Posted 28 September 2012 - 01:34 AM
There are two revenue sources for networks: ads and fees. If Hulu or other viewing service doesn't require ad viewing -- I don't know what model they're on: some sources allow the viewer to cut out after 10-15 seconds -- there must be a licensing or subscription fee. (I wonder if research has shown whether it's really the first 10-15 seconds repeated often enough that's as effective or effective enough, especially in this age of constant distraction.)
It's possible that they're running off the incremental model: if you add the sub-par ratings on TV with the whatever value Internet viewing is assigned, the incremental value* of Internet might put it over the line for renewal. It's also possible that while ratings might be sub-par for that show alone, the viewers that stay for the shows that follow might be high enough or enough of a target demographic or a new demographici to matter. It would be as short-sighted to ignore these impacts as it would be to ignore the opportunity cost of the slot.
*When I worked in magazines in the '90's, the amount advertisers were willing to pay was based on a combination of circulation, the loyalty of the subscriber base -- what % of new subscribers converted to renewing subscribers, the renewal rates, number of years subscribed, etc., and the demographics of the subscribers. Different types of subscriptions were assigned different values: gift subscriptions, sweepstakes and fundraising subscriptions, copies sold en masse to hotels and airlines, bundled subscriptions, etc. I haven't worked in the industry since the Internet and e-readers, tablets, and smart phones, but it's hard for me to imagine that these aren't considered in the current formulas and that something similar isn't done in TV, even if the mechanisms are different.
Also, the Internet makes it possible to click and purchase online, which is what I'd be trying to integrate into the Internet transmissions of TV shows.