NEW YORK (TheStreet) -- The movement of advertising dollars to online video may be reaching a tipping point.
Even as the country's broadcast networks, led by CBS (CBS) , continue to profit handsomely from a business based on advertising and so-called retransmission fees from local station owners, the future is clear: advertisers are accelerating their move to online video.
The reasons are simple. The current generation of young people, known in marketing jargon as millennials, are watching cable-TV much less than previous generations. MoffettNathanson analyst Michael Nathanson called summer television ratings "terrible" in a note Tuesday, pointing to aggregate prime time ratings down 5.1% in broadcast and 9.8% on cable over August.
Millennials have all but migrated to Internet-based services such as Netflix (NFLX) and a host of digital sources for news and entertainment. For young people addicted to their handheld devices, online media allows for an interaction television can't match.
And marketers are increasingly following millennials. Over the second quarter, advertising at broadcast networks including Fox, ABC and The CW fell 7.2%, according to media monitoring group Kantar Media. Meanwhile, online spending for just desktop display climbed 10% during the first six months of the year, Kantar said. Looking ahead, media research firm Magna Global says digital media -- video, display, mobile -- will be the largest advertising category in the U.S. within three years, amassing $72 billion compared to a forecast $70.5 billion for television.