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More good news for Netflix (and bad news for the TV networks)

Is watching TV the old-fashioned way becoming a thing of the past?

A new report from Nielsen (NLSN) shows that traditional live television viewership was down slightly over the third quarter (4%), but online streaming viewership jumped 60%.

This means Americans are watching an average of 11 hours of streaming video each month while just one year ago, online video consumption averaged about seven hours monthly.

Yahoo Finance's Jeff Macke and Rick Newman discussed the trend, which they both agree has big implications for network television. Macke points out that in the most recent “upfront” markets, broadcast advertising sales were flat while cable ad sales slumped.

Macke says people are opting out of the old model: switching on your set—and leaving it on. “Frankly, the commercial thing—the idea of the one minute, two minute, three minute interruption every 15 minutes in your viewing experience is so antiquated.”

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‘If we want to jump straight to the bottom line, the online model works…you get your little 10 second ad upfront, in exchange for that you get a bunch of content; that’s an easy ad to sell as opposed to this passive viewership,’ says Macke.

Newman compares the trend to that of the then-emerging ecommerce business over a decade ago; “ecommerce is booming but retail is still the big chunk of the spending.” He points out “someone is still watching TV.”

According to Nielsen’s report, Americans on average still watched more than four hours of live television a day, or 141 hours per month last quarter but in 2013’s Q3, that number was 147 hours.

A potential problem is how Nielsen measures live television consumption; Macke refers to these live television hours as “fuzzy numbers” which really just measure how many hours the television stays on, as opposed to actual sets of eyes watching. “The big bugaboo in the Nielsen thing is that you don’t have that interactivity that you do with the online [viewing],” he says.

Macke also says the online streaming numbers are understated, as they don’t include programming watched using smartphones or Roku, furthering the case that traditional TV viewing is an endangered pastime. “The trend is not the networks’ buddy.  They have to crack the code on this.”

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