Now, Disney (DIS) and CBS (CBS) already offer those same shows for viewing on the same day-after-original air date schedule on their own Web sites (though they aren’t presented commercial-free as they will be on Netflix). But that doesn’t seem to matter to Netflix (NFLX), which is clearly positioning itself as a one-stop shop for online delivery of movies and television shows.

And doing quite well at it, I might add. Wedbush Morgan Securities analyst Michael Pachter estimates that between 10 and 20 percent of Netflix’s 8.4 million subscribers use the company’s streaming service regularly.

As BoomTown readers know, I have been adamant that Yahoo’s online ad outsourcing deal with Google is troublesome on a lot of levels. Although, so is government intervention.

From giving advertisers less choice to creating a de facto monopoly to its potential for stifling innovation, the deal–which was struck as a parry to Microsoft’s attempt to buy Yahoo (YHOO) and is set to begin next month–gives me the heebie-jeebies, given the pair control 80 percent of the online search ad market.

Now, The Wall Street Journal is reporting that the Justice Department has quietly hired an outside litigator–former Walt Disney Vice Chairman Sanford Litvack–to contemplate whether the government should consider mounting an antitrust case against the search giant.

The article stresses that government regulators have not yet decided to move forward or whether they would simply focus on the Yahoo deal or cast their net more broadly concerning the huge market share of Google (GOOG) in search.

But, ironically, the move has echoes of the Justice Department suit against Microsoft 10 years ago for antitrust violations. Well-known litigator David Boies was hired as special counsel in that case.

Google has argued since it struck the deal that it keeps competition alive. In a statement to The Journal, the company said:

We voluntarily delayed implementation of this arrangement to give the Department of Justice time to understand it, and we continue to work cooperatively with them. While there has been a lot of speculation about this agreement’s potential impact on advertisers or ad prices, we think it would be premature for regulators to halt the agreement before we implement it and everyone can judge the actual impact.

Still, Google faces increasing headwinds. Major advertisers have been complaining about the implications of its Yahoo deal, including the Association of National Advertisers this week.

In an egregious pot-kettle move, Microsoft (MSFT) has also been very vocal about stopping the deal, including at Congressional hearings in Washington, D.C. in mid-July, which I attended.

Here are video interviews I did with the lawyers from Google, Yahoo and Microsoft at that hearing:

This kind of arguing will likely be taking place for a long time to come now with the Justice Department weighing in.

And even though what the government knows about the Internet could fit on a microchip, it is probably a good idea for regulators to at least poke around in this arena.

Because what I wrote back in April when the Yahoo-Google deal was revealed still stands:

And while it might be a long-cherished dream of Google’s to take over Yahoo search–and also get the chance to return to the scene of the crime, since Google got its first big push from doing Yahoo search, before Yahoo wised up too late–there is simply no way this will be allowed by regulators, nor should it.

Still, you have to almost admire the chutzpah of the search giant in making this move, if the sheer and unadulterated arrogance of it wasn’t so distracting.

Because while Google has almost none of the obvious menacing aggression that characterized Microsoft when it thoroughly dominated tech (although all those beach bikes on its campus inexplicably creep me out a little bit), the company still cannot be allowed to have a monopolistic share of the market.

It is bad for advertisers, it is bad for consumers, it is bad for innovation, no matter how well-intentioned Google is.

And no matter how many flashy moves Google and Yahoo make, it is flat-out wrong for one player to so dominate such an important sector (and I hope regulators look at the email domination in the case of a Yahoo-Microsoft union with a similar gimlet eye).”

Please see this disclosure related to me and Google.

In what is likely to turbocharge its heft in the digital space, according to an internal email sent out by Walt Disney (DIS) CEO Bob Iger, the entertainment company is combining its Disney Interactive Studios and the Walt Disney Internet Group.

The new unit, called Disney Interactive Media Group–will be headed by WDIG’s Steve Wadsworth.

WDIG has a wide range of properties, like Club Penguin and Disney.com. Disney Interactive Studios makes a range of games for Disney brands like “Hannah Montana” and “Wall-E.”

Here’s the memo, with email address removed:

From: Bob Iger
Sent: Wed Jun 04 19:44:22 2008
Subject: Disney Interactive Media Group (DIMG)

Bob

Yesterday, Time Warner (TWX) CEO Jeffrey Bewkes said that Warner Bros. plans to experiment with VOD releases day-and-date with DVD later this year. And now this morning, Apple (AAPL) announced that a number of major and independent movie studios have agreed to make their films available on iTunes day-and-date with DVD–$9.99 for library title purchases and $14.99 for new release purchases. Among the studios participating in the deal: 20th Century Fox (NWS), Walt Disney Studios (DIS), Warner Bros., Paramount Pictures (VIA), Universal Studios Home Entertainment (GE), Sony Pictures Entertainment (SNE), Lionsgate (LGF), Image Entertainment (DISK) and First Look Studios (FRST.PK).

An impressive lineup and one that clearly heralds a shift in the movie industry’s view of digital distribution. A shift in iTunes movie purchases as well–upward. The removal of Hollywood’s typical 30-day lead time on DVD releases will no doubt boost new-release sales on iTunes, assuming customers don’t mind paying $14.99 for films that lack the extra features and picture quality of their DVD counterparts. It will boost movie studio revenues as well. With no manufacturing and reproduction costs to speak of, margins from day-and-date download releases are presumably quite high.

So much for that hard-fought DVD format war …

This morning, I am interviewing Steve Wadsworth, who helms Walt Disney’s (DIS) Internet businesses.

And after sating myself with as much Club Penguin info as possible, I will be sitting rapt in the front row, as folks like Yahoo’s (YHOO) Jeff Weiner, Bebo’s Joanna Shields and AOL’s (TWX) Ron Grant talk about how social media is going to finally make money.

BoomTown is on a vision quest to answer that question in the coming year, so we are kicking entrepreneurs and taking names!

Here’s a short video I did on the opening night, including talking to paidContent’s Staci Kramer and Seth Goldstein of Social Media.

But, first, it starts with a tour of my temporary L.A. abode at the home of Mahalo’s Jason Calacanis:

I am back in Sin City to appear on a panel at the National Association of Television Program Executives (NATPE) conference here today, along with former Walt Disney head Michael Eisner, former Viacom head Jonathan Dolgen and Dmitry Shapiro, founder and CIO of Veoh.

Titled “Possibilities and Perils of Internet TV,” it should be an interesting discussion, since I think it is all peril at this point with very little to show in the possibility column.

While there have been a lot of attempts to create Internet TV–and by this I don’t mean delivering traditional television via IP–most of what is out there is repurposed professional content that Hollywood hopes we will think is newfangled and, via easy-to-post user-generated material, a more massive version of “America’s Funniest Home Videos.”

In other words, bad Web programs and a whole lot of videos of cats on skateboards. As for profits from all this: Not so much.

Nonetheless, the television industry is changing dramatically. With the backdrop of the writers’ strike, the situation is even more volatile, as viewers migrate away from the network model and toward, well, who knows?

Both Eisner and Dolgen are investors in Veoh–one of the many online video services out there, this one aimed at professional content. And Eisner has been dabbling in the new media content space to mixed results.

I wrote about Eisner back in November when he jumped on the Blame-Steve-Jobs bandwagon, saying Apple was to blame for Hollywood’s woes.

Said Eisner–whose tense relationship with Jobs was well known–then: “[Movie and television studios] make deals with Steve Jobs, who takes them to the cleaners. They make all these kinds of things, and who’s making money? Apple! They should get a piece of Apple. If I was a union, I’d be striking up wherever he is.”

I will be sure to ask him about that comment.

Yesterday, Walt Disney’s ABC broadcast network and ESPN cable sports channel announced a deal at the Cable Show in Las Vegas to provide free on-demand video of hit shows and other content to Cox Communications, one of the bigger cable companies. Except Cox was required to disable its fast-forward feature to stop viewers from skipping over ads. Thus, those with Cox’s on-demand service lose that functionality, although subscribers with their own digital video recorder can still do as they please, thanks be to the TiVo gods.

This move is a disappointment to me, because I think Disney under the leadership of CEO Bob Iger (pictured here) is one of the more–excuse me–fast forward of the television companies, making big strides in moving its programming all over the Net and onto other devices beyond the television. Its own ABC.com, for example, is one of my favorite places to watch “Ugly Betty” and other popular prime-time programming using its really exceptional player. And I don’t even mind its ads embedded in the program, though I do surf the Web as I listen to them, because it was part of the deal I understood when I clicked in, as opposed to on-demand viewers who usually get to fast-forward through programming.

Iger has energized the digital fortunes of Disney since he took over, and he should be commended for this kind of innovative stuff. But he also should be pilloried for moves such as Disney made with Cox. The very idea of this is offensive, given the inexorable movement away from heavy-handed control of consumers’ ability to have what they want, when they want, how they want.

What’s that you say from your Burbank aerie? Programming needs to be paid for? “Advertising is critical to the financial health of our business, and this agreement marks the first time one of our cable-operator partners is acknowledging that,” said Anne Sweeney, president of the Disney-ABC Television Group, to The Wall Street Journal in a story about the Cox deal.

So the plan is to hobble consumers and force-feed them ads they probably don’t want to see? Figuring out new ad solutions in the new paradigm is Disney’s problem and that of the advertising industry. How about coming up with ads that are truly relevant or helpful? Or even entertaining and involving?

I’m not sure that the driving reason to get a DVR in the first place is just to skip commercials. I don’t fundamentally believe that. People can understand in order to have convenience and on-demand (options), that you can’t skip commercials.”

– ABC President of Advertising Sales Mike Shaw, July 2006

Looks like Walt Disney has finally come up with a theory to explain plummeting ratings at ABC and ESPN–as well as a plan to fix them. The company’s two big TV networks have struck a deal with Cox Communications to offer free on-demand broadcast of hit shows and sporting events, as long as Cox disables its fast-forward feature that lets viewers skip advertisements.

To Disney, the price of free entertainment is suffering through inescapable advertising, and its DVR-empowered viewership hasn’t been holding up its part of the deal. And so, beginning this fall, Cox will offer episodes of four ABC prime-time series, along with select ESPN on ABC college football games in the FreeZone section of its on-demand service. They will be available the day after their original broadcast, and Cox will disable its on-demand fast-forward option.

Will viewers accustomed to fast-forwarding through advertisements watch on-demand programming with unavoidable ads? And, more to the point, if they so clearly dislike watching advertisements, why would they watch programming like this at all? Why wouldn’t they use their DVRs to record the same shows as they air live and use that device’s fast-forward function to skip the ads? Cox President Pat Esser says viewers will understand the transaction it’s proposing. “People want their content, and they want it for free, but I think they realize that there is a business model to keep intact for them to get it that way,” he told The Wall Street Journal.

We’ll see, I guess. But I hope for Esser’s sake that Cox and other cable operators like it are investigating other ways of solving this problem. Like figuring out how to take advantage of the attention fast-forwarding requires. Because while DVR users often fast-forward through commercials, the very act of paying attention to what they’re forwarding through vastly increases ad recall. “There’s a pretty good basis for thinking that the active attention required to fast-forward could reinforce brand awareness,” said Kenneth Wilbur, associate professor of marketing at the University of Southern California’s Marshall School of Business. “There can be a real effect on purchasing behavior due to the attention required. … You could see extensive changes coming to creative formats and a great deal of research into how creative can best be adapted to fast-forwarding.”

I’m not sure that the driving reason to get a DVR in the first place is just to skip commercials. I don’t fundamentally believe that. People can understand in order to have convenience and on-demand (options), that you can’t skip commercials.”

– ABC President of Advertising Sales Mike Shaw, July 2006

Looks like Walt Disney has finally come up with a theory to explain plummeting ratings at ABC and ESPN–as well as a plan to fix them. The company’s two big TV networks have struck a deal with Cox Communications to offer free on-demand broadcast of hit shows and sporting events, as long as Cox disables its fast-forward feature that lets viewers skip advertisements.

To Disney, the price of free entertainment is suffering through inescapable advertising, and its DVR-empowered viewership hasn’t been holding up its part of the deal. And so, beginning this fall, Cox will offer episodes of four ABC prime-time series, along with select ESPN on ABC college football games in the FreeZone section of its on-demand service. They will be available the day after their original broadcast, and Cox will disable its on-demand fast-forward option.

Will viewers accustomed to fast-forwarding through advertisements watch on-demand programming with unavoidable ads? And, more to the point, if they so clearly dislike watching advertisements, why would they watch programming like this at all? Why wouldn’t they use their DVRs to record the same shows as they air live and use that device’s fast-forward function to skip the ads? Cox President Pat Esser says viewers will understand the transaction it’s proposing. “People want their content, and they want it for free, but I think they realize that there is a business model to keep intact for them to get it that way,” he told The Wall Street Journal.

We’ll see, I guess. But I hope for Esser’s sake that Cox and other cable operators like it are investigating other ways of solving this problem. Like figuring out how to take advantage of the attention fast-forwarding requires. Because while DVR users often fast-forward through commercials, the very act of paying attention to what they’re forwarding through vastly increases ad recall. “There’s a pretty good basis for thinking that the active attention required to fast-forward could reinforce brand awareness,” said Kenneth Wilbur, associate professor of marketing at the University of Southern California’s Marshall School of Business. “There can be a real effect on purchasing behavior due to the attention required. … You could see extensive changes coming to creative formats and a great deal of research into how creative can best be adapted to fast-forwarding.”

Could it be Anne Sweeney, the co-chair of Disney Media Networks and president of the Disney-ABC Television Group, whose name constantly pops up in Silicon Valley chatter about the job? The position–which will oversee vast swatches of Yahoo’s consumer-product area, like search, news, information and communications products, as well as international and mobile–would not be a bad choice for Yahoo, given her big media chops and also her record with ABC’s Web initiatives.

She was deeply involved in the move to sell episodes of ABC shows on Apple’s iTunes store (where its “Lost” is the biggest seller) and also the streaming of shows on its Web site. (Using its terrific player, I caught up on all the “Ugly Betty” shows I missed last night and even dipped into the turmoils of the sad-sack Los Angeles yuppies of “What About Brian,” so count me a fan.)

Sweeney also gave two of the best quotes ever from a traditional media exec at a conference late last year. On piracy: “We understand now that piracy is a business model,” said Sweeney. “Pirates compete the same way we do–through quality, price and availability. We don’t like the model, but we realize it’s competitive enough to make it a major competitor going forward.” And, my favorite, on consumer empowerment via technology: “All of us have to continually renew our business in order to renew our brands, because audiences have the upper hand and show no sign of giving it back.”

No, they do not and, to revive Yahoo, top execs have to tattoo that mantra on their backsides.

By way of background, there is a still-open position to lead the recently formed division at the Sunnyvale, Calif.-based company. Late last year, Yahoo reshuffled its management (and jettisoned some). The result was a split of the company into three groups–one tech group headed by CTO Farzad Nazem, the Advertiser and Publisher Group under CFO Sue Decker and an unknown executive to lead its key product consumer areas in search, communications, communities and media in the Audience Group. While Decker is the favorite to eventually replace Chairman and CEO Terry Semel, the Audience Group head would also be a presumable candidate.

Some thought Jeff Weiner, whose title is executive vice president of the network division, would get the nod then and even now, given that his job includes the “consumer-facing” products like communications (email, IM), community (Groups, 360, Flickr, Bix), media (news and information and entertainment), search (Web, Answers, Del.icio.us) and the front door of the whole place. But Weiner’s ascension has not happened, and sources say that makes it unlikely (though not out of the question). Well-liked internally, the hard-working Weiner would be an excellent choice, as would some others inside Yahoo. In any case, the search has been dragging on now five months.

Other people that people mention for the job: Former Cisco exec Mike Volpi and former AOL programming exec Jim Bankoff.

Please see this disclosure related to me and Google.