People Watching More TV Online, On TV


Americans are watching more video online, which, as we discussed last week, could someday threaten pay TV providers like cable and telco giants. But in the near term, people are still watching more television on TV than they were before, too.

According to Nielsen, the average American over age 2 watched 151 hours of TV per month during last year’s fourth quarter, or an average five hours a day. (Yikes! A record high.) Meanwhile, they watched less than 3 hours per month of video on the Internet, Nielsen says, as the WSJ summarizes.

What does this tell us? Cable and pay TV providers still have a massive lead over Internet TV upstarts. And as cable companies add more Internet TV to their service offerings, connecting your living room to the Internet is still their game to lose. (Versus Apple, Amazon, etc.)

But (obviously) young people are watching more video online than the average American. People between 18-24 spent about five hours per month watching Internet TV during Q4, about the same amount of time as they spent watching programs on their DVRs.

We assume younger people will continue to watch more video on their computers as more content moves online (and as quality improves). And as those people age, they will probably be more likely to substitute free Web video for pay TV.

The problem: At the moment, Web TV makes a tiny fraction of the revenue per hour that regular TV does. This is part of the reason why big media companies like NBC and Fox are scared of software tools like Boxee, which make it easier to watch Web video on your TV set.