• by Mark Walsh  @markfwal, February 7, 2008

Only 10% of adult online consumers have watched full-length TV episodes online in the last year, but a bigger audience awaits if TV producers and technology players can deliver a better experience.

JupiterResearch estimates in a new report that 15% of the online population might watch TV shows online if certain steps were taken to release pent-up demand. Jupiter recommends, among other things, that TV networks adopt some of the social tools that help user-generated video to take off online.

That means allowing users to create and share clips from 30-minute or hour-long episodes as Hulu, the online video joint venture of NBC Universal and News Corp., now does. Such moves would help TV network sites pull in young viewers who typically gravitate toward social networking or video-sharing sites.

TV producers also have to provide more comprehensive program libraries online. One-third of people surveyed by Jupiter said being able to watch any show episode online for free was a key factor in their desire to watch TV online. For now, "the networks are only putting limited libraries online," said JupiterResearch analyst Bobby Tulsiani.

The most recent episodes of show may be available, but only for a month or so. And finding episodes from prior episodes is a crapshoot, depending on the network and the program. Tulsiani noted, for instance, that Fox has offered episodes of the most recent and first season of "24" but not much from the intervening four seasons.

"The consistency of the libraries and the user experience is still not the way people want it," he said.

An even bigger hurdle to using the so-called "Internet DVR" is that most people still want to watch their favorite shows on TV, even after they originally air. Connecting the Internet to a TV set via a PC or set-top box has long been a stumbling block for bringing online viewing to the living room. Jupiter points to partial solutions such as high-quality video sites such as Joost that aim to rival TV. "Until that gap is bridged, you're not looking at a mass market," Tulsiani said.

The Jupiter report also encourages TV producers to overcome fears of cannibalizing their content and develop new ad models online. The firm forecasts that online video advertising will hit $2.3 in 2012, up from $554 million in 2007. Online episodes typically feature video pre-roll or mid-roll ads adapted from TV spots.

The report cites YouTube's launch of semi-transparent ticker ads on video clips as an innovative effort that put the customer experience ahead of short-term revenue goals.