Media Companies in Streaming War

Can they make money from streaming without killing TV?

There’s no denying the fact that online streaming is taking a big bite out of traditional television viewership. According to Nielsen, at any given time of day during the past TV season, about 11.5 million people between 18 and 34 years old watched TV on traditional sets—down 2 percent from a year earlier and 3.4 percent from two seasons ago. And SNL Kagan estimated Friday that the number of households that pay for TV service shrank by 458,000 to about 100.1 million households in the second quarter.

Now, there’s a war brewing over which media companies will find a way to profit from the changing TV landscape by taking advantage of web streaming, reports The Wall Street Journal.

While companies like Netflix, Apple, and Amazon entrench themselves in America’s living rooms, cable providers and other traditional media companies are fighting back, offering their content on new platforms like tablets and Internet-connected TVs, and trying to restrict the amount of free programming available online.

Content providers have managed to benefit by signing lucrative deals to stream their shows on sites like Netflix. Viacom and CBS each added at least $60 million in pretax profit from digital streaming deals in the quarter through June, while NBCUniversal added $80 million. But in order to protect their core business, these companies are licensing mostly older content—not current shows that could bring in ad dollars—and staying wary of how much a streaming deal will cannibalize a show’s other potential revenue, from advertising to reruns to iTunes Store sales.