Online TV is bound to get messy

Spoiler alert: People watch TV shows online nowadays.

Each major network’s Web site includes a substantial video and episode gallery, and co-op Web sites, such as Hulu, a joint venture between News Corp. and NBC Universal, are bringing more and more content to the Web.

Up until now, viewers and users have seen this democratizing of content as nothing but a great change with the technology. Clearly there are benefits when the networks provide full episodes online. We don’t have to watch the program live or worry about setting the DVR, and the “related content” features help us find more in just a click.

We’ve all been able to embrace this move toward more online TV, because the networks behind them see great visitor ratings and ad revenue. During Gov. Sarah Palin’s stint as the Republican vice presidential candidate and the subsequent parodies by Tina Fey and “Saturday Night Live,” Hulu experienced more than 5 million unique viewers each month. Hulu’s online ad sales for the fourth quarter in 2008 were up compared to 2007, and the same results were seen by CBS and ABC’s video pages.

But as the market for online video gets more competitive and the money gets tighter, things are going to become very interesting. There are quite a few issues that have complicated and will continue to complicate the online video sector.

First of all, the major legal issues between the competing factions will continue to disrupt free video-watching use for everyone. When each major network or faction (YouTube is owned by Google) owns a major video-hosting Web site, there are going to be battles over copyright issues.

Good luck searching for an “SNL” clip on YouTube. If you do find something a few hours after the broadcast, be certain that the video will soon “no longer be available due to a copyright infringement claim by NBC Universal.” It’s understandable for Hulu to protect its content, but what about those people outside the United States who can only access YouTube?

Second, Hulu’s success is going to make the content division even larger. CBS recently purchased former TV info headquarters TV.com and hopes to turn it into its own version of Hulu. It’s smart for CBS to set itself up to compete with Hulu, but purchasing a news portal and slowly turning it into its own hub isn’t the way to do it. It wouldn’t surprise me if CBS keeps the news of TV.com while slowly emphasizing its own content.

Moves like this signal that the Web video market will eventually be just like network TV with each section clearly divided and continuous battles over content and ad revenue. That’s not necessarily a bad thing, but it’s sad to see the networks use the same business model on the Internet so quickly. And when ad revenues look to be down this year, who knows what they’ll fight over in 2009.