So as more and more people go online the huge advertising marketing known as television is in flux.  The current model is to produce a very expensive program and then to place the show on the antenna which broadcasts out to the masses.  If one person receives the signal it costs the network the same as if they were broadcasting the Super Bowl.  Hence everyone wants a hit show because that means there are more eyeballs and thus, more profit.  Production is a sunk cost and thus syndication and re-runs are a great market because commercials can be sold without any real additional cost (if production is the most expensive thing). 

Online is a different story.  Bandwidth is the name of the game.  This space, dominated by the Akamai's and the Limelights of the world, is all about transferring data and transferring data fast.  So instead of this old model where the signal goes up and there is no incremental cost (to steal a term from the days of Economics 101) to serve the show, the network has to pay for every single stream of video.  So what is going to happen?  Well Hulu only has 2 - 3 minutes of commercials now.  How are the networks going to recoup the rising costs of production? 

The key is reuse of content and to add extra ad inventory to the video without adding extra ad inventory.  Huh?  What?  The first point: Reuse of content.  That's pretty straight forward.  Get someone to watch your content more than once.  That way you are not incurring any additional production costs.  We see this with the ABC episodic, LOST.  Week 1 they have the regular show and then Week 2 they have the "enhanced" version.  The enhanced version is simply a text box giving us commentary on what is going on...."Why does Jack not like Ben?" etc.

The second point: How do we add extra ad inventory without adding extra ad inventory?  After all Hulu has set a precedent.  Imagine the outcry that would occur if they simply doubled their ad inventory from two to four minutes....This is the problem that is the bane of online video economics.....How can we solve this?