Coming to a TV set near you: broadband Internet video, says Emerging Media Dynamics president
Aug 14, 2007 2:56 PM
IPTV Update: You say in your report, “Microsoft truly pushed the Internet video-to- TV business ahead on Nov. 6, 2006 when it announced deals wit a slew of TV programmers to reach viewers directly through the Xbox 360 platform and Xbox Live service, bypassing altogether the tradition distributors of video to the TV set.” Then you identify some of the top networks and studios that tied up with Microsoft. This is only one example of traditional program distributors seeking out Internet TV distribution. Coupled with your 2017 projection of 73 million households with access to the Internet through their TVs, what will become of the traditional TV network- affiliate relationship?
Cynthia Brumfield: That’s a very interesting question. I think that’s the $64,000 question. That’s the big threat from Internet video. Internet video is a destabilizing development for everybody in the television business, in the entertainment business, in the Hollywood industry, because it is a way of taking power away from the aggregators, the networks, the studios, the motion picture theaters and letting consumers have far more endless choices than they ever did before.
And it sort of destabilizes the market. It fractionalizes everything, and it allows control to slip away from what previously had been a very few number of players involved in getting video — news, entertainment and sports — out to consumers.
The problem is that Internet video really today can only be watched on PCs. Most consumers don’t consider that to be a satisfactory experience, so you have to make that leap from the PC to the TV. Once you do that, the concept of a network and the concept of a channel dies. And it is already dying. Certainly pay per view, video on demand, and the DVD and the VCR before that started nibbling away at this concept of an aggregated, edited channel put out by a fairly powerful intermediary in the entertainment, news and sports business.
Bringing the Internet to a TV set ultimately demolishes the concept of a channel. We’re not talking about the short term. We’re not talking about five years. No, I don’t think you are going to get rid of linear channels or networks or the existing
model in five years, but you’re going to weaken it. Then 10 years from now, you are
going to very substantially have weakened it. Twenty years from now, the notion of
a channel will seem as quaint to children as the notion of broadcast stations seem to
children now. I don’t think they know the difference between a FOX cable channel
and a FOX broadcast channel. In fact, the concept of an over-the-air TV station is not
one a teenager today grasps. And I think 20 years from now, the concept of a
channel might have that same aura about it. Children will have grown up with a lot
of program choices, but plopping down and watching — according to somebody
else’s schedule — program after program, and it might not be one you’d choose to
watch, will not exist.
IPTV Update: It seems that the local affiliate is the most threatened in this scenario, not the network that produces programming.
Cynthia Brumfield: There’s no question the local television station is going to have the hardest time of every player in the food chain, and they already are. Local broadcasting is already suffering fairly dramatically. They are already being bypassed by their network suppliers. FOX, ABC, NBC and CBS all put their prime-time programming on the Internet. What does that do to the local affiliate? Kind of leaves them in the lurch if they don’t happen to be owned by one of those entities.
I think as time goes on, the channel aggregator, the local channel not the network, is going to be in a tough spot. The network is in far better shape because they are the brand and they have the relationship. The local XYZ station doesn’t have that ability, and its previous role existed to pick and choose among content providers’ line-ups so its viewers could watch on a chronological basis hour by hour. That idea is going away, and they are the ones who will have to morph into some other sort of entity.
Radio stations had to morph into dramatically different entities over the last 60 years. Local TV stations are going to have to serve some other purpose, and they are at the bottom of the heap when it comes to bearing the brunt of all these changes.
IPTV Update: Will the Internet be able to sustain such a large number of Internet TV users — i.e. bandwidth requirements, switching, etc.?
Cynthia Brumfield: The Internet itself, I don’t think there are any capacity restraints in the backbone. The issue is the last mile and even the last 50ft. WiFi is not the ideal medium for distributing high-bandwidth content. A lot of the devices we cover in the report connect to the PC or the Internet, but mostly to the PC, through WiFi. So you have that issue.
Then you have the issue of the broadband connection itself. This is a very theoretical issue because I don’t think we are anywhere near it, but if suddenly everybody is watching video on their TV using some form of Internet connection, the 1.5Mb/s DSL connection is going to be inadequate. Even a 7Mb/s cable connection or perhaps even a 15Mb/s FiOS fiber connection to the home may be inadequate. So the real work will have to be done in the last mile and last 50ft.
IPTV Update: Is there anything else you’d like to add?
Cynthia Brumfield: There certainly is this alternative of accessing your TV set in terms of an alternate infrastructure, and broadband providers and television video providers are probably not quite aware of the Trojan Horse capability that some of these devices really hold.
All it takes is one smart entrepreneur or one very successful box, let’s say the Xbox 360 or the Sling Media SlingCatcher. All that really has to happen is for one device to capture consumer imagination, and suddenly there will be a platform in place that completely bypasses cable, satellite and telco to the consumer. It’s not going to happen anytime soon, but the groundwork is certainly being laid.
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