The Future of Television & The Digital Living Room

Posted on Oct 19, 2010 | 133 comments


Dana Settle & I hosted a dinner with some of the biggest companies in entertainment to talk about the future of television, film & digital media.  Michael Ovitz, the co-founder of CAA was the keynote speaker.

Nobody can predict 100% what the future of television will be so I won’t pretend that I know the answers.  But I do know that it will form a huge basis of the future of the Internet, how we consume media, how we communicate with friends, how we play games and how we shop.  Video will be inextricably linked to the future of the Internet and consumption between PCs, mobile devices and TVs will merge.  Note that I didn’t say there will be total “convergence” – but I believe the services will inter-operate.

The digital living room battle will take place over the next 5-10 years, not just the next 1-2.  But with the introduction of Apple TV, Google TV, the Boxee Box & other initiatives it’s clear that this battle will heat up in 2011.  The following is not meant to be a deep dive but rather a framework for understanding the issues.  This is where the digital media puck is going.

While we won’t get through all of this, here are some of the issues in the industry that I plan to bring up and ones I hope we’ll discuss tomorrow:

1. “Over the Top” video distribution –  Apple TV is brand new and is priced at $99.  Given how Apple’s products are normally delivered to near perfection it is likely to be a huge holiday hit this year.  While their past efforts at Apple TV have been mediocre it seems clear that this time they’re really trying to get it right.  That said, Apple will remain a closed system designed to drive media consumption through a closed iTunes system and a take a toll for media distribution.

The device itself will have no storage.  So without my weighing into the pro’s / con’s of this I can say that I believe it will capture a large segment of the market but leave room for “open platforms” to play a big role.

Just as in the mobile battle when Apple goes closed it creates an opportunity for somebody that is substantively open.  Enter Google.  If you’re an OEM who wants to move more hardware but you don’t have the muscle to create an entire media ecosystem then you’re best off finding a partner who can build a software OS, app platform and search capabilities.

So it is unsurprising to see companies like Sony, Logitech & Intel partner with Google.  Google balances the universe and helps all of the hardware, software and media companies ensure it isn’t a “one horse race.”

That said, it would be an understatement to say that traditional media is skeptical about Google’s benevolence and many fear a world in which video content margins are crushed in the way that print & music have been with the primary beneficiary having been Google.  So while they enjoy a race with two major brands competing they also have three other strategies they’ll pursue.

  • they’ll try to “move up the stack” and provide some of these services themselves.  Thus you see television manufacturers rushing to create content ecosystems, app platforms, TV OS’s and Internet offerings
  • they’ll continue to partner with the MSO’s: tradition cable & satellite providers as well as the new FiOS offerings from Telcos.  The MSO’s are today’s distribution platforms and they still have a lot of muscle in the ensuing years
  • they’ll continue to look for independent technology partners.  They will find the Hobbesian power relationship more palatable than strengthening what they consider their “frenemies” (Apple & Google) and as a result will work with independent players like Boxee.

I have always thought there was room for an independent success story like Boxee or someone similar.  I’ve always believed that such a player would only succeed if they could capture an enthusiastic user base that feels compelled to use their platform to discover and consume content.  Clearly Boxee captured the imagination of this early-mover user base 2 years ago.  The launch of their new Boxee Box in November and the user acceptance of that will be telling for their future development.

2. Attempts at “moving up the stack” – In 1997 I led a project to help senior management at British Telecom define its Internet strategy.  I did some market sizing analysis and wrote a strategy paper called, “It’s about the meat & potatoes, not the sex & sizzle.”  I argued that if BT was focused there would be a large business in access services (dial up, ISDN and the equivalent of T1’s), hosting services and other infrastructure related products that would be very profitable and they had a great chance to corner the market on a high-market growth business.

My paper warned of the dangers of trying to “move up the stack” and become a content company.  At the time all telco’s were envious of Yahoo! and Excite in particular as well as all of the Internet companies with grandiose stock market valuations.  The attitude was “I’ll be damned if those young kids are going to get rich off of our infrastructure.”  Needless to say BT didn’t follow the advice of my paper and it went bananas for content deals signing a string of money-losing content partnerships.  I guess shareholders would have probably punished them for being boring and prudent.

Fast forward nearly a decade and it was unsurprising to me to see the death grip that global mobile operators placed over the handsets.  They threatened any hardware manufacturer with not putting anything but operator approved software on the phones.  In this way they locked down the device (they controlled the phone distribution market through owning retail stores and subsidizing handset costs).  The mobile operators were run largely by the same people who ran the wireline telcos a decade early and still felt screwed by the tech industry.  The created a hegemony that delayed innovation until January 2007 when the iPhone was introduced.

The iPhone broke the hegemony with hardware & software that had no telco software on it – thus the Faustian AT&T / Apple iPhone deal.  They both gained.  They both lost.  But ultimately we all won because consumers finally had enough of locked down, crappy software from telcos.  Imagine how much mobile telco money still exists in meat & potatoes.  Imagine if one of them had created a Skype competitor.

So entering 2011 why does this matter?  I see a repeat from television manufacturers and MSO’s.  They know that the world is changing and they’re shit scared of what that means for hardware and pipeline providers.  The hardware manufacturers are on razor-thin margins and see that having apps on TVs will be a way to build direct relationships with consumers and built higher margin businesses.  It’s hard to blame them.  But none of this will stick.  Not because they are bad companies – but because software is not a core competency.

They will never succeed in these businesses.  And I think the smartest hardware providers & MSOs are the ones that will sign unique and daring partnerships with startup technology firms.  But the whole market will develop more slowly as we watch this bum fight take place.  Get your seats ringside – it will take place over the next 2-3 years.

3. The “second screen” – One of the most exciting developments in television & media to me will be “second screen” technologies built initially on iPads and extended to the plethora of devices we’ll see over the next 3-5 years.  And this will be real innovation & revolutionary in the way that the iPad is, rather than just being incremental.  It will involve 3d (see Nintendo’s moves, for example).  You’ll likely see applications that draw you into interactive experiences, connect you to your social networks, help you browse your TV better and create a richer media experience overall.

I think we’re in the 1st inning of second screen technologies & applications and this movement will create whole new experiences that the 50+ crowd will lament as “ruining the TV experience.”  The 15-30 crowd will feel like this is what TV was meant to be – social.  In my opinion this will replicate what most of us 40+ year olds already experienced when we were in our 20’s.  We’ll have the post show water cooler effect that was popular in the Seinfeld era.  We’ll have simultaneous viewing parties like we did for Friends or Melrose Place.  But most of it will be virtual.

4. Content bundling –  When there was one pipe capable of broadband delivery leading into our house the person who controlled this could control what we saw and it was delivered in a linear timeframe.  As a result it became popular to bundle content together and get us to pay for “packages” when all we really wanted was The Sopranos or ESPN.  We all saw what happened when technology let us buy singles on iTunes rather than whole albums pushed by record labels.  No prizes for guessing what the future holds for video.  The idea of forced bundles will seem archaic.  Smart companies will figure this out early.  The “Innovator’s Dilemma” will hold others back.  The bundle is the walking dead.  Only question is how long it survives.

5. Torso TV - Television was designed for a mass audience in a single country.  One of the things that has fascinated me over the past couple of years is the rise of global content and its ability to develop a “niche” global audience that is relevant.  Think of about the rise of Japanese Anime, Spanish Novelas, Korean Drama or the rise of Bollywood entertainment from India.  It’s not a mass, mainstream audience but I would argue that it’s “global torso” content that will be meaningful at scale.  Websites like ViiKii, which have been launched to create realtime translations of shows by fan-subbers, have huge followings already.  And I’m sure that this is what popularized the SlingBox in the first place.  British, India & Pakistani ex-pats on a global scale want to watch cricket.

I believe that NetFlix has won the battle for the “head end” of content from films.  They have such a strong base of subscribers and their strategy of “Netflix everywhere” is brilliant.  We watch it on the iPad.  We pause.  We turn on our TV and get it streamed through the Wii.  And it’s available also on the Apple TV.  It’s on Boxee.  It’s effen awesome.  Game over.  IMO.  But the torso?  It’s up for grabs.  And I think players like Boxee understand this is a juicy and valuable market. As does ViiKii and countless others racing to serve fragmented audiences the good stuff.

6. YouTube meets the television – It was funny to me to hear people say for years that “YouTube had no business model.”  It made me laugh because it is so obvious when you capture an entire market of passionate consumers in any market – especially in video – that in the long-run it becomes a huge business.  So many people are stuck in the mindset that YouTube is UGC (as defined as people uploading silly videos or watching Coke & Mentos explode) and that brands don’t want to advertise on UGC.

And meanwhile I’ve seen several LA startups focus on creating low-cost video production & distribution houses.  They are quietly accumulating audiences in the same way that Zynga did on Facebook.  And if you think that these guys can’t monetize then I’ll refer you to everybody’s arguments about games – that free-to-play would never work in the US.  And meanwhile Zynga is one of the fastest growing companies in US history.

What Zynga understood is that you need to go where the consumers are, capture those audiences, build a direct relationship and then diversify channel partners.  This is happening in spades now on YouTube as a new generation of viewers is being served up by a new generation of TV production houses that are currently under the radar screen of many people.  This will change in the next 2 years.

And as they explode and become bigger companies YouTube becomes even more of a Juggernaut.  And don’t forget that as the Internet meets TV, YouTube will continue to be a brand to be reckoned with served up by Google TVs.

7. Content discovery – new metaphors – Anybody who tries to search for a program to watch on TV on an EPG (electronic programming guide) knows just how bad they are for finding “the good stuff.”  And for a long time the Internet has been that way, too.  The best online video search tool (in terms of usability) that I’ve seen is Clicker.  By a long shot.  Do a little test yourself.  Trying searching for something on Hulu.  Then try the same search on Clicker.  Try it first for content that is on Hulu and then for content that is not.  And Hulu’s search is actually reasonable.

Much of web video search is bad at finding “the good stuff” including YouTube itself.  Try searching “Dora the Explorer” in YouTube and then try it on Clicker.  And then try it on Hulu.  I feel confident that any user trying this will not go back from Clicker (no, I’m not an investor).

But as the Internet & TV merge it will be a major fight for how you find the good stuff.  Google isn’t that good at video search today.  Will this change in a world of Google TV’s?  Boxee prides itself on social TV & content discovery.  Will their next version blow us away and be the way we search our TVs?  Will the MSO / EPG world improve (answer: not likely)?  What about discovering content on our TVs via Twitter or Facebook?  Or some unforeseen technology?  Will we discover stuff through second-screen apps?

Technology such as that being created by Matt Mireles over at SpeakerText is trying to make video transcriptions and make video more searchable and discoverable.  Imagine that world.  I’m sure others are focused on solving this great problem.

The amazing thing about content discovery is that it can alter what is actually viewed and thus becomes a powerful broker in the new TV era where pipes don’t have a stranglehold on eyeballs.

I have no idea who will win.  I only know who won’t.

8. Gaming & TV – One of the great unknowns for me is what role the console manufacturers have on our future media consumptions experiences.  There are about 60 million 7th generatation game consoles in the US between the Nintendo Wii, Xbox and PlayStations against about 110 million homes.

And while free-to-play games are becoming hugely popular and as my own kids spend as much time playing Angry Birds (you can’t tell me you don’t want one of these – I already pre-ordered 2 for Hanukkah!) on the iPad now as they do Super Mario Bros. on the Wii – it’s clear that the games manufacturers will find a way to be hugely relevant in the digital living room fight.

As will the media companies.  Disney acquired Playdom and Club Penguin.  EA bought PlayFish.  Google has had long-standing rumors around Zynga.  It’s clear that games will feature in the Internet meets TV meets Video world.  They’re all battling for mindshare & share of wallet.  Watch for continued game creep into TV.

Don’t believe me?  Check out what the younger generation does on Machinima these days.  People record their game experiences and make them into videos to share. Games meets videos meets TV.  To make it easier for you to understand – check out this video (NSFW – language – but good graphics & example of future. You can get through first 1.20 safely).

9. Social media meets digital content – I think the social media story is more obvious in many ways.  It’s clear that when people watch movies now they Tweet about it when they get out and this has an impact on box office sales.  Social media buzz can boost or bury content.  The current generation of players are trying to skate with the puck at their feet by simply offering “check-ins for TV” the next generation will connect us in ways we don’t even imagine now.  I’ve seen some really innovative companies trying to solve this social TV problem but their stuff is so new I feel I can’t talk about it out of fairness to them.  But I’m hugely interested to watch how this space evolves.

10. The changing nature of content & the role of the narrative – A lot of Hollywood people say that the traditional “narrative” of filmed entertainment will hold in the Internet meets TV world.  They say that long-form storytelling will be where the ad money will flow and people will still want to consume professionally written, edited and produced content.

While I agree that there is a bright future for the talent that is uniquely in Los Angeles I think the future of TV & Film will be as different as the transition from radio to TV was.  As is widely known “many of the earliest TV programs were modified versions of well-established radio shows.”  Why wouldn’t we think that 50 years from now our initial Internet meets TV shows won’t seem just as quaint.  Consider:

  • The 22-minute format with 8 minutes of 30-second commercials was designed for linear programming.  Why is the number 22 magic?  In a non-linear world do we need a standard length?
  • The world is filled with amazing writers, directors, actors and producers.  Many of them don’t have the money or access to be in Hollywood or the ones that are here lack the ability to reach an audience.  Companies like Filmaka have been trying to solve this problem.
  • What happens when content production & distribution is easy to professionally produce and distribute at mass low-cost scale?  Will we still have predictable story lines?  Or can we develop more fragmented content to meet the needs of fragmented audiences and interest groups?
  • What happens in a world where content producers have a direct relationship with the audience and can involve the audience directly in story creation?  Or maybe even as wacky as involving the audience in the story itself?
  • Isn’t Arcade Fire’s Wilderness Downtown already an example of the future where you can involve customized assets to an audience?  We each see a similar story but with different backgrounds, characters or maybe even music? In a world where the house that I grew up in can play a role in the story (as with Wilderness Downtown) – anything is possible.  Isn’t it obvious that content customization to the audience is the future?

I’m such a big believer in the power of writing, editing and producing.  When I’m given the choice I always watch independent film with complex characters and non-cliche story lines.  I see a future in which Hollywood still is the center of global video content creation in the same way that Silicon Valley remains the center of technology development.  But democratization of production & distribution will clearly change the world as we know it today.

And I’m excited to participate in that revolution.

  • MHSzymczyk

    Hi Mark – thanks for the reply. Zugara is an Augmented Reality Software developer though we have a background as an interactive marketing company so approach the AR space a bit differently. We're launching our new site in a week (http://zuglinux.zugara.com/zdotcom/) but this gives a good sense of how we're looking to use AR in e-commerce, gaming (like Kinect), and video conferencing. We're down in Culver City so would appreciate any time you might have to chat or meet up in person (AR demos always work best when you interact with them). I sent an email to Tasha at GRP trying to contact you that way, but hadn't heard anything back yet..

    Matt

  • Kylepearson

    Here's my idea for the future of watching sports: Pick your broadcasters.

    Why not?? If I want to listen to Hometown Harrie vs the droll ESPN guy, why not? Well obviously because the network pays them, they read ad script etc… But still, I would LOVE to listen to a Celtics game commentated on by Bill Simmons rather than the Jackson and Van Gundy duo.

    A consumer could just tap into their narrator-of-choice's feed like a web cast and watch the game with their preferred narrator talking. Open it up to anybody with high quality microphones, the top commentators can get sponsored and read ads tailored to their audience, do a rev share with the distributor…

  • http://www.metamorphblog.com Matt Mireles

    Hi Mark,

    Thanks for the shout out re: SpeakerText! For those you who are interested, here's a live example: http://tcrn.ch/9Pvx5c

    As your post makes clear, I think this space is still in its infant stages of development. It reminds me of where the rest of the web was back in the pre-Google era––there's tons of content, but it's not organized or discoverable in any meaningful way. Video search today reminds me of AltaVista in its heyday. Same with advertising: the stuff that works is branded advertising, which is essentially the old broadcast model ported onto a new medium.

    The common theme here is a general lack of understanding what's actually going on inside of these videos. Until you develop some sort of semantic understanding of the content itself, search, recommendations, and advertising are all going to be constrained. If you can crack this nut, however, then world is yours.

    To do that, you first need to create a layer of textual metadata on top of online video. Ergot, SpeakerText.

    We generate video metadata (transcripts are just the beginning) and then make it interactive & social.

    Now what's different about our approach is that we don't actually believe computers can solve this problem. Many, many people have sunk millions and millions of dollars into speech recognition & computer vision. And outside of a handful of use cases, the stuff doesn't work.

    We're more of the Steve Jobs school of thought regarding the role of computers (at least given today's hardware): “A computer is a bicycle for our minds.” Instead of creating a more intelligent & capable machine, we're creating machines that extends the limits of human intelligence & productivity. Think of it as 21st Century mass production, where workers are crowdsourced and the assembly line is both virtual & intelligent.

    The benefit of this approach is that we can guarantee quality. The question is whether we can deliver on cost. 'Tis an open question, but I––for obvious reasons––am bullish.

    -Matt Mireles
    CEO, SpeakerText
    http://speakertext.com

  • http://mediabastard.wordpress.com C3

    http://mediabastard.wordpress.com/2010/10/14/google-tv-killed-the-video-star-dateline-2015/

    im not so sure you really see the economic fallout…. there is no 10000 fans letting creative content makers earn a living… and writers from print are now either “screaming heads” on tv or blogs..or.. well.. serving enemas at health clinics:)– or coffee at starbucks for those who need decade old metaphores;)

  • jz

    MLB streaming is available on a number of different platforms but, as it currently stands, it's really only a solution for out-of-market customers. All local feeds are subject to blackout restrictions during broadcast and viewer location is verified via IP address.

    Live events appear to be the last stand for broadcast television. Without sports, American Idol, Dancing with the Stars, events/award shows, etc. most other content isn't so time-sensitive that it can't be time-shifted. At least not for the price we're currently paying for it.

  • DavidLarkin

    Terrific post. This is an incredibly dynamic landscape. A lot of what is holding back the space on the premium movie and TV side is not technical, but contractual and business issues. HBO for example, holds cable and Internet rights to films from Warner Bros., 20th Century Fox and Universal Pictures for years to come. Wal -Mart, as the largest seller of DVDs, exerts powerful pressure on studios wary of offending them on pricing issues. Now that they have acquired VUDU, there may be a lot more experimentation by them to create a digital entertainment business that may be a model for other services, but by sheer market power they will have a huge influence. Many films have rights tied up for years in other ways, resulting in the convoluted film rental policies on iTunes that match the pay per view conditions in hotel rooms. And the cable companies seems to be slow getting their act together, but they pay content providers 32 billion a year and no train is going to leave without them even if they seem to be mucking things up right now. This industry needs smart entrepreneurs, no doubt. And I can't believe I am saying this – it will also need smart lawyers who will be able to push changes in the rights contracts that have existed for years without much change.

  • http://blog.laundrigo.com/ Tal Baron

    Excellent Post. I think you nailed it on the content discovery piece. As web content and traditional TV content merge, there will have to be a viable way to sort through the massive amount of videos available. I think Clicker is on the right path but the user experience is still built for the web and not intuitive enough to watch on a TV. We're actually working on building a website that's meant to be used on a television and hope to bridge that gap.

  • http://twitter.com/wfjackson3 Willis F Jackson III

    Ho…ly….crap.

    I need to let all of this digest for a bit. One question though. This is a pretty interesting and coherent view of the long term, but surely there are more points of attack for the old money to try and protect their position. Where else do you see them attacking other than vertical integration and bundling?

  • http://twitter.com/wfjackson3 Willis F Jackson III

    Yes, because replacing the GPU in a laptop is not cost efficient and the laptop cost vastly outweighs the GPU cost (for most users). In lots of physical technological hardware, you see an ebb and flow cycle between fragmented device innovation and product integration. People come up with new ideas and innovate, sometimes rapidly, but usually in adjacent or related products and at very different rates. Eventually people start to see the value in a set of products but become encumbered by the lack of specific features. In the case of PDA's, it was the absence of an always on data connection. Since the phone offered that as its primary value, the integration was natural and easy to predict.

    I expect something similar to happen to home entertainment. People are going to build separate devices until the real value and the limitations of different devices are exposed. Then you will see some things integrating with one another to provide better value.

  • http://www.twitter.com/biggiesu Mike Su

    The biggest challenge for the future of television, IMHO, is disrupting business models. Right now TV's business is built on scarcity, windowing, and reselling, while the web is about available anytime, anywhere. TV not only makes money from the first run, but from syndication, international rights, DVDs, iTunes etc. Make the product once, monetize it 100 different ways. The biggest threat with the internet is that not only are you making less on the one core product, but you're also removing all the other ancillary revenue streams. That's why on Hulu Plus you get a situation where you can watch every episode ever of Desperate Housewives, but can't watch a single episode of Community or Chuck, not even the ones you can watch on Hulu.com. This is immensely confusing to the user. So how do you bridge the gap between a user's expectations of web and the content owner's expectations of revenue? What will ultimately give? The easiest answer is production budgets. But what other ways are there around this? Is this even something that studios can fight? Or will they hold on so tight until the floor gives from underneath them?

  • http://www.twitter.com/biggiesu Mike Su

    And if I may reply to my own comment, does this also mean big budget shows we love like Lost or 24 can no longer be produced? Or if the main product, the show, can be a loss leader for other revenue streams? The way live concerts have plugged the gap for the plunging CD sales? Or does it mean that quality stuff becomes a subscription product (ala HBO) while the free stuff becomes cheaper and cheaper to produce?

  • http://technbiz.blogspot.com paramendra
  • http://twitter.com/PookyMedia Pooky Amsterdam

    http://www.appmarket.tv/opinion/741–second-life-treettv-and-the-future-of-tv.html

    This very much a part of that revolution – Sit back & relax has become Lean forward and engage!
    PookyMedia specializes in avatar based viewer log in entertainment.

  • http://www.wrightsteenrod.com @wrightsteenrod

    Do you think the incumbents (studios, broadcasters, MSO's) see the danger in allowing an outsider from Google to start-up capture the winning position in search/curate/recommend race in the video world much like Google captured the search engine race in the text-based web world to the detriment of the traditional media businesses?

  • http://shanacarp.com/essays ShanaC

    I think it is super important to note that as content gets fractured into “the torso”, the second screen effect becomes even more important as a way of delivering content from the primary screen. It stops being secondary, and it starts becoming part of the story itself. We've already been seeing hints of this with the online Comic Books of Heros. In theory one could expand outward from the sociability side of gaming into a world where the story expands through ones sociability.

    I do think it is somewhat dangerous territory to go into what Arcade Fire did and then try translating it into long form storytelling. We now studying neuroscience alongside fiction-one of the reasons we all read, is because we want to know about what goes on in others heads, not ours. we like imagining other places and other people, it helps ground us in our own…Storytelling probably won't lose that flavor for a long time.

  • http://blogs.forrester.com/james_mcquivey James McQ

    AllVid may fail for the same reason CableCard did: the industry was too slow to deploy (cable boxes live for 7 years on average, too costly to replace sooner than that), and they insisted that CableCard devices made by 3rd parties provide no internet access. 6 tuners are of no use in a world where much of what you want to watch is coming over IP from the Internet.

  • http://blogs.forrester.com/james_mcquivey James McQ

    There's another issue to consider re: a la carte. Do people really want that? Consider that Netflix streaming is booming right now in a quasi-bundled approach — pay once for all the content you can possibly consume, bounded only by the hours per day and the amount of content you find interesting. I submit that people are happy to pay for “access to content,” not content itself, in as unlimited a way as possible. That's what a cable subscription is, unlimited access to nearly infinite content options. A la carte would force you to make too many suboptimal choices.

  • http://www.digispeaker.com Jon Smirl

    HDTV video streams are 30-40Mb/s. We're going to be using channels for a long time. Although no one may watch the channels, instead they will go straight to DVR. Channels are a very efficient way of broadcasting a show to millions of people. It takes 40Mb/s bandwidth to do that. A million people watching on Netflix takes 1M * 40Mb/s. Today's Internet can't handle the conversion of all TV viewing to Internet on-demand.

    FCC says they have learned from their mistakes with CableCard and they won't repeat them this time around.

    Cable can't afford to be too arrogant this time either. The value proposition of cable is quickly falling and a lot of people are cutting the cord. I believe the number of people subscribing to cable in the US has fallen for the last couple of months.

    What you want is a blend of the two systems. But we need the cooperation of cable to achieve the blend.

  • http://www.facebook.com/profile.php?id=1198247493 Susan Miller

    As an EP/Writer (just can't wrap around content creator) of Streamy/Telly/Webby winning scripted drama web series, “Anyone But Me”, I so appreciate your piece. Thanks.

  • http://asalesguy.com Keenan

    One thing you omitted was the impact of access. All of these scenario's describe require BB access. OTT, (over the top), Google TV, the XBox all require access that comes from the street, from the D-slam, CO, headend etc.

    This creates an interesting dynamic should the MSO's and Service Providers chose to get in this game and do it well.

    Ironically, today is the first day of the 2Wire, (DSL gateway provider) Pace acquisition (set top box provider). http://www.pace.com/universal/news-events/press-releases/2010/pace-plc-proposed-acquisition-of-2wire-inc/

    This partnership positions the SP's and MSO's well to “own” the digital home, which includes the TV. It also includes the Fridge, the lights, home security, data back up and more. The living room is the holy grail, but it doesn't stop there. The idea that one central “box” can control all things digital, not just the TV makes for a compelling story and currently the SP's and the MSO's own that access. It's not about the BB they can provide, but about the box or the central “gateway” that are in position to own. There is no reason they can't get to many of the things the OTT and others are doing and more.

    Like you, not sure where this is all going to end up, but to omit the impact the SP's and the MSO's leaves out some important pieces.

  • Matt Talbot

    Awesome post Mark. This is such a cool space and I think the innovations we see here will have a huge impact on our culture and the way we consume media. I love the idea of the way artists can integrate the “second screen” to enhance the experience, especially when it comes to live programming (and not American Idol voting live TV, maybe a live concert stream). The right artists using the right technology could lead to some amazing things!

  • Patricia

    You actually can predict the future of television if you understand the internet platform. Learn from there and what's ahead is a no brainer.

  • http://bothsidesofthetable.com msuster

    Your point is exactly THE point. Provide it as a service or other people will provide it free. That's what we learned from the music industry.

  • Dave W Baldwin

    Yanic is right regarding what is to be desired sooner than later. Remember the customer will want the answer immediately and with least amount of effort.

  • Dave W Baldwin

    If nothing else, imagine a father and son watching a game and they get notice something happening on the field at the nephew/cousin's game. The dad says, “send it” and they watch on YouTube. At the same time, they should be able to alert the relatives on the ball field what they're watching and….

    Sky is the limit.

  • http://bothsidesofthetable.com msuster

    All good issues. And people like Marc Cuban have written about the bandwidth problem that I think many underestimate. That said, it presents opportunities for startups as well!

  • http://bothsidesofthetable.com msuster

    It's all about choice. In music you have Rhapsody, iTunes or free. Given only the budled choice of the album people chose free. Given other options they prove willing to pay.

  • http://bothsidesofthetable.com msuster

    long – yes. messy – yes. fight – yes. Grab a seat, ringside. It's going to be fun to watch.

  • http://bothsidesofthetable.com msuster

    can't wait to try out your service. as someone who does video weekly having a searchable transcription would be hugely valuable.

  • http://bothsidesofthetable.com msuster

    you can look at it both ways. you can see a system that finds, finances and promotes a limited number of proven stars. or a democratic system that makes it easier for stars to be discovered. i think the future is more exciting for talent. at least those that aren't already rich & famous.

  • http://bothsidesofthetable.com msuster

    yes, agree. structural industry issues that used to be technical (i.e. time windows due to celluloid, expensive film) have persisted in a digital world. The complexity of this model is going to be disrupted.

  • http://bothsidesofthetable.com msuster

    Yeah, it's designed for the web. And for that it's awesome. Somebody has got to grab the TV space. It's open for the taking. But elusive.

  • http://bothsidesofthetable.com msuster

    they currently have a stranglehold on financing, stars, high-quality production and distribution. those won't break quickly or easily. but disruption often happens suddenly. and unexpectedly.

  • http://bothsidesofthetable.com msuster

    agree 100%. I talked about this is response to a previous content. biggest hurdles are incumbency and business model established at a time of celluloid film. disruption will happen, but not quickly or easily.

  • http://bothsidesofthetable.com msuster

    yes, they see it. but the innovator's dilemma makes radical responses very difficult

  • http://bothsidesofthetable.com msuster

    arcade fire is year's ahead of the curve. but I have no doubt that's what the future holds.

  • http://bothsidesofthetable.com msuster

    You're right. I didn't talk about it in the post but did in response to comments. bandwidth restrictions are a real constraint and marc cuban has written brilliantly on this.

  • Dave W Baldwin

    Good job. It is refreshing to see others who could visualize.

  • http://www.lg15today.blogspot.com modelmotion

    :):):)

  • Dave W Baldwin

    Great Post! As far as my own plug, I warn of too many remote controls ;D.

    Otherwise, this is what will make the next decade so fun…the push to creativity! Remember, the world survived without television and to see some of the television experts today, you can tell they're more than worried.

    We are going to have to address some real issues regarding the transmission of info. To sit now and think the big boys will control what the person at home watches is short sighted. They can put it off as long as they can… confuse the majority (like cellphone carrier commercials) and force their networks and/or the protection of the cable company.

    But look at the present. Networks like MSNBC probably get more viewers per YouTube replays. A certain radio guy can't grow above 30m listeners and figured out his needing to jump to web. In the case of playback and avoiding commercials, you do this knowing you are not watching it the 'moment' of first airing.

    In the case of overpaid writers/directors/actors and so on….it is up to the market to 'disrupt'… and now is the opportunity.

    Excuse the number of thoughts in one paragraph. Next year will be interesting as we see volleys between tablet makers and shots across the bow regarding web television. The smart ones will produce tools that interact in all vehicles involved with delivery to consumer.

  • Ken Ross

    Mark-

    Thanks for mentioning us. Small pet peeve: we're Netflix, not NetFlix. Hope the dinner is great.

    Ken Ross

    Vice President, Corporate Communications

    Netflix, Inc.

    kross@netflix.com

  • Jrisner

    I second that. All great stuff, but particularly the death of bundling can't come soon enough. Would certainly reduce content-distributor issues like the current fox-cablevision spat.

  • http://www.webserials.com Joshua Sikora

    Interesting article, for sure — I really appreciate your analysis of the situation!

    I think most of what's going on right now is just a lot of noise and confusion. That's how it always is when there's no standards and infinite options and it just makes it worse that right now this is true for content producers, distributors, and viewers. We've been through these kinds of revolutions before — but never with so many variables.

    Speaking as a content producer, YouTube has become next to worthless for us. Back in 2007 and 2008 we were pulling in millions of viewers through YouTube. We were one of their first batch of handpicked content partners and we had a lot of great support from their editorial team.

    But since then, the emphasis of the site has totally shifted. Most of the “featured” videos are now paid placements. The design of the site has changed, making it harder for viewers to follow our shows or find future episodes. YouTube is useful for promotion and great if you have money to spend, but as a distribution channel, it's kind of useless.

    Meanwhile, companies like Blip.tv have done an incredible job fostering relationships with independent producers and working hard to create a viable monetization system for content creators. We've all but abandoned YouTube, but continue to work closely with Blip.tv to create a solid (and profitable) home for our independent productions. Check out our site — http://www.webserials.com — not only is it more effective and profitable than YouTube, but we also have complete control over the design and layout for each show, making it a far better viewing experience for our audience. And we can do things that you could never do within the confines of another website.

    This is the big hurdle I think we'll need to overcome in the next couple of years. As long as content creators are bound to destination sites like YouTube and Hulu, content will have to fit into particular boxes. It will limit innovation (consider the impossibility of Arcade Fire's music video on YouTube) and it will leave all of us content creators at the mercy of whatever decisions are being made high up in these companies (as we found when YouTube moved away from supporting the smaller, independent productions).

    Sites like Clicker might be most promising because they give viewers a useful way of finding content on the web without dictating a particular format or site. But we've also found that promoting our shows through Facebook has been particularly effective and gives us a lot of control over how we interact with our fans.

    YouTube and other destination sites were useful in the early days of web video, but now I wonder if we'll ultimately need them, or if web video will just become another part of our web experience. There's no gateway needed for any other website — the gatekeepers are our friends who share links on Facebook, or the bloggers that we read, or the news sites we track. We've been finding useful web content this way for years now. It seems like the next generation of web video will be found in this organic way as well.

    And if that's the case, then that gives us as content creators a lot of freedom to create outside the box, because then we're not bound to making web videos. We can make web experiences that utilize video as just one part of a larger creation. As someone who's trained as a filmmaker, having the other tools of the internet available to me as a storyteller is incredibly liberating… and incredibly exciting.

  • http://metamenus.com Chris F. Brown

    Quite a few people alerted me to this post, and when I hit point #3 “The Second Screen” I saw why.

    At Metabeam (http://metamenus.com) we offer services for real-time distribution and automated navigation assembly in the second screen (we actually support any number of connected devices, so also the 3rd, 4th and 5th screens if you've got a family). We've pioneered applications like synchronous alternate audio, user tagging for a wiki-style commentary track, and we've got a big release coming with The Expendables Nov 23 on DVD/Blu-ray/Digital Copy, where our app is being promoted as a special feature. Our goal is to help media publishers put their metadata to work, and to provide ordinary users with precise control over their media. For more information and a preview of the Expendables app, please see http://metamenus.com.

    Comments welcome!

    @Fredwilson “Swim with sharks and walk at the feet of elephants” …you just described my career…

  • Yaniv

    At BeeTV we have created a Recommendation Engine that is optimized for TV – we also believe in a very “laid back” user experience for TV content discovery – for us it’s not just discovery but it’s the main way to navigate through our channels/content. We have a website at http://bee.tv and an iPhone App called BeeTV Guide – both use our recommendation engine to help people find what to watch on TV/Web/iPhone/iPad…
    Of course, the real magic will happen when our TV interface will be embedded in our TVs (MSOs move slower than turtles)

  • dshen

    All this is great and I agree. But the one thing I do not agree on is that streaming powers this TV/internet for the near future.

    I have the luxury or the non-luxury of being in 3 places in the US a lot. Thus, I've had the opportunity to experience broadband availability in those 3 places, which are NYC, LA, and SF Bay.

    In the SF Bay, I have an amazing 50 Mbps fiber optic line. In LA, I've experienced a private company managed 1.2 Mbps cable modem driven internet line and also experienced a 20 Mbps Time Warner cable modem line. In NYC, I have 1.5 Mbps DSL from Verizon.

    SF Bay:

    Most of the time, this 50 Mbps fiber optic line performs flawlessly. But sometimes, it inexplicably drops in speed. Sometimes, it maintains its speed but its the serving website that is faulty, or the connection from my fiber optic line to the network on which the website is, slows down for some reason. I have seen even Youtube come in hiccuping. We sometimes watch streaming video from China – that sometimes is flicker free and sometimes it just halts and sits there waiting for….something. I do share the line with other tenants in my condo complex so maybe somebody(s) is doing something that takes up nearly all 50 Mbps bandwidth…?

    LA:

    The first line I had was advertised as 1.2 Mbps. It was the only option in the apartment building at the time so I took it. But the download speeds from it were abysmal. No matter how hard I complained, they could not fix it. But yet I would run a speed test to a LA server and it would say 1.2 Mbps and that's what their tech support guys would point to. When I tested against a NYC server, it would drop to less than 500 Mbps. Somehow, whatever network they were running on was poorly connected to the rest of the world.

    The Time Warner serviced cable modem 20 Mbps line is pretty awesome most of the time. But yet, it would also slow down at weird times, causing streaming to hiccup and pause. Other times, the video streaming is pretty awesome. This is also affected by the fact that I share the line with other tenants. Too many people streaming/downloading files/etc, and the whole thing slows down.

    NYC:

    Verizon DSL 1.5 Mbps is pretty darn good. It behaves much faster than 1.5 Mbps which means that being close to NYC based servers makes a big difference. But yet every now and then streaming will be affected and video is interrupted and slow.

    Sometimes it seems that time of day matters. Middle of the day seems slower than middle of the night.

    But my point is that many of these companies are banking on streaming as the future and all I gotta say is, gimme back my Apple TV with the hard drive because the network is way too inconsistent, even in places where technology is more commonplace. I can't imagine what it's like in the middle of the country. And we get mad when normal cable TV goes down even for a little bit… I just want my TV shows to play continuously and without interruption and I cannot depend on internet connectivity to be good enough to do so.

  • Joe

    Regarding the 22 minute show length, I think there is some truth to ratio of commercials to programming, but that's not set in stone either. Most believe that the internet shortens attention spans, so maybe we'll see shorter programming with the same ratio, or a different mix of ad timing within the show.

    I would also suggest that the show's characteristics will likely remain close to the same as long as the unions are involved in production. Folks like SAG have been around for decades and will be around for decades after I die, and are some of the stingiest, unchanging unions in the world. As long as standard agreements control, the end product for the internet will look a lot the end product for television.

    Hope all of you at Digital Hollywood today enjoyed it, minus the weather!

  • http://terezan.tumblr.com/ Tereza

    Mark, curious, as a corollary on the ad side do you predict more variants from :30's? Or maybe more ads that are, say, interactive a la SolveMedia and not just one-way broadcast?

    I think the future tv platform will have a lot more ads-as-games.

  • http://vinodgopinath.wordpress.com/ Vinod Gopinath

    It's not just the hardware. If you are running a service, you are going to offer new features and that could require an update to the software on your device (TV). When was the last time your TVs firmware/software was updated? What if the update stops half way? What if it screws up the system. If you forked out an extra $250 for a net enabled TV, will you tolerate a crash? This is where the TV and a PC difference begin to show up. Not all consumers are willing to look at the TV service like they look at their PCs.
    This is the concern for OEMs since they are not used to this and believe it will up their customer support costs especially with non-tech savvy users. They do have a valid concern…but it is an inevitability that both software service vendors and OEMs will have to come to terms with.
    So till such time consumers get used to looking at their TV sets like they look at their iPhones/MACs there will be a set-top box (non-integrated) market. Integrated devices will work for the real early adopters for now.

  • http://arnoldwaldstein.com awaldstein

    At the end we (the consumer) wins.

    For $99, picked up the AppleTV to play with. Set-up…a snap. Design…beautiful. Interface…super simple. Streaming from network through AirPlay to big screen… cool.

    A first step only but will open the market for a new way of doing things. That's what Apple does.