• by Joe Mandese  @mp_joemandese, August 9, 2007

The bad news is that consumer time spent with media is down. It's down for the first time in recent memory -- despite an explosion of media options. The good news within that, according to the media economists at Veronis Suhler Stevenson, is that media time is down because digital media is enabling consumers to spend it more efficiently.

"Consumers typically watch broadcast or cable television at least 30 minutes per session, while they spend as little as five to seven minutes viewing consumer-generated video," concludes the just-released 21st edition of VSS' annual Communications Industry Forecast, suggesting an ominous future for ad-supported media outlets that depend on consumers spending as much time with them as possible -- and charging advertisers as much as they can for the time consumers spend with their medium.

Actually, there's some good news for television within that broader trend: Overall usage of television is not down. It actually continues to grow for most traditional TV outlets. And it's definitely growing for newer forms of television. The average American is projected to spend 1,686 hours watching TV this year, up nearly 1% from 2006. By 2011, VSS projects the average person will spend 1,742 hours a year watching TV. And that's all for traditional TV outlets like broadcast, cable and satellite TV.

But the real story is how people are beginning to utilize alternate channels for watching television. Time spent with alternate video channels such as the Internet, out-of-home, and in-flight media are all up far more dramatically, suggesting that the networks' decision to migrate across platforms is well-timed -- especially for NBC Universal, which appears to be pushing out in all directions simultaneously in what an observer described for me as "an effort to colonize as much new media space as possible."

I've already written about NBC's deal with Premier Retail Networks to get inside stores, and most of you are well aware of their various Internet initiatives, but the most telling vote of confidence in NBC's strategy came in a report today that big private equity firm Providence Equity Partners is making a big bet on NBC U's and News Corp.'s new Internet video venture. The as-yet-unnamed venture, still working under the title New Co., got an infusion of $100 million from the equity firm in exchange for a 10% stake, according to a report in today's New York Times. That puts an immediate market value of $1 billion on the venture, even before it streams a single program or ad online beginning this fall. And in financial parlance, that's still an "early round" valuation, so we're talking some real market capitalization here.

Why? I think the team at Providence must understand that the opportunity here is to harness the power of network quality programming with an economic model that has proven to work for more than half a century: It's called advertising. And putting those two things together in a meaningful distribution platform, the way NBC U. and News Corp. envision it, will satisfy all the key stakeholders that most of the early Internet video models seem to have ignored: advertisers, content owners, and of course, consumers. If they do that right, they'll probably satisfy the desires of a fourth constituency: investors.