• by Erik Sass  @eriksass1, February 20, 2007

When it comes to Web and broadband services, TV nets need to wise up.

An industry analysis from Broadband Directions, LLC gives the big TV networks a mixed report card for their efforts to adapt to the Internet and roll out broadband video service.

Although broadband video is booming, the networks' vehicles for delivering video online are less interesting and less interactive than big file-sharing sites, like YouTube. Furthermore, local TV stations consider online video to be a promotional tool, rather than a medium in its own right.

"Most networks still have not embraced the value of building out robust, deeply interactive, short-form clip properties," the report says. Flaws of the network Web sites include limited possibilities for sharing video content with friends: "the most common interactive element we found was the ability to email the clip along to a friend," but "even this feature was sub-optimal."

And that's just the beginning.

Broadband detailed a litany of failings common to the big networks' sites. Video was often out of date by two years, many of the promotional teasers related to episodes had already aired, and there was no video-search function. There was also no ability to upload video, tag clips, create personalized indexes or playlists, or download clips to portable players.

Ironically, Broadband Directions sees the market for paid TV downloads shrinking in favor of ad-supported models. According to its study of local TV stations, 82% were generating revenue through advertising in online video, with 88% of this group using "pre-roll" video ads. The remaining 12% used display ads around the video player.

As for future predictions: demand for paid downloads, via services like iTunes, will shrink in 2007. "The consumer-value proposition for paid TV program downloads is diminishing" due to the availability of "catch-up" episodes via DVR or VOD, both of which are increasing in penetration.

The quality of VOD offerings has been low in the past, but "we believe this is about to change," citing Disney's recent accord with Comcast as "a bellwether... suggesting additional deals between networks and cable TV operators will follow."

The market pressures affecting networks are well-known, including the growth of ad-skipping technologies like DVR, which reached 15.6% penetration of American households by the end of 2006. According to Broadband Directions, "Research has shown that fewer than 1% of viewers watching a program with a DVR actually watch the ads."