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Summary:

Lots of folks are talking about “exploding TV” right behind Mac Mini and other problems Apple is having with bloggers. Jeff Jarvis, Fred Wilson and Chris Anderson are leading the conversation. I don’t agree – I think the difference has to be made in TV (as […]

Lots of folks are talking about “exploding TV” right behind Mac Mini and other problems Apple is having with bloggers. Jeff Jarvis, Fred Wilson and Chris Anderson are leading the conversation. I don’t agree – I think the difference has to be made in TV (as we know it) and content created and distributed on the Internet by individuals and indies.

Here are some actual numbers which show that exploding TV is one with a really long and I mean long fuse. An average American watches four hours of television and assuming that he gets to pick and choose at a rate of 99 cents an hour, well his/her average spend is going to be about $1465 a year or about $120 a month. Add the download costs – say a good 6 megabits connection, which is about $50 a month, you are looking at $170 a month. Average cable bill is about $52 a month. Not including the cost of specialized gear like darling of the moment, Akimbo or TiVo, the delta is just too wide.

Unlimited television, which can be manipulated at say extra $10 a month if you get the cable DVR, versus a micro-niche download model? Take your pick! I guess, its safe to say that television is not going to change from being a push to pull model for some time. However, it might go from total push to some manipulate status. Remember, there are only 2 million TiVo customers – and given the time and marketing dollars that company has spent, it should be a cautionary tale. Moreover, it is a model which is very US centric. And one more thing….

In the US Digital TV report, eMarketer Senior Analyst Ben Macklin describes the slow start of VOD: “Watching any movie or TV show at any time of the day or night with full DVD functionality is undoubtedly an attractive proposition for most consumers, but VOD has not turned out to be the cash cow cable operators were hoping for, at least not yet. While VOD has become widely available across the cable footprint in 2004 (satellite TV operators, such as DIRECTV, do not have the bandwidth to offer on-demand services). eMarketer estimates less than 10% of cable TV households were regular users of the service in early 2004. Furthermore, cable operators are providing increasing amounts of VOD content for free, indicating, perhaps, that the future of VOD will primarily be a service to reduce churn rather than a significant revenue generator in the short term.” (eMarketer report link)

Does it mean it will never happen? Can’t say that, but safely can say this whole explosion might take at least five years at the very least. And like the Bells, I don’t take the television companies lightly – they always figure out a way to subsume the revolution.

  1. what is the cost of streaming/downloading v. p2p via bittorrent?

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  2. On the other hand, I only watch 4-8 hours of TV a week and have to pay $50 a month for digital cable. I do have a Tivo and it would be nice to download / pull the shows that I watch regulary. Paying $8 a month would be great.

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  3. Zak you have point, however if you watched 8 hours of TV every week or 32 hours every month you be spending $32 at the very least. or lower … depends. You know the shows you want etc, are also subsidized by advertising (which i know you don’t watch ;-) ] this is an economics problem and not a technology problem. the business model is just not there. oh well..

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  4. Math strikes again!

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  5. Broadband costs will go down soon. In Paris you can get a 8 megabits for as little as 15 euro ($20). Content cost for VoD will go down once they have found a way to get advertisement in it.

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  6. Om: You make a few assumptions I don’t make:
    – I do not assume that cable and broadcast go away but that they find themselves faced with new pressure from very cheap and plentiful programming distributed by new means; that is what makes the economics of TV start to fizzle and explode… that and the added choice and control consumers get, which is explosive itself.
    – I do not assume that all this TV is necessarily of full broadcast quality yet. Some of it will be streamed online; some of it will be seen on mobile devices; some of it will then be of a quality somewhere between broadcast and satphone (which, of course, is a wide gulf, indeed).
    – I do not assume that much of this is live. Thus, it can be distributed via BitTorrent or the equivalent in the background and can be distributed via shared downstream bandwidth.
    The REAL point is that once there is a viable alternative network in the distributed network of the internet — the network no one owns — then the economic advantage — no, stranglehold — that one holds by owning the means of distribution is eroded. Now a programmer can go to Comcast or directly to the consumer. That is what is explosive. It changes the essence of this deal-driven industry and makes it consumer-driven.
    Note how a few years ago, no programmer would have DARED put any programming on the internet; their MSO deals forbade it. Now they are recognizing — with great fear — the competition of programming via the internet and they are running to stake territory there. But their programming is still expensive; their MSO deals are still strangling; their talent deals are still restrictive.
    This won’t come with a new Sopranos or with the NFL. It will come with niche programming: Compare the X-hundred-K dollars it takes to produce, say, Trading Spaces, and the deals it takes to get it distributed with the new model: X-hundred-OR-thousand dollars to produce the show; distribution via the network no one owns; marketing via viral blogs and metadata; an extremely small nut that can be made profitable by small advertising. That will create tremendous competitive pressure.
    That is the explosion.
    Broadcast and cable networks will exist just as newspapers exist post internet. But newspapers have lost incredible revenue to Craigslist, changing the very economics of the industry. That is explosive.

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  7. Exploding – other views

    Since I’m firmly in the camp of changing distribution paradigms, things that balance our unbridled optimism with some skepticism are always a good read. Om Malik (Business 2.0 /www.gigaom.com ) takes a thoughtful look at some of the obstacles in this …

    COMMENT:
    AUTHOR: Wayne E. Yang

    I think some people are being too quick to sound the death knell of traditional media and other content gatekeepers. We all know that networks are characterized by hubs, and there will probably always be media participants to serve in the role of media hubs / portals. The question really is over who will win out to become and control those new hubs. Note how some traditional players are attempting to co-opt new media players: for instance, in the way that newspapers like Le Monde are attempting to become the jumping-off point for some of their local bloggers.
    Additionally, while the explosion of television and other traditional forms of media means that there will continue to be opportunities for the creation of alternative content, traditional companies will retain a role in the production of more polished content, since it will be difficult to best their ability to attract larger sums of production capital.

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