The Internet Integration Model and Influence of American Television Media

When the Internet and other emerging media are surging around the world, the television industry seems to be suffering from collective anxiety. From the perspective of the United States, where the Internet is most developed, the situation is not as bad as imagined - TV advertising revenue is still growing, the audience size is quite stable, and no TV station has gone bankrupt. In fact, local TV station transactions have been very active in the past year, with 290 local TV stations being merged, setting a historical record in the number of transactions, and the transaction amount of 8.8 billion US dollars has also reached a peak since 2006. Television is still a very profitable business.

Despite this, the American television industry still has some concerns about the future - compared with the Internet, the relative attention of television users is declining, the growth rate of advertising revenue is much lower than that of the Internet, and the advertising revenue gap between the two is gradually narrowing, etc. These phenomena have made executives in the American television industry think about the future of television and actively explore Internet businesses suitable for the integrated development of the television industry.

1. Internet business model of American television media

Through the review of the Internet business of major American television media organizations, the author found that there are five main models of integrated development:

1. Independent model: TV media independently develops Internet products and transmits content to audiences through new Internet channels, such as the portal websites of most TV stations and self-developed apps. Among them, the more influential ones include CBS Interactive, NBC Universal, Turner Digital, ESPN, Viacom Digital, etc.

2. Cooperation model: TV media cooperate with Internet companies, use the communication platforms of powerful Internet companies, and jointly build new communication channels to transmit content to the audience. For example, the cooperation between Yahoo and NBC and ABC, and the cooperation between Fox and MSN.

3. Merger model: including forward mergers of TV media and Internet companies, and reverse mergers of Internet companies and traditional TV. Currently, mergers are mainly forward mergers, most of which end in failure, such as Time Warner's merger with AOL and News Corporation's merger with Myspace. Reverse mergers of the Internet with traditional media mainly occur in the newspaper field, such as Amazon CEO Jeff Bezos' acquisition of The Washington Post for $250 million.

4. Tool model: Traditional TV media use the Internet as a tool for publicity and promotion and to enhance interaction with the audience. The most typical example is that traditional TV media open accounts on social networking sites Facebook, Twitter and YouTube.

In practice, several major TV networks have chosen different models to promote media convergence. CBS first developed independently, then gradually acquired and refused to join Hulu; Fox first acquired and then joined; ABC first joined and then cooperated; NBC and TBS have both independent development and joint ventures. Different TV groups have different development models for the Internet, but none of them adopts a single development model.

2. The influence of American television media’s Internet products

1. Ranking of monthly UV visits on desktop internet

From the list of top 10 UV users of desktop Internet in December 2013 released by comScore, only CBS Interactive and Turner Digital, the websites of traditional TV media, made the list, ranking 9th and 10th, with monthly UV of 76 million and 75 million respectively, which is far behind the first place, Yahoo with 195 million.

Among the list from 11th to 50th, there are five Internet websites with traditional television backgrounds, namely ComcastNBC Universal at 15th, ViacomDigital at 21st, ESPN at 26th, Fox News Digital Network at 44th and Time Warner (excluding Turner and WB) at 47th.

In terms of the number of websites on the list, there are 7 websites with TV backgrounds in the top 50, accounting for 14% of the list, and they are ranked relatively low. Internet products of traditional TV media groups have a place in the Internet industry, but their influence is relatively weak.

From the perspective of website categories, traditional TV background websites rank relatively high among the three major vertical websites of entertainment, news and sports, but are not among the top 10 among the three major comprehensive websites of portals, social networking and e-commerce.

Among entertainment websites, CBS Interactive ranked second with nearly 76 million UVs; Comcast NBC Universal ranked third with more than 63 million UVs; and Viacom Digital ranked fifth with nearly 44 million UVs.

Among news websites, the news website jointly launched by Yahoo and ABC ranked first, with UV close to 76 million; CNN Network ranked second, with UV over 64 million; NBC News Digital ranked seventh, with UV over 52 million; CBS News ranked eighth, with UV close to 36 million; Fox News Digital ranked tenth, with UV close to 29 million.

Among sports websites, the sports website jointly developed by Yahoo and NBC ranked first, with UV close to 42 million; ESPN ranked second, with UV close to 38 million; Fox sports website ranked third, with UV exceeding 31 million; CBS sports website ranked seventh, with UV exceeding 18 million.

Although the websites of traditional TV media are not as large as comprehensive Internet websites in absolute scale, and their UVs do not exceed 100 million, they have a strong influence in vertical fields closely related to TV. This is also the result of TV media giving full play to its own advantages.

2. Monthly UV reach rate of mobile Internet

According to the mobile reach ranking released by comScore in December 2013, among the top 15 websites with the highest user traffic through browsers and apps, TurnerDigital ranked 9th with a reach of 44%; CBS Interactive ranked 11th with a reach of 38%; and Comcast NBC Universal ranked 15th with a reach of 29%. However, in the reach ranking of websites that only access the Internet through apps, there is no traditional TV in the top 15. This shows that the mobile Internet entry method of traditional TV media mainly relies on browsers.

3. Video traffic (excluding mobile video)

Although traditional TV media websites and apps are relatively backward in terms of user scale compared to Internet giants, reports released by many research institutions show that video traffic is experiencing explosive growth. This means that traditional TV media video content consumption will usher in a golden period of development on the Internet. According to video traffic data released by comScore from January to December 2013, in the past year, the total amount of videos increased by 35%, the amount of video ads increased by 211%, and the number of video viewers increased by 4%. The growth of video ads is particularly prominent.

However, according to the video traffic data released by comScore in December 2013, among the top 10 UV users, only Turner Digital ranked 10th with 29 million UVs. In the video play volume ranking, only Hulu ranked 9th with more than 480 million video plays, which is far behind Google (mainly YouTube) which ranked first, and is only equivalent to 3.6% of Google.

Data shows that traditional TV media's Internet video services are relatively backward. Of course, Internet video services are still in the early stages of development, and traditional TV media still have a lot of room for development. This also shows that TV media have not focused their business on Internet video services.

In comScore's December 2013 video playback rankings, among the 11th to 25th places, ESPN, ViacomDigital, and Turner Digital ranked 17th, 18th, and 19th respectively, and CBSinteractive ranked 24th.

Similar to the ranking of desktop Internet, video websites with traditional TV background have a large gap in absolute numbers of user scale and video playback volume compared with Internet giants. However, when it comes to vertical video websites, traditional TV media websites have a greater advantage in online TV, music, movies, news and sports videos except for social videos.

From the online TV list, the first place was taken by the total video traffic of AOL + Huffington Post, with UV exceeding 48 million. CBS.com, ABC Television, and NBCU Digital ranked 2nd to 4th, with UVs of 11.8 million, 8.2 million, and 8.1 million respectively. 6th to 9th place were also occupied by TV media websites, namely A+E networks Digital, Discovery Networks, TBS, and BET Networks, with UVs ranging from 3.7 million to 2 million.

Among music video websites, Warner Music and MTV Music Group ranked 2nd and 3rd respectively. VEVO ranked 1st and claimed to be the music version of Hulu, integrating the resources of the three major record companies to create an online music website.

In the movie website rankings, only NBCU Filmed Ent made the list, ranking 8th with UV close to 540,000, while Paramount Online from the traditional film industry ranked 3rd with UV of 8.55 million.

In the ranking of news video websites, Yahoo-ABCNews Network, a video news website jointly developed by Yahoo and ABC, ranked third with nearly 28 million UVs; CNN Network ranked fourth with nearly 19 million UVs; NBC News Digital ranked fifth with more than 12 million UVs; CBS News ranked eighth with nearly 7.9 million UVs; and Fox News Digital ranked tenth with more than 5 million UVs.

In the ranking of sports video websites, ESPN ranked second with nearly 18 million UVs; Yahoo Sports-NBC Sports, a sports video website jointly established by Yahoo and NBC, ranked third with over 11 million UVs; Fox Sports.com opened by Fox on MSN ranked fourth with nearly 6.4 million UVs; CBS Sports ranked eighth with over 3 million UVs.

Overall, traditional TV media's Internet video services have obvious advantages in vertical fields, but are at a disadvantage in the fields of social video and UGC. This is precisely the strength of mainstream video websites and the source of huge traffic. The top two video websites, YouTube and Facebook, both rely mainly on video UGC and social functions to occupy the market.

3. Internet business revenue of American television media

1. Profit model

There are three main sources of income for traditional TV stations’ Internet business: one is advertising, which is the main source of traditional media’s Internet business. Currently, most traditional media’s Internet business income mainly comes from advertising; the second is paid income, such as Hulu’s paid subscription and the TV Everywhere business initiated by cable TV providers, which expands cable TV subscribers through Internet channels; the third is other income, such as hosting events.

2. Total advertising volume

Since the Internet business of traditional TV stations has not surpassed the Internet giants in the overall rankings, they only have certain advantages in vertical fields, and no Internet product has more than 80 million users, so the revenue from Internet products does not constitute the main source of income for traditional TV stations as a whole.

According to data released by PricewaterhouseCoopers, global online TV advertising revenue from traditional TV will increase from $3.7 billion in 2013 to $9.7 billion in 2018. Its proportion of total TV revenue will also increase from 2.2% in 2013 to 4.5% in 2018. According to data released by the IAB, in 2013, the total revenue of online video advertising in the United States was $2.8 billion, and the total revenue of TV advertising was $74.5 billion. Even if the $2.8 billion is fully included in the revenue of TV stations, online video advertising only accounts for 3.6% of the total video advertising of $77.3 billion. Online video advertising is still a small part of video advertising.

IV. Summary

From the above analysis, we can see that the major American TV networks have chosen different models to explore the Internet according to their own conditions, and all of them have tried to enter the Internet by "walking on two legs". The independent development of CBS, NBC and Turner (mainly CNN) has achieved more obvious results, with the number of users ranging from 63 million to 76 million. ABC News has also gained more than 75 million users with the help of Yahoo!. Hulu, which was built by the joint model, has performed mediocre in terms of UV and video playback volume. The cases of the acquisition model have basically failed. Therefore, from the perspective of development model, adhering to the strategy of independent development and moderate cooperation is a feasible path for traditional media to enter the Internet. Due to different operating thinking and management methods, traditional media should be cautious in acquiring new media.

From the perspective of the overall influence of TV media Internet products, although certain results have been achieved, the highest UV of 76 million is still far behind the top three Internet giants, which all have more than 175 million users. The highlights of traditional media come from the vertical fields of the Internet, which are formed based on the content and brand advantages of traditional media.

Judging from the proportion of Internet advertising revenue to the total TV media revenue, Internet product advertising revenue still accounts for a very small proportion. The Internet is still a supplementary business for traditional TV organizations and a natural extension of traditional TV organizations to the Internet channel.

Based on this, we believe that the current strategic focus of American television organizations is still on the traditional television field. In a sense, the current exploration of Internet products by television organizations is just an experiment. This may be because the impact of the Internet on American television media has not yet caused serious damage.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.