It is no secret that consumers are increasingly using smartphones, tablets and computers to watch TV shows online. Media researcher SNL Kagan estimates that households that use online video instead of paying for TV service will grow to nearly 4% by the end of 2011, up from 2% in 2010, in the $30 billion cable TV industry.

Since consumers have gotten in the habit of receiving media content online for free or at a lower cost, cable TV content providers and distributors are adjusting their business models so they can remain profitable.

One idea adopted by companies like Comcast and Time Warner is “TV Everywhere.” In this model, consumers are able to watch shows online as long as they are a traditional cable TV subscriber. But according to The Wall Street Journal, “TV Everywhere” has been slow in gaining popularity because some TV channel owners want to be paid extra to provide their shows over the Internet – as a result only select shows are shown online.

Another popular alternative is Hulu – a website offering free TV shows that is a partnership between Walt Disney, Comcast and News Corp. According to The Wall Street Journal, some media executives value Hulu since it gives content creators direct access to consumers compared to working with cable and satellite distribution companies as well as an online alternative to offering shows through Apple’s iTunes and Amazon.com. 

Although Hulu is a free site, consumers can subscribe to Hulu Plus for $7.99 to receive premium content; Hulu Plus currently has more than one million customers. Hulu Plus is a new revenue stream for content creators but also puts them at risk of angering the distributors, who are their biggest customers since the service can be seen as competition.

As consumers continue to increase their use of mobile devices and consume media online, TV content creators and cable companies will need to evaluate their business model to remain profitable and relevant. 

Ed Samide is a Senior Account Manager at Domus, Inc., a marketing communications agency based in Philadelphia. For more information, visit http://www.domusinc.com. For new business inquiries, please contact CEO and founder of Domus, Inc. Betty Tuppeny at betty.tuppeny@domusinc.com or 215-772-2805.