Streaming TV Can Be Profitable

Here’s some potentially good news for those of us who love to watch our favorite TV shows online: MTV Networks and ABC.com have achieved profitability with their latest online video efforts. Both networks currently have clear, aggressive strategies for distributing TV online—MTVN aims for a wide distribution while ABC is pushing a walled garden of high-quality streams.

During a recent panel discussion on broadband video distribution, Greg Clayman, executive vice president of digital distribution and business development for MTV Networks, said online video is profitable as a business. However, the business is still a small one in comparison to the rest of MTVN’s business.  Clayman hopes the network will be able to grow the overall pie, rather than to replace one delivery method with another.

On a gross-margin basis, ABC.com is also profitable: Every streamed episode brings in a profit, albeit a smaller profit than the TV version. Albert Cheng, Disney/ABC Television Group executive vice president of digital media said, “It took us a while to do that…but it’s been really a good business.” Both Cheng and Clayman expressed desire to grow online profits to match, or possibly even surpass, those made through television. Cheng further mentioned the tradeoff is not the proverbial "analog dollars for digital pennies.” Instead, he said the difference between Internet video and TV is more like comparing "a teenager to a full-grown adult.”

Considering nearly two years ago MTVN parent Viacom sued YouTube for $1 billion and barely offered legit alternative versions of its shows online, we’ve definitely come a long way in the past couple years. Given the number of people who currently watch TV shows online, this news brings hope that networks will continue to offer shows online as long as it continues to be profitable to do so.