by 2011.

 
What did you find most interesting or most surprising about this report?
 
That despite the hype, broadcasters and cable networks understand that online is another distribution window and not a current replacement for traditional TV.
 
And on the movie rental side, mail and kiosks are the key players for the next three to four years versus stores.
 

What's the most important thing media buyers and planners can take away from it?
 
Online will not replace traditional TV within the next five years. Online viewers will not put up with 16 minutes of video adverts.
 
Further, given what the broadcasters and cable networks take in from traditional TV advertising and program sales, they will not sacrifice traditional TV for online.
 
Concerning traditional TV, buyers should take away that given the rise of DVR penetration, advertising must become smarter and more innovative, more targeted and more dynamic, etc.
 

What are the biggest factors impacting broadcast and cable network online advertising revenues?
 
If eyeballs are cynical regarding traditional TV advertising, they are even more cynical online.
 
Online TV advertising will see strong revenue growth, but the lack of minutes--online TV from the broadcasters and cable networks on average sees no more than four minutes an hour--and less eyeballs than TV will limit how big it can become.
 
At the current run rate, by year-end 2010, 48 percent of U.S. TV subscribers will have a DVR, up from 25 percent at year-end 2007.

Given the option of watching TV and skipping ads, and watching online video with ads, we believe the majority of consumers will choose TV and the DVR. Bottom line, the DVR will limit full-episode online viewing.
 

How will the market for online TV change over the next four years?
 
We estimate national broadcaster/local station and cable network (led by Disney/ABC, CBS/Viacom, NBC Universal, News Corp., Time Warner/AOL) U.S. online TV advertising (we have not included non-TV related) revenues represented 2 percent ($1.4 billion) of overall U.S. broadcast/cable network TV advertising revenue in 2007, and forecast 8 percent ($6.4 billion) in 2011.
 
We estimate in 2007 that 9 percent of TV viewers had also watched full-episode broadcast/cable network TV online, up from 6 percent in 2006. We forecast 14 percent for 2008, 19 percent for 2009, and 23 percent for 2010.

Do you think online TV viewing will ever really take off, or will it remain something that only a small swath of people use?
 
Perhaps the next generation will alter the numbers, but we do not forecast beyond the next five years.

You say that online TV has 80 percent less available advertising minutes per hour, lower CPM rates and no lucrative upfront market. Which advertisers are most likely to embrace this form of advertising?
 
All will embrace. A large amount of advertisers will also go online over the next five years to reach a particular demographic.

Why do video clips see such a larger audience than viewing full episodes?
 
First and foremost it’s because the viewer experience for watching a two-minute online clip is pleasurable.

Having to watch a 30- or 60-minute TV show online is not enjoyable.