I recently attended an event in New York presented by videonuze (a highly recommended resource for all things internet video, by the way). The evening’s panel discussion tended to focus primarily on three issues:
- Monetization
- Content aggregation
- Whether overall video consumption will continue to grow to accomodate increased internet video usage, or will terrestrial television (cable and broadcast) start to lose market share
Listening to the panelists, I found myself increasingly struck by fact that they all appeared to be laboring under the assumption that as a technology, internet video is necessarily a function of the personal computer and the web browser (and perhaps someday the smartphone). It wasn’t until moderator Will Richmond explicitly addressed the issue in his final question that what I consider to be the elephant in the room was even mentioned: internet video on the television.
That the subject sat so low on the panelists’ collective radar screen was interesting, only because there happens to be such a major CE push underway right now: a slew of network-enabled hardware was just announced at CES, Adobe’s got Flash running a chip, and several noteworthy cross-industry partnerships have been struck between some pretty heavy hitters – I’ve commented previously on a few of them:
The question was put to the panelists: “Do you see internet video coming to the television in two years?” Answers ranged from a clear “no” to a hedged “it’s a ways off” to an interesting prediction (from a cable executive) that users will likely be frustrated attempting to connect such devices themselves without the high level of customer care they’re used to receiving from their cable company.
The consensus? That ‘killer app’ internet television solution you’ve been waiting for is probably closer to five years away than two. While I’m of the opinion that it will come sooner than that (and sooner than might be comfortable for many in the industry), the one thing everyone agrees on is that it is coming. There are not ‘ifs’ in this conversation – only ‘whens’. Here then is my take on how it will impact the three core issues listed above:
Monetization: Internet video on the television will mean the high-CPM targeted ads of the internet, and (due to the lean-back, social nature of the television viewing experience) an audience finally willing to tolerate a more traditional (i.e. heavier) ad load. From the perspective of the advertising industry, this long-awaited combination represents the best of both worlds – and so in the long run, I’m optimistic that internet video on the television will more than solve the monetization issues many industry analysts and executives have struggled to address so far.
Content Aggregation: This is a very interesting topic. The web (and the web browser) are arguably the killer apps of at least the last several decades (happy 20th birthday, btw), but a wide-open browser paradigm (with all the accompanying complexity, security, and instability issues) is not really an appropriate solution for a CE device such as a television or set-top box (nobody wants to have to worry about their television crashing). In place of all that convenient web standardization, though, there will be some heavy lifting needed to create more appropriate dedicated solutions. Unlike the web, the system architecture will be closed and centralized: in other words, the hardware will present the viewer with a user interface containing all necessary controls and content meta data, and upstream communication will be limited to a single service-providing host – even if the actual video data streams are then streamed from an assortment of asset-owning partners and their optimized CDNs. The goal is an elegant and cohesive user experience that still solves the tricky problem of allowing content search, discovery, and delivery across multiple sources and multiple video formats (TiVo, for one, recognizes the challenge and is taking an interesting search-based approach to solving it).
The Size of the Pie: The prospect of a disruptively successful lean-back internet video experience eating into terrestrial broadcast and cable viewership (and the resulting impact on traditional advertising and cable/satellite subscription revenue models) is on a lot of people’s minds these days. For example, note how quickly (and how thoroughly) joint owners Fox and NBCU recently forced hulu to shut down access from the boxee application after it became clear the small startup had plans to release a set-top hardware device (and that people were already installing boxee on their Apple TVs). To insulate the incumbents from such zero-sum viewership concerns, several recently-announced initiatives (Time Warner’s TV Everywhere and Zillion TV) have announced they plan to require customers maintain at least one concurrent cable or satellite television service contract. Of course, there’s no technical reason for this policy – it’s just there to prevent viewers from canceling their cable subscription and going “over the top” with only their broadband internet connection. Long term, such an arbitrary restriction will prove unsustainable in the marketplace, but in the short term it’s a smart move: in a nascent market such as internet-enabled CE, first-mover advantage is huge, and any insurgent internet television solution that makes the cable companies feel at least a little less threatened (even if only for the time being) is going to have an advantage gaining traction quickly.
All in all, aside from the realtively short shrift given to the CE industry’s recent discovery of the internet by the panelists, it was an excellent discussion – and once again, if you’re at all curious about the future of internet video, I highly recommend videonuze.
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