Video Search Market is Heating Up

As more and more TV viewers turn to the Internet to see full-length episodes of their favorite shows, the market for services that index these shows and make them easily available is also heating up. TVGuide.com released a number of significant updates to its site yesterday that include embedded full-length shows. Microsoft's Bing video search now also makes it easier to find content from TV and cable networks online. While Google offers a comprehensive video search engine, it doesn't offer any specific features that make it easier to find and watch TV shows online.

Clicker's new DVR-like playlists give it a unique feature that makes it stand out from the crowd and turns it into a one-stop shop for TV content on the Internet. You can find our full review of Clicker here.

While consumers have been enjoying the service since its launch in 2007, happily watching free TV shows and movies over their PCs and even their TV sets thanks to Media Center plugins and other unofficial hacks, the company itself is still trying to navigate this new online landscape and effectively monetize their content. Now recent statements by a News Corp exec have people wondering: can Hulu make the ad-supported model work? Or does the company have other plans?

One of the primary objectives behind Hulu was to put free programming on the Internet to combat the rampant pirating of TV content that took place on sites like the popular file-sharing destination, The Pirate Bay. As iTunes did with music, the idea is to make using Hulu's service easier than having to go out and seek the illegal downloads.

Although iTunes charges for music on a per-file basis, Hulu, too has a business model that makes you pay - except in their case, you're paying with your eyeballs, not your credit card. Using video ads, Hulu has been attempting to monetize its service, but those efforts have been difficult at times. This spring, for instance, Screen Digest analyst Arash Amel claimed that Hulu had only sold about 60% of its ad inventory. "What we've seen is rapid growth in consumption, but the advertising isn't keeping up," he said.

While these figures, if accurate, could be reason for concern, many feel that the profitability of an online video venture of this nature takes time to develop. Eventually, the ad-supported model would work for Hulu as it has worked for numerous other websites and services, supporters claim.

Besides, more recent deals seem to bode well for the site. Case in point, this month the Publicis Groupe announced a mulit-million dollar ad deal that involved targeted advertising to particular Hulu demographics. The deal is said to represent a "significant increase" in spending on Hulu.

Hulu to Charge?

Despite the promises ad deals like this hold, there is still debate as to whether or not Hulu is going to stick to the ad-supported model or try something new. At a conference last week, News Corp. deputy chairman Chase Carey made a pronouncement regarding this point that raised more than a few eyebrows:

"I think a free model is a very difficult way to capture the value of our content. I think what we need to do is deliver that content to consumers in a way where they will appreciate the value," Carey was quoted as saying by Broadcasting & Cable. "Hulu...needs to evolve to have a meaningful subscription model as part of its business."

This seems to jibe with earlier reports where News Corp. CEO Rupert Murdoch also hinted at the site's plans to add premium services by saying, "Are we looking at it with a view toward adding subscription services and pay per view? Yes we are."

But "looking at" and "doing" are two very different things - where does Hulu stand now? Has their core philosophy - that is, their belief in the ad-supported model - changed?

According to AdWeek, it has not. In the article, the company claims their ad-supported free service is still the one that "resonates with the largest group of users" and that any additional models would just serve to complement that.

However, when we reached out to Hulu to ask about their plans regarding charging for content, the company wouldn't go on record with any such statement.

Why So Cagey?

Hulu's current decision to clam up could be taken in a few different ways. Perhaps they simply haven't decided what they're going to do about adding new premium services to Hulu and therefore don't want to discuss it at all.

Yet the quote they provided to AdWeek seems innocuous enough - so why not just stick with it? Why now choose to say nothing at all? Maybe they're hoping that with no quote, there is no story, and that will allow them to quell the impending panic among some users who are worried about Hulu's plans to make customers pay. Because some people are so opposed to paying for online content, just hearing reports that Hulu might change to a pay-to-stream model could dissuade them from continuing to use the service.

Then again, it could be that the opposite is true. Hulu wants to keep everyone wondering about what's coming next, generating excitement without providing any details. This means people can speculate wildly and give their opinions, allowing Hulu to tap into that online conversation about what people want before making any official decisions or announcements.

What We Think: Hulu Will Launch Value-Added Services

Despite any official confirmations from the company, we think it's pretty clear that Hulu has intentions to launch value-added services on top of its free, ad-supported model in the coming months. These may include pay-per-view options and some sort of subscription model. However, that subscription model would be there to provide users with value-added services that you couldn't get from the free model alone. Perhaps behind the scenes interviews? Sneak peeks? Actor interviews? Who knows...but the possibilities are endless.

As to why we think that, it comes down to simple math. We've now seen three different statements about these premium services: Carey's recent remarks, Murdoch's quote from earlier this year, and anonymous sources quoted by Dan Rayburn who hinted that Hulu's iPhone app won't launch until "Hulu rolls out a subscription based service."

...And They'll be Tied to the iPhone

The iPhone app, in fact, may be the real secret the company is trying to hide. Imagine if the much-rumored and highly anticipated application was linked to a subscription-based model. That could downright revolutionize the way people watch TV. Providing streaming content over the popular Apple smartphone would easily bring in additional revenue and that new source could quickly outperform the profits made by the ad-supported model.

Yet launching a Hulu iPhone app would be a challenge, as the company is undoubtedly aware. And, of course, Hulu wouldn't want to say anything about it, especially considering how difficult Apple is when it comes to applications that compete with their core services. Apple may not even approve such an application, claiming (rightly so) that it competes with iTunes.

However, Apple may be loosening up on that front, with no small thanks going to the FCC who recently questioned the company's rejection of the Google Voice application - a VoIP dialer that Apple rejected because it competed with what the iPhone does natively. (Apple claims they're "still reviewing" it, but no one really buys that.) Since the FCC's involvement, however, Apple has gone on to approve a streaming music app called Spotify, an application that many had feared would be rejected because it, even more so than Google Voice, competed with iTunes. That leaves us hopeful that a similar application launched by Hulu could also make it through the approval process.

Still, we wouldn't blame Hulu if they wanted to keep that extremely quiet. And that would certainly explain why Hulu won't comment on their plans.

Of course, this is all just speculation at this point, but we hope it turns out to be true.

Although Netflix will try to make a streaming-only service work abroad, the company really doesn't think there's a demand for this type of offering within the U.S. In fact, when responding to a reporter's question regarding Netflix's plans for an a la carte option (there isn't one), Hastings said that while they're "open-minded to" an a la carte service that came without the DVD option, the company hasn't seen much interest in something of that nature in the States. "Everybody also wants to get DVDs," said Hastings. "All the new releases are on DVD, the vast catalog is on DVD. When there is demand, it will make sense for us to meet that demand for streaming only."

...But There is Demand for Streaming-Only

While that may be true - people do want the new releases - the demand for the physical media is arguably an artificial one created by the entertainment industry. Studios simply refuse to offer their movies and TV shows via Netflix's on-demand streaming library until they've been able to pull in a nice profit from disk sales first. This, in turn, forces consumers to not only purchase but also desire the DVD-by-mail part of the Netflix service as opposed to a separate, unbundled option of on-demand content only.

In other words, to say that the demand for streaming-only doesn't exist isn't exactly accurate. After all, Netflix reported that their streaming stats are now at an all-time high with 42% of subscribers having streamed at least 15 minutes of one TV show or movie during the last quarter. This number is up from 22% during the same period last year. Considering that Netflix's subscriber base itself has grown 28% over the past year, this figure means that the raw count of subscribers actively engaged in streaming has now more than doubled over last year. Hastings even said himself that the numbers were "a good marker of increasing streaming adoption."

Although the demand for new releases would probably have many subscribers sticking with the hybrid DVD/streaming service, by forgoing a streaming-only option it seems that the company is overlooking an opportunity to pick up a sizable group of more casual users. There are likely a number of people who would appreciate the option to pay a little less in order to to gain access to the on-demand content only - content which includes a much smaller catalog than what's available by mail. Given the company's integrations into game consoles, set-top boxes and even some TVs, there's actually no need to even own a DVD player anymore to watch Netflix movies. The content is on-demand.

Streaming media is the future, not physical disks. Hollywood knows this too, but as with the music industry, they're fighting tooth-and-nail to keep the old business model afloat for as long as possible. So far, it's working. As long as they control the method of distribution and keep it limited to physical media it will look like DVDs are what the people want. But the people really want streams. From music (Pandora, Spotify) to TV (Hulu, iPlayer) and yes, to movies via Netflix, streaming media is rapidly becoming the method of choice for many of today's consumers. The future is an on-demand world and Hollywood would do better to figure that out now than try to delay the inevitable.

NBC's Zucker also hinted at the company's interest in the matter. "Whether there are other ways to monetize Hulu down the road, it is something that we are open to, something we will explore," he said, but like Murdoch, reiterated "there are no plans at this time."

Subscription Services Already in Testing?

While that may be the official company line, other sites are reporting a slightly different variation on this story. The Business of Video blog, for example, says they've been in contact with sources who have confirmed that Hulu is already beta testing a subscription-based service internally and is working out the technical requirements. If that story is to be believed, the offering won't go live anytime this year as Hulu still needs to figure out the details of the business plan.

Whether or not that rumor is true, it wouldn't be surprising to hear that Hulu is working on such a project, given their obvious interest in adding more revenue-generating features to the site. Zucker himself even updated his ongoing conference comment about "analog dollars" being used to chase "digital dimes." (In 2008, it was "digital pennies.") "Certainly by next year the goal should be at least quarters," he joked.

What We Want to See: Premium Channels on Hulu

Subscription services would be a brilliant way to chase those quarters, indeed. Perhaps it could even convince cable-only paid channels like HBO and Showtime to get on board with the venture. They've already tentatively given iTunes a shot, but still seem reluctant to share current episodes in a timely fashion on that service. The reason for the networks' timidity is because their iTunes revenue simply doesn't compare to their cable TV subscription offerings or even their DVD sales. (Ironically, that's probably due to the fact that they don't offer current programs via iTunes!). Instead, they would rather entice consumers to subscribe by tempting them with their backcatalog of programming.

However, if the situation was to change and consumers could subscribe to these channels online for a comparable fee to what the companies generate through cable TV distribution, would they continue to put up such resistance? After all, money is money, who cares where it comes from?

These days, more and more consumers are pinching pennies by cancelling cable subscriptions thanks to the numerous alternatives available online. Obviously, premium channels are getting the boot, too. Imagine if they could have a chance to win back some of those penny-pinching former subscribers by way of an online subscription service. After all, what would you give for piecemeal plans that let you buy a 3-month pass to HBO instead of the all-or-nothing combo packages available via your cable TV provider?

Of course, all this is just wishful thinking on our part, but if Hulu does it right, the possibilities for their new TV distribution network are virtually endless.

The internet leaves no business model untouched and unchanged, especially when it comes to media consumption. Whether music, movies, journalism, publishing, or TV, the impact of having high-speed, always-on connectivity has revolutionized how we interact and entertain ourselves. But in the wake of these changes, media companies are left struggling to monetize their efforts, all of sudden discovering that their old business model now looks like a square peg getting hammered into a very round hole.

TV viewing habits are just one example of this change. Not only are companies like Comcast and Time Warner experimenting with on-demand online viewing initiatives, the networks themselves now post their top shows to the web. The major TV networks have featured streaming video on their websites for years. Meanwhile, several networks and studios, including NBC Universal, FOX, and ABC, have banded together to offer Hulu, a popular destination for commercial-supported streaming video.

But putting shows online has its drawbacks, as networks are finding out. Without solid measurement tools, making the shows available on other platforms is, in the short term, hurting the bottom line. In a recent issue of TV Guide magazine, for example, it was noted that networks are specifically facing problems with re-runs. Where before a second airing of an episode from a popular show could make decent money, they're now finding less viewers tuning in thanks to on-demand offerings and online viewings. According to one unnamed network exec, this presents a huge challenge for the networks. "We're not like cable, which has a second revenue stream from subscribers," the exec said. "We need to amortize these very expensive shows."

Measuring the Web TV Audience: A Tricky Prospect

Through anecdotal evidence, we know that more people are watching TV online these days. It comes up in conversation among friends, especially when someone laments how they "forgot to record" a program. They now know they can go online and get caught up. Others find themselves relaxing in front of their laptop's screen nearly as often as they hang out in their living room to watch the big screen. In fact, thanks to the recession, more people than ever have decided to cancel their cable TV subscriptions to save money, realizing that many of their favorite programs are available through alternative methods, including online streams. Need proof? Just look at the Google Insights chart for the term "cancel cable."

Then there are the recent statistics from the nonprofit Conference Board that show how online viewing is on the rise. According to their findings, nearly a quarter of U.S. households now watch TV online, up 20% from last year. New shows are most popular, watched by 43% of viewers followed by 35% of viewers who watch sitcoms, dramas, and comedies. And 90% of the viewings take place at home.

Unfortunately, there hasn't been a good way to effectively monitor and measure the online TV viewing audience. When Nielsen previously reported on Hulu's viewing numbers for instance, Hulu lashed out at the company claiming the numbers were wildly inaccurate.

At the time, Nielsen was using a combination of web beacons to determine when streams started and stopped while also measuring the web use of a panel of 200,000 online users. Hulu themselves, however, preferred to quote numbers from measurement firm comScore, especially since that company reported a much higher reach even as Nielsen noticed a slight decline. The problem here, as we noted at the time, is that online measurements aren't standardized, making it difficult to accurately determine audience counts.

A brand, whether Hulu or any other online video provider, could look at the measurements from major firms like comScore, Compete, or Quantcast, and then pick the company whose estimates were the highest when crafting their "look at us grow!" type press releases. In all honesty, it's probably better that Nielsen gets involved to more objectively report the online traffic through their representative sample methodology. It may not be entirely accurate either, but at least you know that it's coming from an unbiased third party.

The "Internet Meter" Will Deliver Hard Data

At the moment, the Internet Meter software resides in a test group of 375 People Meter households, which has allowed the company to evaluate its capabilities before rolling it out to the remaining group. In addition, the software has been deployed to the company's online panel (as mentioned above) which now measures over 230,000 individuals. Installation of the software will be completed in 2010 but full implementation won't be seen until the following year. If that seems like too slow of a pace, it's only because the company is being very careful, fully knowledgeable of the major impact this technology will have on the TV industry. According to Sara Erichson, President, Media Client Services in North America, Nielsen will not take "any actions that would dilute the reliability of the core television ratings data."

Once the Nielsen data goes live, it will reveal a plethora of information regarding not just viewing numbers but also the demographics of who watches what and when. The information can then be used by advertisers and marketers who want to target niche audiences like the hip crowd who watches sci-fi shows but never stays home on Fridays to view them live on TV when they air. Or the group of people who are too embarrassed to set their DVRs to record "Ugly Betty," but sneak in the guilty pleasure online in their free time. Expect the online ads interspersed with the online content to soon become more precise and more targeted than they are now, thanks to these sorts of reveals. Perhaps the networks will even be able to charge more for ads, once they have numbers to back them up. That would be a good thing for the industry as a whole as well as consumers, since it could lead to more shows being put online. Who knows, maybe one day we'll even be able to purchase online-only cable TV subscriptions, too.

The company just raised its first round of venture capital funding last November, but when we talked to Boxee's CEO Avner Ronen yesterday, he stressed that the company thinks this is the right time to expand. Ronen noted that Boxee will use the money to grow its development team to about 20 people, as it sees a chance to become a major player on connected TVs and set-top boxes. These devices are only now starting to gain a foothold in people's living rooms and will give Boxee a chance to go mainstream.

Currently, the software runs on Macs, Windows, Linux, and Apple TV, but while it is getting easier to connect a PC to a large TV set in the living room, this is definitely still a niche market. In order to reach a larger audience, Boxee will have to get its software onto TVs, game consoles, and set-top boxes directly. The company is already talking to a number of manufacturers, though Ronen wasn't ready to announce any partnerships yet.

Ronen also told us that the company plans to offer a platform for content producers and doesn't want to get into the content business itself. Instead, Boxee will give media companies and independent producers options to sell subscriptions to their content or give users access to content on an a la carte basis. Major League Baseball started to offer access to its content to its Premium subscribers on Boxee last month.

In the U.S., Livestation also began offering Al Jazeera English Live (iTunes link) last month, a live TV application built using the same technology. As with BBC News, the live TV channel is available over both Wi-Fi and 3G. Around the corner, NASA may also be launching a live TV streaming application using Livestation's technology. Already a content partner, NASA's iPhone app has a description that reads: "Update Coming that adds Live NASA Public TV streaming to your device."

While both of these news applications offer TV streams from stations that Livestation is already partners with by way of their live TV desktop application, the company's iPhone streaming solution represents "just the tip of the iceberg," claims Livestation CEO Matteo Berlucchi. "Once other broadcasters see the immediate business benefits of the revenue model we are offering... we expect usage to increase."

The revenue model he is referring to is the one where iPhone and iPod Touch users purchase the mobile applications built using the Livestation iPhone technology platform in the iTunes App Store. They can then also serve ads within the app itself, if the broadcaster so chooses. Those ads don't have to be simple text or image links, either - they can be video ads, too, much like what you would see on TV. In addition, Berlucchi says that paid-for content that goes beyond that of the app's initial purchase price is also a possibility in the future.

According to Livestation's website, the iPhone solution uses the company's own streaming protocol to deliver the TV streams. However, they note that they plan to support the native Apple Streaming protocol as soon as it becomes available. That seems to confirm our suspicions from earlier this year about live streaming on the iPhone, which came about when we uncovered Apple's IETF submission for a live streaming protocol.

Livestation is not the only company to provide a means of watching TV on your iPhone, but the current crop of iPhone applications like SlingPlayer, Live TV, and Orb require a set-top box, a TV tuner, and/or software installed on your computer. Livestation's apps, on the other hand, simply require an iPhone.

To see the technology in action, you can watch this video on Vimeo, where the BBC News application is demonstrated.

At the very least, the service represents a good first step in bringing the web to the TV without losing that essential "TV experience" which has more to do with passively holding a remote than it does with actively typing onto a keyboard. That psychological barrier between participation levels involved in surfing the net and watching TV is probably what led early internet-enabled TV experiences to fail...like "Web TV" for example. People just don't want keyboards in the living room. Verizon seems to understand our need for more passive interaction and has made nearly everything about their web-enabled TV service easy to perform with the Verizon FiOS remote control.

Hands-On: Facebook on the TV

First things first. Before you can have any fun with the Widget Bazaar, you have to configure a parental control password. This may seem a bit odd, but it's understandable given some of the Twitter hashtags we've seen become trending topics lately. To set up the parental control passcode, you have to delve into settings. It's not really that difficult and the process was complete in a matter of moments.

Now you can enter your new passcode to access the Facebook widget, but before you begin you still have to scroll through pages and pages of an end-user agreement and select "I agree" at the end.

Once you're past these initial setup configurations, you can proceed with logging into your Facebook account. The Facebook widget only appears on one half of your screen, so you can play around with it while still continuing to watch whatever program you have on.

On the next screen, you're presented with boxes to enter in your Facebook email address and password. There's a handy option to "Remember Me" so you don't have to re-enter your email each time. You're also prompted to set up an optional numeric passcode which you can use in the future in lieu of entering in your password. I recommend doing so - pushing numbers on your remote is a lot easier and faster than using that on-screen keyboard.

Once logged in, your new Facebook sidebar appears with your current program still playing to the right. There's an option at the top to "switch user" which will probably introduce a whole new way to fight over the remote control (it's my turn on Facebook!). The first option - the one to view your "Profile" - is actually quite boring. It just displays your current profile photo and status, two things you probably don't need to see. Unfortunately, there's no way to use the on-screen keyboard to post a custom status update from within this area.

Both the "Friends - Status Updates" and the "All Friends" section looked exactly the same to me. I thought the "All Friends" section would be more like the News Feed (so-and-so posted a photo, so-and-so requested help in Mafia Wars), but that didn't appear to be the case. It's possible that all my friends were just surprisingly inactive on Facebook at the time I launched this section, but I'm not so sure. In any event, both sections looked exactly the same: a list of friends and their status messages.

The "Albums" section was particularly fun and probably the most useful of all the options. Here, you can launch a list of your Facebook photo albums and then scroll through the pictures they contained in a slideshow-like format. Another tap on the "OK" button would launch the pictures full-screen.

Finally, the best part: updating your Facebook status. An option at the bottom allows you to update your status with a pre-configured message that says what show your watching. Although I still wish that I could customize my message, this simple, one-button post option is a great feature to have.

Hands-On: Twitter on the TV

Before you can start using the Twitter widget, you have to agree yet again to another Terms of Service. Besides the typical lawyerly stuff you'd expect to see, there was an interesting section that pointed you to www22.verizon.com/terms to read more about the Digital Millennium Copyright Act for info on how to contact Verizon with claims. There was also a section that informed you how to report child pornography posted to Twitter. (I wasn't even aware that Twitter had that problem, but I guess Verizon's lawyers were just covering all their bases).

Unlike with Facebook, you don't configure your own Twitter account within this widget. That means you can't see your replies, direct messages or your friends' timeline. In other words, this widget isn't a Twitter client. That's disappointing because I'd like to be able to tweet from my TV...at the very least I think you should have the same option as in Facebook to tweet what you're watching. Sadly, that's not the case.

Instead, the Verizon Twitter widget provides more of a read-only experience. You can check out a list of the latest trends and see the related tweets, perform keyword-based searches, or even configure "favorite topics" for custom saved searches of your own. (Hint: set up a favorite search for your Twitter username to keep track of replies).

The interface to all these options looks the same: tweets on the right, TV show playing on the left - just like with the Facebook widget. The tweets don't update automatically, but you can press "OK" on your remote to refresh them. You can also scroll up and down through the list to see more.

The absolute coolest option within the Twitter widget is its ability to display tweets about the current show. In my case, I was watching "Pan's Labyrinth" on HBO (which is, by the way, an odd but interesting tale). Surprisingly, there were a few others tweeting about this movie, too. Of course, had I been watching something more common - like American Idol for instance - there surely would have been tons more tweets to see. The only problem with the way these tweets are displayed is the lack of a timestamp. I really don't know if these folks were watching Pan's Labyrinth with me right now or if they were watching it sometime in the past.

Conclusion

Overall, I'm thrilled to have this sort of functionality on my TV, but I'd like to see a few improvements. I'd like the option to make the Twitter widget more of a client so I can tweet an opinion about what I'm watching or at least that I'm watching something. Although the on-screen keyboard is cumbersome and slow, what better way to kill time in between commercials? I'd also like to type in custom Facebook status messages in the same way.

The only other major complaint was speed. There was a bit of a delay when scrolling through photos in my album, for example, and hitting the scroll button again and again only led to the selection moving way too far ahead of where I wanted to go. I should have known better than to keep mashing it, but with TVs, you expect instant reactions. Channel Up changes the channel immediately, for example, without any delay.

Also, when viewing tweets, scrolling up and down through the list did a weird refresh of the entire screen which was distracting. I didn't see the same type of refresh when scrolling through Facebook updates, so it seems like something is really off there. Perhaps the widget also doing a search to look for more current updates...I'm not sure. In any event, it needs to be fixed.

But at the end of the day, despite these issues, having Facebook and Twitter on my TV is truly incredible.

Oh, I should also mention that the Widget Bazaar introduces two other widgets: Sudoku and ESPN Fantasy Sports. More widgets will launch in the future. I've only included a selection of images in this post, for all the photos from my TV, you can visit the online album here.

A report on Bloomberg.com about the release of this movie highlights some of the frustrations with the current advertising situation among YouTube's executives. In an interview with the news service, YouTube's Anthony Zameczkowski argues that YouTube is a place where filmmakers can reach 350 million unique users a month, and that YouTube is "more than just dogs on skateboards." According to Bloomberg, YouTube's Zameczkowski also tried to encourage more studios and filmmakers to upload their films to the service at last month's Cannes Film Festival.

Interestingly, though, even some of the most popular movies on YouTube hardly ever have over 500,000 views, and some of the most popular films there look more like traditional YouTube videos than slick movie studio productions.

YouTube Still Tries to Make a Profit

As we have argued many times before, YouTube still has to find a better revenue model in order to become profitable. Short clips and home movies are not too popular with advertisers, even though most of us clearly love them. Brands, however, would probably be more than happy to support projects like this and other feature-length movies and TV shows, as the financial and popular success of sites like Hulu clearly shows. Currently, according to Bloomberg, YouTube only earns money from about 3% of all the videos it hosts.

Thanks to Barb Dybwad at Obsessable for alerting us to this story.

This study, which was sponsored by media research firm Nielsen, however, concludes that the average adult in the U.S. still watches an almost unbelievable 5 1/2 hours of live TV every day. 94% of adults watch TV on any given day, while most people only watch online videos for a few minutes a day.

TV (including DVR playback) represents 99% of all the video watched by U.S. adults, and even for the youngest group in the sample, those 18-24, online video only represented 2% of all screen time.

The Bad News for TV

In terms of general use, however, computers and mobile screens have clearly taken time away from TV, even if online video still has a lot of room to grow. Users 18-24 spend more time in front of their computer screens than any other group (143 min a day on average), but still watch 210 min of TV every day.

The older a person, the more time they are likely to spend in front of their TV (421 min for those 65 and older). For TV executives, however, this means that the next generation of viewers will most likely spend even less time in front of their TVs.

With YouTube XL, Boxee, and the new Hulu Desktop, a growing number of players are also now pushing online video onto the TV screens of mainstream users, and chances are that within a few years, online video and traditional TV will simply start to converge. While we will probably still be watching the majority of video on TV sets, users will care less and less whether it is coming from their cable company or ISP.

Note: we reported some data from a preliminary version of this report in March.

While soccer (or football, for our European readers) might not be your thing, it is interesting to see how many TV networks have now made Twitter a part of their daily routine.

Some of Twitter's popularity in the TV world is obviously due to the novelty factor of Twitter, but Twitter does provide TV channels with an easy way to create a backchannel for their programs. CNN and other 24-hour cable news channels also regularly use Twitter (and Facebook). For example as a backchannel during live programming. Reading tweets is also a cheap way to fill airtime.

In addition, there is the now infamous Twitter TV show  that is not made by Twitter or even about Twitter (the company).

As our own Sarah Perez reported earlier this year, Verizon is also looking into incorporating a Twitter widget into its FiOS TV interface. For now, the FiOS interface still looks a bit clunky, and writing tweets doesn't look like an option given the lack of a keyboard, but it would be cool to see a constant stream of tweets about a specific show stream by on your TV, especially during live events.

Unsurprisingly, this study, which tracked the media consumption habits of 350 Americans, also found that older adults tend to spend more time in front of their TVs, while they also spend significantly less time in front of their computers. Interestingly, among all age groups, the overall time spent in front of screens is very consistent (about 8 1/2 hours), but boomers 45-54 consume about one hour more than all the other age groups.

With regards to computer usage, surfing the web, emailing, and using 'any software' are the predominant activities. On an average day, young adults 18-24 watch about 5 minutes of online video. As expected, this group also uses email far less than any other group (20 minutes), except for users over 65 (11 minutes). According to this study, younger adults also have a stronger tendency to use all different kinds of media simultaneously (think surfing the web on the couch while watching TV).

Online Video is Still Very Small Compared to TV

Surfing the mobile web (0.9 minutes per day), and watching mobile video (0.1 minutes per day) is clearly only a hobby for a small minority of users. We do know, however, that those users who do watch online and mobile video tend to watch a lot of it, so clearly, this market has a lot of room to grow, even though TV will surely hold on to its dominant position as the preferred means of consuming video content for quite a while.

A Few More Interesting Results

• users who owned a DVR early on used it to watch TV far more often than those who only got a DVR recently.
• HDTV owners who just bought their first or second HDTV watch more TV than others
• Americans over 45 spend more time fiddling with the screens on their GPS navigation systems than they spend on watching Internet video.

Sadly, the report does not include data for users under 18. Our suspicion is that the numbers for online and mobile video viewing might be quite different for this demographic.

Overall, the results from this study also correlate well with Nielsen's own A2/M2 Three Screen Report from 2008.

Here is a copy of the press release (pdf).

CC-licensed logo image used courtesy of Flickr user Aaron Escobar.

Also on the list of desired experiences were things like chatting with other people who are watching the same TV show, accessing "Most Watched" lists, recommending shows to family and friends, and receiving recommendations in return. These items point towards a desire for TV to become less of an isolated, solitary experience and make it function more like the social networks we see online. (Perhaps instead of just having "online friends," we'll one day be "friending" people on our TV, too?)

If this happens, it will be an entirely new frontier for television. Watching TV has always been more of a passive activity - you switch it on, sit back, and allow yourself to be entertained. Adding a social element to TV will be a dramatic shift - and one that has to be done carefully in order not to mar what people have come to expect as the TV "experience." Time and again we've seen "Web TV"-like initiatives crash and burn, mostly because what people want from a TV is not the same as what they want from a computer.

But then again, maybe we shouldn't speak for the next generation of TV viewers users.

Gen Y, or "digital natives" as they're often called, has grown up plugged in. And those that follow them may be even more plugged in, if that's even possible. These are demographics that have been socializing online since they learned to type, often at very, very young ages... even as young as elementary school.

Is it possible that this generation of TV viewers will shift and shape what it means to watch TV? It's very possible. Gen Y is already not watching TV as much as they are going online. And when they do get around to viewing TV shows, it's usually time-shifted content courtesy of DVRs or it's content viewed online, where TV is now becoming more social. NBC Universal's Hulu.com has just introduced a friends feature, for example, which lets online TV viewers create profiles and "friend" other users. Soon that same experience may find its way to the living room, too. Time will tell.

Any serious Twitter user will tell you that half the fun of watching a major television event or popular show is tuning into the backchannel provided by those twittering their thoughts and reactions to what's being broadcast. An excellent example of this type of live backchannel was seen during President Obama's recent public address - a hotly tracked item on Twitter where the hashtag to follow was #NSOTU (aka "Not State of the Union.") Even lawmakers were getting in on the action by twittering from the House floor while listening to Obama speak.

This real-time view into the reactions of the crowd has been at times insightful, at other times humorous, but is always an interesting and interactive way to participate in any event, including something shown on TV. Yet when it comes to Twitter and the television, it's often a two-screen experience involving a web-connected laptop or phone and the TV itself.

But with Verizon's new widget platform, developers will be able to build widgets like this one which displays Twitter updates on your TV. But unlike Twitter's own search tool that only lists the trending topics, Verizon's widget demonstrates how Twitter could enhance your TV-viewing experience in a whole new way. When launching this widget, for example, one of the options is "current channel." Select that and all of a sudden you're seeing the tweets related specifically to the program or movie that you're currently viewing.

Another widget, this one for Facebook users, lets you update your status with a message about what you're watching. It also provides access to your friends and your photo albums.

These two widgets were built in-house by Verizon engineers and won't necessarily ship with the upcoming update to the DVR... but they could. In a recent demonstration of the software's capabilities, Joseph Ambeault, Director of Consumer Product Development Video, hinted that the company had talked to various internet companies about their providing widgets for the new platform. However, he would not confirm any specifics. (There were some very cagey head rolls - half nods, half shakes - when providing the non-answers, though!). We specifically asked about Twitter, but the Verizon representative said he could not comment. We're taking the decided ambiguity to mean talks began but nothing is official.

In fact, seeing the widget in action makes us wonder - is this a part of Twitter's mysterious business model? It very well could be. Verizon's widgets, which could potentially reach several million customers here in the United States, will be monetized through on-screen advertisements like banner ads. These ads, similar in look and feel to those seen on the web, will launch a quick TV commercial when selected with the remote control.

The Widget Ecosystem

At present, Verizon has widgets for weather, traffic, headlines, horoscopes, and community information. There's also an ESPN Fantasy Football widget which provides stats on your players and scores. But when the widget platform goes live, the potential for an entire ecosystem of widgets will explode. However, the questions as to how this ecosystem will look and behave are things Verizon is still figuring out as, up until now, they've solely focused on the technical aspects of the solution.

What they can say now is that widgets will be programmed using LUA, a standard technology which many game developers will be familiar with already. The process for signing up to create a widget won't involve any laborious steps, either. Instead, there will be a quick web form to fill out and then developers can gain access to the company's SDK (software development kit). According to Verizon, they're not interested in tightly controlling which widgets become available to their FiOS customers - they just want to provide tools for widget creation and sharing. As Ambeault describes it, the ecosystem's level of openness will be "somewhere in between Apple and Google" - a reference to the variation between the App Store approval process for the locked-down iPhones versus the wide-open Google Android platform.

Also of note, Verizon seems less interested in competing with the other newly launched widget platforms, like the Yahoo/Intel TV widgets that are being integrated into new televisions themselves, and are more interested in working to port those widgets to their platform. But when asked if they were working with Yahoo, the only answer was yet another cryptic head roll.

Internet Video with No Extra Box (Just a Computer)

Another aspect to the upgraded Verizon Web + TV experience is the introduction of internet content, searchable through their "Interactive Media Guide." When the new software launches, Verizon FiOS DVRs will stream software from YouTube, DailyMotion, Break.com, Blip.tv, and Veoh. The format conversion that makes this possible actually takes place on a computer connected on the home network running Verizon Media Manager software, not on the DVR itself. Verizon says they configure this software for consumers at the time of installation.

This Media Manager software also allows customers to stream videos and photos from their PC to TV.

Beyond the Net

Multiple upgrades to the DVR software will take place over the course of the coming year. The first upgrade, due out this summer, will deliver new features like the updated program guide with its richer contextual menus. Here, for example, customers will find things like colorful thumbnails of movies when searching through on-demand titles - an experience somewhat reminiscent of Netflix. Also included will be the ability to preview programs from channels you don't currently subscribe to and the option to then order the channel using your remote. Most notably, though, the summer upgrade (from version 1.6 to 1.7 of Verizon's 2nd-generation software) will introduce the internet video content. Later this fall, the widget SDK will launch.

Given Verizon's position as a TV company, phone company, ISP, and wireless provider, they plan to maximize their new software across all various platforms. Already Verizon mobile phones can access TV through V-Cast, but in the future they may be able to use the widgets too. Mobile phone users can also program their DVRs remotely.

Of course, this news is only of interest to Verizon FiOS customers - still a relatively small market here in the U.S. when compared to cable but one that's growing in key markets. However, Verizon's move is raising the bar as to what consumers will come to expect from their web-connected TVs in the future, whether the web content comes from Verizon, is built into the TV itself, or arrives as part of whatever comes next.

Now Google's deep dive into U.S. TV viewing habits will go even further. In a partnership with Dish Network, also a TV Ads partner since the launch, Google will be able to give their customers data involving which programs are time-shifted versus which are not. The time-shifted viewership data breaks the TV ad impressions down into "live," "live + same day," "live + 1 day," "live + 3 day," and "live + 7 day" categories. This additional data will be provided free of charge to advertisers.

Unlike with Nielsen, who samples a small, opt-in portion of the TV-watching American population, Google's DVR data comes from EchoStar's Dish Network. The data is "anonymized," of course, but it's entirely possible that most Dish customers don't know they're providing data to Google at all. The metrics reported reflect viewership of the specific TV ad commercials, says Google, not just general program viewership. That can only mean that Dish is providing Google with details on who fast forwards through the commercials versus who does not.

Google isn't just handing over the data they're retrieving from the DVRs, either. They are actively analyzing it, too. According to the company's blog post, they "love digging into data" and have been "excited to investigate how time-shifted viewing differs from live viewing." Their initial findings suggest that niche programming tends to get a disproportionate percentage of its viewing through DVR.

At the moment, Google TV Ads are sold on the Dish Network for some of NBC Universal's cable channels, Bloomberg, and the Hallmark Channel. Dish Network is the U.S.'s third largest pay-TV provider.