Here's another threat to online distribution of non-interactive scripted media: social media games, which are taking off in a big way.
Right now, their financial model is based on one percent of players buying virtual goods, but that's a shitty model (since it's based on a tiny percentage of players and everyone else is a freeloader) and since it's shitty, it's gotta change. Maybe the games can change to incentivize freeloaders to change their wicked ways, but I doubt it, since a major attraction of the games is that, well, they're free. And they appeal to casual gamers who are not going to be that strongly motivated to fork over money for an improved experience. If they care that much, they'd be playing real games, not FarmVille.
So the other way the games could go is to lure in serious brands with serious ad money, and not have the ads relegated to an afterthought that nobody clicks on. And that's a model they're perfectly positioned for, because the casual, mass-market gamer is effectively the same as the broadcast viewer market the big brands are already advertising to.
The achilles heel of advertising on a non-interactive online medium (TV on the internet) is that all you're doing is what you could do on TV, but more lamely - smaller screen, smaller audience, and an audience less tolerant for looking at ads.
The fact that you're in a non-interactive medium makes the audience less passive compared with the kind of zoned-out zombies who watch TV and just let the ads wash over them, even if they could zap them, which no doubt explains the weird phenomenon of nearly half of DVR viewers not zapping ads. An internet viewer's brain is not zombified but is already in interactive-mode, which is not what you want, unless your ads are interactive as well, and can take advantage of that.
Social media games can swoop right in and muscle online TV out of the picture, by integrating the ads into the games themselves, and make them far more powerful than either regular TV or online TV can hope to offer. Right now, the best examples I've found is Polyvore
(a very loose game in which the products are
the game) and WildTangent
(which is making efforts to match advertisers and game content - Scoop Away in a game about keeping pets for instance.)
And I continue to be amazed that we're not seeing TV and movies in social media games. Why is there a Vampire Wars on Facebook but not a Vampire Diaries, which offers the possibility that "Damon," "Stefan" and "Elena" might actually show up in the game for you to interact with? Why aren't the same advertisers on the TV show being given ad slots in the game, and have their products integrated into the game?
And when that happens, what's the point of also having Vampire Diaries, the TV series, online? The advertisers will naturally prefer the greater impact that social media game advertising provides. The TV series online will be nothing more than an afterthought. I could envision a day when TV series become simply the advance PR for the games, which is where all the action and the big ad money really is.