Last week’s Consumer Electronics Show (CES) highlighted a wide range of new Internet-connected TVs, Blu-ray players and other devices, but more important than the devices themselves is the effect that Internet connectivity brings to the consumer experience of watching video. If there’s one thing we learned from CES this year, it’s that there’s a paradigm shift happening in the way consumers discover and access content.
Cable companies, so used to having their program guides being the first thing people see when they turn on their TVs, need to get used to a new reality: It’s not the distributor that owns the relationship with the consumer anymore; it’s the TV manufacturer. In other words, it’s an app world and the cable companies just live in it.
On a new generation of connected TVs, cable programming is not the first or the only piece of content available to the consumer; instead, the cable company is just one of many on-screen choices available, including games, widgets and even over-the-top viewing options from companies like Netflix (s NFLX) and Hulu Plus. As more people purchase these connected sets, that will increasingly put pressure on the old guard to differentiate what they have to offer from alternative content providers.
Perhaps seeing the coming shift, big cable players like Comcast (s CMCSA) and Time Warner Cable (s TWC) have announced new applications on connected TVs, Blu-ray players and mobile devices. But by doing so, they’re merely ceding some of the control they’ve long enjoyed in “owning” the customer relationship. That control now increasingly belongs to the consumer electronics manufacturer, which is now the deciding factor for what content options consumers see when they turn on their TV sets. In this strange new world, consumer electronics manufacturers are the new gatekeepers.
That’s a frightening thought for cable distributors, and for content owners alike. Which might be why so many cable and programming execs have come out to complain about the app experience on connected TVs, saying it’s confusing or “not ready for primetime.” (Of course, this is coming from the same industry that just put us through 15 years of navigating 500 channels on an up-and-down grid.) It’s not just that the consumer experience isn’t up to par; it’s that the new paradigm undercuts their hold on the TV audience.
We’ve discussed the potential results of this shift before: T he cable program guide will become less important as a content discovery mechanism, and personalized recommendations will become a larger part of the way that consumers find videos they want to watch. In the world in which content is democratized and served up based on viewer interest rather than as part of a programming lineup, the difference between content created for the web and content created for TV gets stripped away, which also has the potential to strip away the power of big cable and satellite distributors and big media conglomerates.
Unfortunately for cable and media companies, this is a shift that will happen with or without them. Some cable companies, like Comcast and Time Warner Cable, are trying to jump on board as early as possible in hopes of capturing some of the TV manufacturers’ audience before it’s too late. And there are signs that some media companies, like Disney, (s DIS) may find their own way to TV sets with apps that are separate from what cable companies offer. But those standing on the sidelines might have a hard time holding onto their audience when the cable program guide is no longer the first thing they see when they turn on the TV.
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