Abstract
This article analyzes the economics of Internet TV, with the purpose of determining the likely nature of program content and its sources. In comparison with cable TV and broadcast TV, Internet TV is expensive in its delivery per household. It is not cheap to produce the content itself, given its multi-media and interactive aspects. Hence, Internet TV is likely to be used for the following types of content: premium movies on VOD basis, specialized programs with a narrow or dispersed base of users, and innovative programs with interactive and multi-media components. These categories favor producers with large budgets, early entrants, large Internet markets, and advanced technology. The United States is a leader along all of these dimensions. Therefore, Internet TV with its marriage of Hollywood and Silicon Valley is likely to strengthen the American role in global media still further.
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