Hollywood is facing some serious problems as more and more viewers are cutting the cord on their cable subscriptions, watching movies online instead of in the theater, and turning to online streaming sites to watch old movies and television episodes, instead of heading to their local Blockbuster. The LA Times reports that DVD sales were down 13% in 2010, CD purchases were down 19%, and “the pay-television industry suffered an unprecedented net loss.” What can the television industry do to lighten the blow and make up for lost viewers and advertising dollars?

This is something that I think about a lot because I watch a lot of movies and television online and I know that I am just one in a sea of many. What effect does our cord cutting have on the industry? We used to watch our favorite shows on television when the premiered and we used to watch movies in the theater. Because we aren’t watching, television and film audiences are shrinking which means, in turn, that the networks aren’t able to make as much from sponsored broadcast advertising to budget future programming, film studios aren’t raking in as much of a profit as they used to in order to budget future productions. In the long run television will continue to suffer and decline if the networks don’t do something, and fast. But what should they do? I have a few ideas.

Put More Archived Episodes Online

In order to make up for the lost broadcast advertising, networks need to put as much monetized content on the web as they can. ABC.com, for instance, only streams the five most recent episodes of popular shows like Grey’s Anatomy. Think about the potential if they showed all of the archives for all of their shows and had advertisers pay for pre-roll or in-play advertising. To top it off, research shows that online viewers are more engaged than television audiences, so these online video ads may be even more valuable for advertisers.

While we’re on the topic of networks putting their content online – make your content available to a global audience as well! Then you can increase your monetized viewership in countries where viewers have no other option than to watch for free on pirated sites (not to insinuate that I watch pirated content J). I live in Tel Aviv and I don’t have access to ABC or NBC videos online, or to Hulu. If I did I would happily head to those sites to watch my favorite shows and I would also happily watch as many advertisements as they decided to throw at me.

Just Give In To Netflix (That means you HBO!)

Yes, Netflix and similar services have led to the downfall of the movie rental business and paid television subscription services. But wasn’t that inevitable? If it wasn’t Netflix it would be someone else, so why do some distributors and networks (aka HBO) have such a problem with giving into Netflix already?

HBO’s Senior VP of Corporate Affairs said, in The Hollywood Reporter, “HBO believes in content exclusivity, especially for high-valued content. That’s our rationale for not selling streaming rights to a competing subscription service.” Another high-placed Time Warner exec was quoted as saying that “if Netflix expects to get a meaningful amount of HBO content, it would have to raise the price of its streaming-only service from $7.99 to $20 before the economics made sense.”

Sorry HBO, but I think your logic is failed in this situation. As more and more of your paid subscription customers are cutting the cord you need to find other outlets for distribution and Netflix is a great one which would probably be prepared to pay you quite a bit of money for your content and offer very good terms. After all, their deal with Epix is rumored to be close to $1 billion. You can hold out for now, but eventually I’ve got a feeling that you’ll come crawling to Netflix with your tail between your legs.

Give Audiences More With Companion Web Series

Networks should start producing web only content in order to cement their spot in the world of web video. Companion web series have already been launched for a number of popular television series. Just last week we wrote about a Cougar Town web series, and companion web series have also been launched for a number of other popular shows over the past couple of years including Grey’s Anatomy, Ugly Betty, Dexter, Weeds and Heroes.

Companion web series are not only a way to drum up excitement and start a buzz about different shows online but are also a great way to make a little extra advertising revenue. The Cougar Town series, for example, is sponsored by Diet Dr. Pepper and each episode features a pre-roll ad.

Exclusive Online Content For Paid Subscribers

Pay-television subscription channels (like HBO) can start offering more exclusive online content for paid viewers. This is a good way to keep viewers from cutting the cord and giving them that extra punch that they need in order to keep paying a monthly fee. Let your paid viewers log in to your website to watch members-only content including behind-the-scenes footage and interviews, previews and more.

People like to feel like they are part of an exclusive club. If they know that other people are streaming the content they are paying for at half the price (on sites like Netflix), or even for free, then they won’t be happy continuing to pay. However, if they are getting access to content that other people aren’t then they will be happier with the fact that they are paying a monthly subscription fee.

Give Viewers Incentives For Watching Live

Networks concerned with the decline of viewership can offer viewers incentives for watching live. Many viewers don’t watch their favorite shows on the night they are broadcast because they think, “Well, I can just watch it when it goes up online tomorrow.” However, a lot more viewers would couch potato it up on premiere night if they had some incentive. Maybe a contest that would require viewers to get information during a commercial break or a trivia competition that would require viewers to answer questions about a specific episode ASAP…the possibilities are basically endless.

As an example, over the summer Tunerfish teamed up with HBO for the season premiere of True Blood. Viewers that “checked in” on Tunerfish while watching the season premiere of the show on HBO received a special badge. This was a good incentive for Tunerfish users to watch the premiere on television, instead of wait to watch online. Television check-in service Miso did something similar with QVC for Black Friday this year, as well as for the DVD/Blue-Ray release of ‘Despicable Me’.

Do you have any ideas for how the television industry can survive the online video boom? Feel free to share them with us in the comments.