ABSTRACT
This chapter explores an economic perspective, the development of the online television industry, its threats to standard television, and its future. It focuses on professionally produced television programming that is also exhibited on standard TV by US broadcast or cable networks. The dominating cause, however, was conversion from analog to digital distribution technologies. In early years, analog was cheaper and more efficient than digital. Extraordinary technological change, especially digital conversion, has combined with an expanding appetite for TV viewing to fuel this economic growth. Cable TV technology in particular is a very efficient means for simultaneous downstream delivery as well as pricing of television services to consumers. Internet technology offers theoretical improvements in both advertising and direct-payment business models. On the advertising side, online video portals incentivize the tracking of individuals' consumption patterns in order to target advertisements to individuals directly.
