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Internet TV – it’s the end of the world as we know it

 Internet killed the TV star

This post has been brewing at the back of my mind for some time now, and is in large part the product of conversations with Alan Patrick over at Broadstuff  (if you are interested in this space the relevant posts on his blog are well worth a full read).  On the way in I was thinking that today might be the day it made the transition from neurons to electrons and then when I read Fred Wilson on Tivo vs The Web I thought carpe diem.

TV will move to the internet.  No news here, everyone gets that.  What I’m not sure about is whether everyone gets just how disruptive it will be.

I think that TV is headed the way of written content.  We used to buy it in bundles (newspapers, books) and now we zero straight in on what we want via search and filters.  So it will be with TV.

To borrow from Chris Andersen’s Long Tail, current TV consumption is shaped by scarcity of distribution.  There has been limited spectrum leading to limited numbers of channels.  So programmes were arranged sequentially in those channels to make sure that enough content was broadcast.

The internet removes the limits on distribution – THIS WILL CHANGE EVERYTHING

Many of the IPTV plays we see and much of what I read doesn’t fully understand this.

Some things I think will change:

  • Set top boxes – no need for those in the future.  PCs will be connected direct to TVs.  Everyone is talking about it, from Fred in his Tivo post above to Doc Searls in his latest Suitwatch email newsletter.  When you downloaded the last episode of Lost Series Two and watched it on your laptop you didn’t use a set top box – it will be the same as that.
  • The notion of ‘Channels’ disappears.  We can see the beginning of this already.  On satellite movie services up to ten channels can be dedicated to showing a single movie on loop, so people can start watching it when they want.  In the future you will create your own programme bundles of the stuff you know you like and stuff you find via search and filters.  Just like reading blogs.
  • Timeshifting appliances – VCRs, DVDs, PVRs – these relics of the channel model will also go
  • Satellite TV – as broadband networks improve satellite will be priced out of the market.  I wouldn’t wanna be Sky right now.  They get this.  That is why they are bought Easynet.
  • Payment models – at the moment we pay a bundled price for TV access and a selection of channels, plus separate subscriptions for broadband, landline and mobile – four different subscriptions that are increasingly from a single provider.  The content part will, if I am right, splinter into lots of different pieces.  To take the print analogy again we will get some free papers and subscribe to a few different magazines from different players.  Getting advertising to work in this world will be challenging.  Also, targeting may allow consumers to reduce their bills.  I currently subscribe to way more than I watch just to make sure I get ALL the Chelsea games and a full selection of easy watching drama.

This radical world offers something new and better for consumers – something they will want.  Many of the IPTV plans at the moment just don’t do enough to get people to change from a TV service that is already good.  There is much more that could be said here and might be the basis for a future post.

None of this will happen quickly though – broadband needs to get better and home networking easier which will take time.  I predict there will be space for successful products in the interim – Slingbox will be one and the internet Tivo may be another.

So what does all this mean for us as entrepreneurs and VCs.  I think in deep tech there will be a need for innovation in home networking and core network switching and routing (by way of disclosure Esprit has a number of investments in this space DisplayLink has silicon that lets you run multiple displays off one PC and Polatis has a revolutionary optical switch).  At the internet layer we will need filters (think Last.fm for TV), aggregators (think RSS for TV, TIOTI has an interesting play here) and maybe video search.

I’d be interested to hear about others.

  • http://eu.techcrunch.com/about Mike Butcher

    Video search: Blinkx.com? Doovle.com?

  • http://uk.techcrunch.com Mike Butcher

    Video search: Blinkx.com? Doovle.com?

  • nic

    Thanks Mike. The guys at Blinkx I know, but Doovle is new to me.

  • nic

    Thanks Mike. The guys at Blinkx I know, but Doovle is new to me.

  • http://ulik.typepad.com/leafar/in_english/index.html leafar

    I am sorry but the two post are in French but you can use a GoogTranslator.
    The first one is about a book call The End of TV, it’s birlliant : http://ulik.typepad.com/leafar/2006/10/en_quelques_ann.html

    The second is about a book written by a friend called “The Peer Age : the “pay-off” choice of free” sorry for the poor transaltion and I used The buggle video to explain why it was a brilliant reading.
    http://ulik.typepad.com/leafar/2006/09/lage_de_peer_po.html

    His book just came out but it’s a redo a of a 2004 version (which is in english) and was very prospective at the time:
    The Entertainment Industry is Cracked, here is the Patch that can be dowloaded here :
    http://www.google.com/search?q=The+Entertainment+Industry+is+Cracked%2C+here+is+the+Patch&ie=utf-8&oe=utf-8&rls=org.mozilla:fr:official&client=firefox-a

    It’s fun to see that we are thinking in the same way. Hoepfully the Web3 is not too far.

  • http://ulik.typepad.com/leafar/in_english/index.html leafar

    I am sorry but the two post are in French but you can use a GoogTranslator.
    The first one is about a book call The End of TV, it’s birlliant : http://ulik.typepad.com/leafar/2006/10/en_quelques_ann.html

    The second is about a book written by a friend called “The Peer Age : the “pay-off” choice of free” sorry for the poor transaltion and I used The buggle video to explain why it was a brilliant reading.
    http://ulik.typepad.com/leafar/2006/09/lage_de_peer_po.html

    His book just came out but it’s a redo a of a 2004 version (which is in english) and was very prospective at the time:
    The Entertainment Industry is Cracked, here is the Patch that can be dowloaded here :
    http://www.google.com/search?q=The+Entertainment+Industry+is+Cracked%2C+here+is+the+Patch&ie=utf-8&oe=utf-8&rls=org.mozilla:fr:official&client=firefox-a

    It’s fun to see that we are thinking in the same way. Hoepfully the Web3 is not too far.

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  • http://www.inclue.com nick gogerty

    we make an video podcatcher/RSS reader that will allow for keyword feeds to be created in the next release. http://www.inclue.com

    We are going to bake the (clunky) http://www.feedgit.com into inclue! people will be able to create a watchlist for video clips based on keywords from youtube, google video and others.

    give us a try. We are a small team that has spent 18 months building the app and are currently looking for VC.

  • http://www.inclue.com nick gogerty

    we make an video podcatcher/RSS reader that will allow for keyword feeds to be created in the next release. http://www.inclue.com

    We are going to bake the (clunky) http://www.feedgit.com into inclue! people will be able to create a watchlist for video clips based on keywords from youtube, google video and others.

    give us a try. We are a small team that has spent 18 months building the app and are currently looking for VC.

  • http://geraldjoseph.typepad.com Gerald Joseph

    Good post,
    I’m pondering what the strategic and business model implications will be.

    Will the major networks ink a joint venture to move television to the internet before Google, Yahoo, and MSN?

    If the future of television is the internet then shouldn’t major networks acquire social networks, social media sites, and internet video companies?

    Will Google end up with television and internet advertising being the major driver of revenue?

    Will Google continue to be considered a tech, search, or internet company? Or Will everyone-traders, investment bankers, analysts, etc.-admit that Google’s a media company and expect the stock to trade at a media company p/e ratio?)

  • http://geraldjoseph.typepad.com Gerald Joseph

    Good post,
    I’m pondering what the strategic and business model implications will be.

    Will the major networks ink a joint venture to move television to the internet before Google, Yahoo, and MSN?

    If the future of television is the internet then shouldn’t major networks acquire social networks, social media sites, and internet video companies?

    Will Google end up with television and internet advertising being the major driver of revenue?

    Will Google continue to be considered a tech, search, or internet company? Or Will everyone-traders, investment bankers, analysts, etc.-admit that Google’s a media company and expect the stock to trade at a media company p/e ratio?)

  • nic

    Hi Geraldine – I think the answer to all your questions is or will eventually be yes. Google is a media company (albeit a v.v.v.v. high growth one)

  • nic

    Hi Geraldine – I think the answer to all your questions is or will eventually be yes. Google is a media company (albeit a v.v.v.v. high growth one)

  • http://ulik.typepad.com/leafar/in_english/index.html leafar

    Gerald.
    I think we need to turn your consideartion around…. Google is from the start a media company…. and search technology is its waves.
    So every media company will need tech to survive. It could filtering technology or other mediation related tech.

  • http://ulik.typepad.com/leafar/in_english/index.html leafar

    Gerald.
    I think we need to turn your consideartion around…. Google is from the start a media company…. and search technology is its waves.
    So every media company will need tech to survive. It could filtering technology or other mediation related tech.

  • http://www.broadstuff.com alan patrick

    Hi Nic

    The relevant bits on my blog are mainly MyPCTV and the IPTV ones.

    Business model wise, the main issue for IPTV plays is that they have to subsidise a STB and higher SLA typically, as well as Big Media content deals, vs a Web2.0 style “free ride” over existing assets to the TV.

    The “tipping point” – and its a good argument to have right now – is the rate of migration of the PC into the living room.

  • http://www.broadstuff.com alan patrick

    Hi Nic

    The relevant bits on my blog are mainly MyPCTV and the IPTV ones.

    Business model wise, the main issue for IPTV plays is that they have to subsidise a STB and higher SLA typically, as well as Big Media content deals, vs a Web2.0 style “free ride” over existing assets to the TV.

    The “tipping point” – and its a good argument to have right now – is the rate of migration of the PC into the living room.

  • http://www.broadstuff.com alan patrick

    And some comments on the comments:

    Re social networks, social media etc – yes, its part of the story – but the big thing will be owning the metadata. Or designing a must have CPE PC of course.

    Re Google…it is now (imho) mainly an Ad Media business and is interested in Search (or Video) insofar as it transports Ads….but this too will change when every home owns an IP Video pipe….and Video search is very different so another player may be able to bypass / acquire a bypass company.

    One of the current debates (aka the Netflix Gambit) is that there is not enough uncontended broadband capacity. We shall see…….

    We are writing a more complete article on all this, plus the Mobile element, should get it finished in the next week or so.

  • http://www.broadstuff.com alan patrick

    And some comments on the comments:

    Re social networks, social media etc – yes, its part of the story – but the big thing will be owning the metadata. Or designing a must have CPE PC of course.

    Re Google…it is now (imho) mainly an Ad Media business and is interested in Search (or Video) insofar as it transports Ads….but this too will change when every home owns an IP Video pipe….and Video search is very different so another player may be able to bypass / acquire a bypass company.

    One of the current debates (aka the Netflix Gambit) is that there is not enough uncontended broadband capacity. We shall see…….

    We are writing a more complete article on all this, plus the Mobile element, should get it finished in the next week or so.

  • http://www.freddestin.com Fred Destin

    This is a good post but I disagree with a few items, most notably that STB’s disappear or that programming stop to matter.

    STB’s are much better than PC’s at delivering a dedicated media centric experience. I think the future is one of dedicated high performance devices that are updated seamlessly and configured on the web.

    In the world of 10,000 channels programming in fact matters deeply. GoogleVideo fails because it is built on a pure search paradigm. Users cannot all do their own programming, in fact the mainstream wants programming. And programming does not stem only from crowdsourcing. You will need a mix of “evolved” linear programming and user filtering.

    Finally there is an important issue with quality. The internet is not a broadcast network and services like Akimbo offer a quality that is not sufficient for most. Maybe the Venice Project has the answer; but in the meantime broadcasting infrastructure will continue to matter for any full length, quality sensitive content (unless suddenly the download model becomes ubiquitous, but that would assume elegant or no DRM).

  • http://www.freddestin.com Fred Destin

    This is a good post but I disagree with a few items, most notably that STB’s disappear or that programming stop to matter.

    STB’s are much better than PC’s at delivering a dedicated media centric experience. I think the future is one of dedicated high performance devices that are updated seamlessly and configured on the web.

    In the world of 10,000 channels programming in fact matters deeply. GoogleVideo fails because it is built on a pure search paradigm. Users cannot all do their own programming, in fact the mainstream wants programming. And programming does not stem only from crowdsourcing. You will need a mix of “evolved” linear programming and user filtering.

    Finally there is an important issue with quality. The internet is not a broadcast network and services like Akimbo offer a quality that is not sufficient for most. Maybe the Venice Project has the answer; but in the meantime broadcasting infrastructure will continue to matter for any full length, quality sensitive content (unless suddenly the download model becomes ubiquitous, but that would assume elegant or no DRM).

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  • http://www.squidoo.com/fast-ways-to-fall-asleep ways to fall asleep

    I think the answer to all your questions is or will eventually be yes. Don't forget Google is a media company