Article at a glance:

Broadband media: Look before you leap

Some 40 million US households will gain access to broadband in the next three to five years. As consumer use proliferates, so do predictions that broadband will revolutionize television and video entertainment. Probably, it eventually will, but for now only the simplest forms of enhanced TV and streaming-video programming will be profitable—though not profitable enough, in a million-channel world, to defray the high cost of creating and distributing shows that permit viewers to decide how they want plotlines to unfold (interactive TV) or when they want to watch (video on demand).

The take-away

Given the current economics of the business and the constraints of technology, broadcasters shouldn't make huge investments in broadband programming just yet. Instead, they should experiment with a portfolio of programming options.