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Summary:

Google chairman Eric Schmidt was on a diplomacy mission to UK broadcasters late last week. His pitch? The Internet will make TV more personal, more social and enable better monetization and measurement opportunities. And Google wants to help them take advantage of those changes.

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Google chairman Eric Schmidt was on a diplomacy mission last week, reaching out to broadcasters in the UK and urging them to embrace changes in the way that viewers watch TV, as enabled by the Internet. Giving the MacTaggart Lecture at the Edinburgh International Television Festival, Schmidt provided a view into how TV is changing and made a plea for broadcasters to work with the search giant to enable that future.

Reading the transcript or watching a video of the lecture (Schmidt’s speech starts about 36 minutes in), you get the feeling that this is no less than a manifesto, not just on the way things will be but also on the way they should be. There’s a feeling of inevitability to it. The message to broadcasters, in light of this, seems to be that they can either get on board with technological change or risk being left behind.

“You ignore the Internet at your peril,” Schmidt told the audience. “The Internet is fundamental to the future of television for one simple reason: because it’s what people want.” For Schmidt, people want the experience that the Internet brings, because it enables things that traditional TV cannot: “It makes TV more personal, more participative, more pertinent.”

The future of choice

While TV programming is limited by time and the number of TV networks, the Internet provides the possibility of a near-infinite amount of content to choose from. And, given the on-demand way that viewers are increasingly viewing content — through prerecorded shows on their DVRs, video-on-demand selections through their cable provider or streaming on the Internet — there needs to be a way to sort through those content choices.

For years broadcasters have largely tried to control viewer choices with lead-ins and other editorial hooks, but the vast number of content choices calls for a new way of discovering content. We’ve long argued that personalized recommendations will be vital to the way that viewers discover video in the future, and it seems that Schmidt agrees with us:

Online, through a combination of algorithms and editorial nudges, suggestions could be individually crafted to suit your interests and needs. The more you watch and share, the more chances the system has to learn, and the better its predictions get. Taken to the ultimate, it would be like the perfect TV channel: always exciting, always relevant — sometimes serendipitous — always worth your time.

Schmidt cites the success of Netflix, which doesn’t have a lot of new content and yet has survived and even flourished through a robust recommendations engine. According to Schmidt, around 60 percent of Netflix views are a result of Netflix’s personalized recommendations, showing that the one-size-fits-all approach to linear TV programming might not be the best way to reach audiences in the future.

The future of interactivity

While viewing is destined to become more personal, it’s also becoming more social. That might seem like a bit of a paradox, but at the same time that viewers are watching content that is more relevant to them, they are also sharing what they’re viewing with others.

This interactivity is not being driven by the TV screen itself but through second screens that viewers are using while watching TV. That includes tapping into social networks on laptops and on mobile phones, commenting on blogs and forums, and even chatting with friends in real time. Schmidt pointed to Google+ Hangouts as one example of how viewers can socially interact while watching video together, and you can see how the same type of technology could be incorporated into future versions of Google TV devices for live video viewing.

While viewers clearly want social interactivity, it’s also good for broadcasters, Schmidt said. “Trending hashtags raise awareness of shows, helping boost ratings. It can be metric for viewer engagement, a vehicle for instant feedback, a channel for reaching people outside broadcast times. It can also provide a great incentive for watching live.”

The future of measurement and monetization

Broadcasters can benefit not only from the way the Internet allows viewers to discover and interact with content but also from vast new opportunities for monetization. That includes selling directly to viewers through digital downloads or the ability to more profitably sell ads against content.

Today there’s a huge premium spent on advertising against the first airing of a TV show, in part because that airing is most likely to aggregate the largest audience. But Schmidt argues that it shouldn’t matter when viewers first watch a show. “If it’s the first time you watch a show, it’s first run to you, no matter how many times it has been broadcast. As TV becomes more personalized, ad models should adjust accordingly.”

Note also that this shift means a change in the way that viewing and ad effectiveness is measured. Nielsen, which provides the ratings currency that is used for selling TV ads in the U.S., is investing heavily in multiscreen measurement, but Schmidt said that Google is trying to understand how to measure effectiveness across multiple platforms as well.

Will broadcasters get on board?

There’s no doubt that the TV industry is in the midst of some fundamental shifts in the way viewers find and interact with video content. And there’s a huge opportunity for broadcasters to use Internet technologies to enable new experiences and better reach a more engaged audience.

Schmidt gave many examples of how content industries fought change over the past century, from newspapers fighting with radio stations in the 1920s and ’30s to Hollywood and broadcasters arguing that technologies like the VCR and TiVo would destroy their businesses.

Although TV viewing will inevitably change as the Internet enables new habits, Schmidt argues that broadcasters should see the opportunity and not the danger that such a change brings. “History shows that in the face of new technology, those who adapt their business models don’t just survive, they prosper,” Schmidt said.

But how soon those businesses will adapt, and how Google fits into their plans, is still very much an open question.

Photos courtesy of Flickr users Ian Munroe and padsbrother

  1. Nice recap, Ryan. Google’s vision of the viewer scenario with regard to online and social viewing is in line with common wisdom. Left unsaid: how advertisers will have to rethink brand campaigns with extended viewing windows, and how ad networks, including Google’s, will deliver and measure those extended impressions. Like you said, some open questions.

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  2. Totally agree. Although I believe interactivity will be a combination of interactive elements on the screen and a corresponding element on a second device. And not just for advertisement, but also for commerce, social, additional content….

    Tzahi,
    attracTV

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  3. It’s just one more way to get you data.

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  4. 最终冰器红豆 Monday, August 29, 2011

    Technology enables personalized TV experience, but wait, we are not living for the technology but vice versa! Choice is good, but we don’t need to embrace them all. TV news is good but there are many people prefer to read newspaper. Thanks Mr. Schimidt, please don’t urge me to change for your grand vision.

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  5. While I like the idea of all on demand television, it’d cost me about twice as much or more to use use my Apple TV exclusively rather than Sky. I hope google’s plan goes well though, as it’s something I’d like to see.

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  6. Currently the Media Cartel doesn’t care if they entertain people (especially women 52% of the population). Their business goals are to block the ability of everyone else to get a program to market and then to place their own advertising venues into peoples homes via their bundled cable packages. They consider the men who buy ads customers, you are just a stupid sucker who is willing to pay to have advertising venues in your home. I can’t wait for easily available, cheap internet TV. But since Internet TV is based on improving the individual experience of TV viewers and the current system is based on placing “one size fits all men” ad venues in more homes it isn’t possible for the Media Cartel to adapt.

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    1. have you heard of roku? (www.roku.com)

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  7. Female head of household homes, will be the first to adopt internet TV because they are so poorly served by the current system. How will the Media Cartel adapt to women consumers no longer being forced to subsidize expensive “one size fits all men” content in order to get Disney channel for their kids?

    I also think this could revolutionize advertising to women. Currently women’s channels are unwatchable because the shows are all punctuated every 5 mins with tit and asspirational advertising clearly designed by men to sell women their part in a male sex fantasy. I guess the men who make these offensive ads don’t understand that women have their own sexual fantasies and aren’t interested in being force fed the world through male eyes. Market research on what women want to watch and what women find offensive is long long long overdue. Of course that is because men know that they know what women want roflmao!

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    1. Wow Bes what man pissed in your cornflakes this morning?
      Most ads I see on TV are geared towards women, in fact most programming is geared toward women(reality shows, talk shows, etc).

      All this talk about the way we watch TV is moot as long as the studios control the content, it will be several years before they give internet viewers preference over their cable/sat overlords.

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  8. Pierre de Montesquiou Tuesday, August 30, 2011

    How long Google will need broadcasters?
    Just remember youtube’s worldwide deal with the Indian Cricket Premier League.
    They’ll soon buy a whole Madmen season on the same level…

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  9. And, in the meantime, the underprivileged get further behind as TV gets more and more expensive and beyond anyone on Welfare or Social Security or Disability to pay for.

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  10. Shawn dear, just because I am tired of subsidizing expensive men’s content on basic cable doesn’t mean I don’t like men, I also don’t want to pay for craptastic “women’s content”. I simply think the men who run the Media Cartel will absolutely be unable to compete as soon as their monopoly delivery system breaks down. As far as most content being geared towards women viewers, no it is not. Most content is written, casting couched, produced, directed, and edited by men. The concepts for new shows are ultimately approved by men. Women simply don’t want to waste their time watching the world through the distorted vision of men, it is that simple. The Media Cartel is a business that has made no effort to adapt to the changing roles of women in the past 30 years and as soon as their Monopoly delivery system breaks they will go down fast. Women’s content is not whatever men say it is, it is only “content women will pay to consume”. As far as advertising goes men dominate and even the few women in advertising advance their careers not by being innovative but by selling ideas men want to hear to men. In order to break out of the the vicious cycle of underserving women consumers who don’t watch and don’t want the vast load of sexist crap foisted off as “women’s content” the Media Cartel would have to change their MO of asking a bunch of guys for ideas for women’s shows, running those ideas past a bunch of gay men for their fabulously fake feminine perspective and then running the results of that past a bunch of women who benefit economically from telling men what they want to hear. So far men like Shawn haven’t even figured out there is a problem so that pretty much insures there will be no changes. I am telling you there is a problem with the current system underserving female viewers who don’t want the vast pile of cheap crap you label “Women’s content”. Stick you head in the sand if it makes you happy, I don’t care because my days of subsidizing crap are over.

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