Among the biggest technical innovations in TV are nontelevision delivery systems. We can skip a network broadcast and still watch our favorite shows on DVRs, on laptops, or on mobile devices for free or for a nominal cost. Not only is TV being reinvented, but its audiences—although fragmented—are also growing. A few years ago, televisions glimmered in the average U.S. household just over seven hours a day; but by 2012, when you add in downloading, streaming, DVR playback, and smartphone/tablet viewing, that figure has expanded to more than eight hours a day. All these options mean that we are still watching TV but at different times, in different places, and on different kinds of screens.

Home Video

In 1975–76, the consumer introduction of videocassettes and videocassette recorders (VCRs) enabled viewers to tape-record TV programs and play them back later. Sony introduced the Betamax (“Beta”) in 1975, and in 1976 JVC in Japan introduced a slightly larger format, VHS (Video Home System), which was incompatible with Beta. This triggered a marketing war, which helped drive costs down and put VCRs in more homes. Beta ultimately lost the consumer marketplace battle to VHS, whose larger tapes held more programming space.

VCRs also got a boost from a failed suit brought against Sony by Disney and MCA (now NBC Universal) in 1976: The two film studios alleged that home taping violated their movie copyrights. In 1979, a federal court ruled in favor of Sony and permitted home taping for personal use. In response, the movie studios quickly set up videotaping facilities so that they could rent and sell movies in video stores, which became popular in the early 1980s.

Over time, the VHS format gave way to DVDs. But today the standard DVD is threatened by both the Internet and a consumer market move toward high-definition DVDs. In fact, in 2007 another format war pitted high-definition Blu-ray DVDs (developed by Sony and used in the PlayStation 3) against the HD DVD format (developed by Toshiba and backed by Microsoft). Blu-ray was declared the victor when, in February 2008, Best Buy and Walmart, the nation’s leading sellers of DVDs, decided to stop carrying HD DVD players and discs.

By 2012, more than 50 percent of U.S. homes had DVRs (digital video recorders), which enable users to download specific programs onto the DVR’s computer memory and watch at a later time. While offering greater flexibility for viewers, DVRs also provide a means to “watch” the watchers. DVRs give advertisers information about what each household views, allowing them to target viewers with specific ads when they play back their programs. This kind of technology has raised concerns among some lawmakers and consumer groups over the tracking of personal viewing and buying habits by marketers.

The impact of home video has been enormous. More than 95 percent of American homes today are equipped with either DVD or DVR players, resulting in two major developments: video rentals and time shifting. Video rental, formerly the province of walk-in video stores like Blockbuster, has given way to mail services like Netflix or online services like iTunes. Time shifting, which began during the VCR era, occurs when viewers record shows and watch them at a later, more convenient time. Time shifting and video rentals, however, have threatened the TV industry’s advertising-driven business model; when viewers watch programs on DVDs and DVRs, they often aren’t watching the ads that normally accompany network or cable shows.

The Third Screen: TV Converges with the Internet

The Internet has transformed the way many of us, especially younger generations, watch movies, TV, and cable programming. These new online viewing experiences are often labeled third screens, usually meaning that computer screens are the third major way we view content (movie screens and traditional TV sets are the first and second screens, respectively). By far the most popular site for viewing video online is YouTube. Containing some original shows, classic TV episodes, full-length films, and of course the homemade user-uploaded clips that first made the site famous, YouTube remains at the center of video consumption online. Owned by Google, YouTube by 2014 was drawing more than one billion unique visitors per month and reporting these statistics on its Web site: “Over 6 billion hours of video are watched each month on YouTube . . . [and] 100 hours of video are uploaded [to the site] every minute.”2

But YouTube has competition from sites that offer full-length episodes of current and recent programming. While viewers might be able to watch snippets of a show on YouTube, it’s rare that they will find a full episode of popular, professionally produced TV shows like Mad Men, New Girl, and Homeland. Services like iTunes or Amazon Instant Video offer the ability to download full seasons of these shows, charging just $0.99 to $2.99 per episode. And streaming site Hulu (a partnership among NBC, Fox, and Disney) allows viewers to watch a certain number of episodes of a show for free—but with ads.

In late 2010, Hulu started Hulu Plus, a paid subscription service. For about $8 a month, viewers can stream full seasons of current and older programs and some movies and documentaries on their computer, TV, or mobile device. Hulu Plus had more than 6 million subscribers by 2014, up from 2 million in early 2012. Netflix, which started streaming videos back in 2008, has moved further away from a DVD-through-mail model and has become more focused on a less expensive (no postal costs) online streaming model. According to Nielsen’s 2014 “Digital Consumer” report, “38 percent of U.S. consumers say they subscribe to or use Netflix to stream video.”3 With nearly 36 million U.S. subscribers by 2014 (Netflix reported 48 million streaming customers worldwide in June 2014), Netflix has become much bigger than Comcast, the largest cable company, with its 22 million U.S. subscribers.4 Netflix has also been negotiating with major film and TV studios for the rights to stream current episodes of prime-time television shows—and seemed willing to pay between $70,000 and $100,000 per episode.5

In addition, cable TV giants like Comcast, Time Warner, and HBO are making programs available to download or stream through sites like Xfinity TV, TV Everywhere, and HBO GO. These programs are open only to subscribers who can download cable TV shows using a password and username. In 2012, Netflix, looking to increase its subscriber base, started talks with some of the largest U.S. cable operators about adding Netflix as part of their cable packages. However, cable and DBS companies are, thus far, resisting Netflix’s proposition and are rolling out their own video-streaming services instead. Comcast introduced Xfinity Streampix in February 2012, expanding the Xfinity offerings to include even more movies from top Hollywood studios and past seasons of TV shows. The goal, according to Comcast executive Marcien Jenckes, is “to be the single stop for video needs for consumers.”6 Other companies have attempted to create streaming services of their own, though some, like Redbox, have failed to catch on.

In most cases, these third-screen sites operate as catch-up services rather than as replacements for broadcast or cable TV, allowing viewers and fans to “catch up” on movies and programs that played earlier in theaters or on television (see Figure 6.2 on page 202). Now, with devices like the Roku box and gaming consoles that can stream programming directly to our television sets, and newer television sets that are Internet ready, the TV has become one of the latest converged devices.

Fourth Screens: Smartphones and Mobile Video

According to Nielsen’s 2014 “Digital Consumer” report, 84 percent of smartphone and tablet owners said they used those devices as an additional screen while they were watching television “at the same time.”7 Such multitasking has further accelerated with new fourth-screen technologies like smartphones, iPods, iPads, and mobile TV devices. For the past few years, these devices have forced major changes in consumer viewing habits and media content creation. Thus cable and DBS operators have begun to capitalize on this trend: Cablevision, Time Warner, and the Dish Network released iPad apps in 2011, allowing their subscribers to watch live TV on their iPads at no additional charge in the hopes of deterring their customers from cutting their subscriptions. However, some cable programmers—like Discovery and Viacom—are pushing back, arguing that their existing contracts with cable and DBS operators don’t cover third or fourth screens.

The multifunctionality and portability of third- and fourth-screen devices means that consumers may no longer need television sets—just as landline telephones have fallen out of favor as more people rely solely on their mobile phones. If where we watch TV programming changes, does TV programming also need to change to keep up? Reality shows like The Voice and dramas like Game of Thrones—with many contestants or characters and multiple plotlines—are considered best suited for the digital age, enabling viewers to talk to one another on various social networks about favorite singers, characters, and plot twists at the same time as they watch these programs on traditional—or nontraditional—TV.