New TV business models via the Internet and entrepreneurs

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Ever have a favorite television show cancelled despite there being plenty of good stories left to tell? Or how about a series with real potential but never getting the chance to flourish?

These things infuriate TV viewers. But broadband, high-speed Internet should provide the answer, right?

Mention the Internet, and the entrepreneurs among us see opportunities to offer new products for consumers, and to change or create new industries. Television would seem to be highly vulnerable to upheaval courtesy of the Internet. Yet, the Internet has been surprisingly slow in challenging the traditional television business model.

Sure, with broadband and digital technologies, it’s easier to watch television than ever before, whether on a desktop computer, laptop or various mobile devices. But what about new business models and content?

The television business model has not changed much in recent times. It’s overwhelmingly advertiser driven. A television show might have a considerable and devoted following when DVR, DVD and iTunes viewing are factored in, for example, but if the Nielsen ratings aren’t there, then that show is unlikely to last long.

Meanwhile, the Internet has generated seemingly endless gigabytes of video. While some of it’s quite good, the glaring shortcoming is quality. Good storytelling combined with top acting, direction and production value remains in short supply, largely due to an unwillingness to take the necessary risks.

But cracks in the old TV model can be detected. Both Netflix and Hulu have started down the path of original content. Netflix has announced three original series, including a crime-comedy series that started streaming in early February, and the return in 2013 of the cult sitcom “Arrested Development,” which was cancelled by Fox in 2006. Hulu also launched a series in February, with two more on the way. Both Netflix and Hulu Plus are subscription services. For good measure, Google reportedly is investing $100 million to build up YouTube channels for original content.

But one of the most interesting people talking up the enormous opportunities at hand is Zachary Levi, who starred as the tech-nerd-turned-spy in the NBC show “Chuck” that just finished its five-year run in January. Levi is quite entrepreneurial, with his own company and website called The Nerd Machine, which hosted “NerdHQ” in July during Comic-Con International in San Diego. Levi brought in various TV buddies to talk to fans, with the idea to have fun and raise funds for charity.

During a “Chuck” panel, Levi spoke about his own vision for television, which is far bolder and more exciting than what others are considering.

Using shows like “Chuck” and the cult classic “Firefly” to make his points with a sci-fi heavy audience, Levi noted that with the technology at hand, no reasons exist for such shows to “be on the chopping block any more.” He explained that the livelihood of such shows could be put directly in viewers’ hands “because you have the power already… If all of a sudden we were to say, hey look, ‘Chuck’ is not going to be on TV any more, but we can make it online and we’re going to sell it for two bucks an episode, would you guys buy ‘Chuck’ for two dollars an episode?”

Levi recognized the challenge of offerings being “free” on the Internet, whether due to advertising or piracy. He noted the role consumers must play: “In the next five years, as everything goes to a subscription model, or goes to an iTunes-type of model, if you guys decide somebody else is going to pay for it — I’m just going to enjoy it — it will die. But if you support it, it will live. And then 2 million people, by the way, can keep a show on the air.”

That model makes a lot of sense in the Internet age. But being an avid video gamer, Levi’s vision is even more expansive: “I want to make fun video-game television shows or movies. I want to go fly around in space and go kill aliens… Maybe you can watch that, you can just sit back and passively watch it like all the other shows you’ve known and loved … or at any given time, maybe your Xbox goes, ‘Hey, pick up your controller if you want to participate in the fight.’ … You finish a level and then the story picks up again.”

That’s what today’s technology should be about, i.e., more consumer power and choices. And make no mistake, that’s where it’s headed.

A Bloomberg report recently noted that CBS was in talks to provide original programming for Netflix. CBS CEO Leslie Moonves offered a revealing comment: “Until they are doing 22 hours a week of premium content, we do not look at them as a competitor, but rather another place to put our content.” That attitude will prove tremendously shortsighted.

The competition s arriving, and if the television networks recognize this, they have the experience and expertise to extend their reach on the Internet. But longtime leaders often fail to see the next big thing that will dramatically alter their industry forever. Instead, it’s the visionary entrepreneurs who get it. And you never know where they might come from — ironically, perhaps from a cancelled network television show about a tech nerd.

Raymond J. Keating is the chief economist for the Small Business & Entrepreneurship Council. His new book is “Chuck” vs. the Business World: Business Tips on TV.