Of all the new storylines playing out on the U.S. TV networks this fall, one in particular has industry executives on the edge of their seats: how will the broadcast networks survive in the Internet age?

No one knows for sure, but this September, for the first time, the American networks are moving forward in lockstep to test the waters. All of the major broadcast networks, including ABC, NBC, CBS, the CW, and Fox, are preparing to roll out Internet initiatives to lure back viewers who have migrated to cable TV and the web. The rise of on-demand cable TV, downloading services like TiVo, and user-generated content sites like YouTube lets audiences choose when and where they watch their favorite content. And network executives are terrified.

But unlike record companies that initially fought the Internet, the networks are desperately trying to figure out how to keep pace with consumers’ changing tastes. And their slate of web-based initiatives this fall will be a litmus test of their success at reaching a more tech-savvy audience. The bottom line is that more network programming will be available on the Internet than ever before.

“This year, as we begin to launch our fall shows, we’ve already got a plan in place as to how we’re going to use the Internet and new media,” says Peter Levinsohn, president of Fox Digital Media. “Last year, people were just starting to nip around the edges. This year, it’s happening,” he says.

In previous seasons, the networks dabbled with online content, but their efforts didn’t generate much heat. For example, in 2004, the now-defunct WB network streamed episodes of Jack & Bobby, a show about two brothers, one of whom grows up to be the U.S. president, on AOL for eight days before it premiered to generate an audience. In the end, the show fizzled.

Perhaps online initiatives haven’t taken off until now because audiences were just not ready for the innovation—literally. One of the drivers behind the growth of online video is the widespread adoption of broadband. In January 2004, only 37 percent of Americans had broadband Internet access at home, according to Arbitron/Edison Media Research. In January 2006, that number had more than doubled, to 58 percent of households.

Joe Laszlo, a media analyst with Jupiter research, says networks have indeed turned a corner when it comes to their acceptance of the Internet. “There has definitely been a sea change in the last 12 months as far as the level of commitment in delivering content online,” he says.

Not Tuning In

Networks have little choice but to embrace new technologies. The network television audience in the United States has been on a steady decline for the past decade. In 2001, network TV captured 43 percent of the viewing public. But by 2005, that number had fallen to 33 percent, a 23 percent decline, according to data from Nielsen Media Research.

The slipping numbers are also hurting advertisers—network television’s main source of revenue. Though advertisers are continuing to plunk money into TV commercials—they spent $12.3 billion on network ads in the first half of 2006, up 5.7 percent from a year earlier, according to TNS Media Intelligence—they aren’t getting more bang for their buck. According to a recent McKinsey report, by 2010, traditional TV advertising is expected to be just one-third as effective as it was in 1990. That’s because more people are switching off ads altogether, or not paying attention to them (commercials seem to offer an opportunity to prepare a snack, load the dishwasher, or feed the dog).

Must-See Internet TV

Each of the networks has its own roadmap for winning back viewers online. Most of them have penned non-exclusive deals with media portals, such as Yahoo, AOL, YouTube, and MySpace—as well as launched their own sites—to enable viewers to watch streamed episodes of primetime shows, usually after they air on television. Some are also working with Apple’s iTunes to allow viewers to download the shows. Fox is one of the only networks to stream select shows online—via 48 partner sites—before they premiere on network TV, a strategy the network says will build “buzz” around new shows. NBC recently announced a similar strategy.

CBS will stream primetime programming on Innertube, the network’s online video spin-off, 24 hours after airtime, as well as a simulcast of the CBS Evening News With Katie Couric. “We think we’ll get people who may not normally be exposed to our programs, and that’s not just entertainment, it’s also news and sports,” says Larry Kramer, president of CBS Digital Media. The network has also partnered with Google and Yahoo to promote its fall lineup on their TV sites with video clips, photos, show summaries, and more.

ABC, for its part, has decided to go it alone, and has not partnered with a portal to distribute its content, though some ABC shows will be available for download on iTunes. In September, ABC will re-launch its broadband video player on ABC.com, where viewers can watch free episodes of new and returning shows with short, opt-in ads after the shows air on the network. ABC has yet to announce which shows it will stream on its site. ABC wouldn’t offer specifics on the changes, but Albert Cheng, executive vice president of digital media for the Disney-ABC Television Group, says navigation is improved, and the advertising platform will be slightly different.

When ABC tested the video player during May sweeps last season, traffic to ABC.com more than doubled. “It’s not cannibalistic to our old media, but it actually enhances the value of our content and our network reach,” says Mr. Cheng.

Meanwhile, this summer NBC launched its own channel on video-sharing site YouTube to promote fall shows using exclusive video clips, including audition videos from The Biggest Loser, a weight-loss reality-TV show, and short scenes from new and returning shows such as The Office, a comedy about co-workers at a Scranton, Pennsylvania, paper supply company. The network will also premiere the new drama Heroes, about people who discover they have superpowers, on Yahoo TV on September 18.

Fox started the season by streaming the pilot episode of Vanished, a series about a team of FBI agents who solve missing-person cases, and the season-two premiere of Prison Break, a show about handsome and wrongly convicted brothers, on Yahoo TV, AOL, Google, and other streaming media and download-to-own sites. The shows will also be available on Fox.com, and on local network affiliates’ sites, after they air on the network.

Fox’ strategy of blanketing its content on as many portals as possible is hardly uncommon. In fact, most of the networks seem to have one goal—to get their content onto the Internet as fast as possible. That may be because no one is sure yet which distribution method will prove the most tantalizing to viewers—and the most profitable to the network selling ads.

“Everyone is looking for the newest, most effective gimmick to drive awareness,” says Marissa Gluck, a media analyst with Los Angeles-based Radar Research. “What better advertisement is there for your media than the media itself?”

Throwing Spaghetti Against a Wall

Networks realize that advertising dollars are quickly migrating to the Internet, and they are hoping to capitalize on the trend. In 2006, online advertising spending increased 23 percent year-on-year to $15.7 billion, and that number is expected to continue growing at a rapid pace. By 2010, that figure will reach more than $26 billion, or 8 percent of total advertising spending, according to Forrester Research.

Networks are offering advertisers a variety of online options, including video ads that roll before short video clips, as well as opt-in ads embedded within a streaming episode, much like TV commercial breaks. They are also promoting shows with banner ads on highly trafficked social networking sites like MySpace. Spokesmen for CBS, NBC, ABC, and Fox said they could not comment on their networks’ plans to divvy up revenue from advertising placed alongside or embedded in content streamed on third-party sites. “This is also a test for the advertising story, and what will be effective advertising on the web,” says Mr. Kramer, of CBS.

Analysts say the networks have little to lose by testing myriad new promotion and marketing techniques on the web. “It’s giving them an opportunity to learn how to monetize shows on the Internet while there’s still mostly an upside to be gained,” says Jupiter’s Mr. Laszlo.

But the networks have a long way to go to build a solid online business model. They are still searching for a standard way to measure the monetary value of digital viewers, a complicated business, says Lynn Bolger, executive vice president of agency development at comScore Media Metrix, which tracks Internet traffic.

Ms. Bolger says her company can tailor its online measurement system, called comScore Video Metrix, to tell individual networks who is watching their branded content online, where they are watching it, and for how long. But because networks use different media players, and varying data to identify or “tag” content streams, it will be a long time, if ever, before we see a standard ratings system for online content.

“You’ve got a very fragmented environment out there,” says Ms. Bolger. “The real challenge is how to aggregate the audience in a meaningful way for the advertiser and the marketer.”

Nielsen is working on its own version of online measurement, called A2/M2, an all-electronic measurement system for all forms of streamed video, whether viewers watch it on their computer of a handheld device. But that system won’t be available until the fall 2007-2008 season, says Gary Holmes, a spokesman for Nielsen Media Research.

But discovering how to hook viewers online—and which format will enable networks to sell the most ads—is going to take time. The online medium is distinctly different than the sit-and-zap network world; online viewers seem to have a shorter attention span and prefer clips under five minutes, for instance. It may take a few more years, but networks will find a way to monetize their content online.

“If we fail, we fail, but we learned something,” says Disney-ABC’s Mr. Cheng. “I think you have to go with this approach, otherwise you don’t get a lot done."

Contact the Writer: AWeinstein@RedHerring.com