More on the future of TV

By November 29, 2006Aggregators, IPTV, PCTV, TV, Web2.0

The kernel for this piece was this presentation from Bear Stearns by Spencer Wang on the future of the entertainment industry I found on Raphael‘s (Leafar) and Nick Carr‘s blogs.

The presentation uses value chains as a framework to analyse TV and chimes well with a lot of what I wrote in Internet TV the end of the world as we know it, internet TV and the future of set top boxes, and why internet tv will mean the end for channels.

My central theme has been that it is difficult to underestimate how disruptive the internet will be to the TV industry

This diagram from Spencer’s presentation sets out the current value chain for TV with the future players boxed underneath.

 TV value chain 4

In my earlier posts I have been talking about content packaging and distribution. 

In distribution it is easy to see the internet emerging dominant and the existing players only surviving to the extent they become ISPs.  Set-top boxes as we know them are mostly about signal transcoding, and EPGs – all that will happen in the PC, as will local storage.

Moving to content packaging, one of Spencer’s key conclusions is that we can:

Expect New Viable Aggregators to Emerge

Channels as we know them are aggregators designed for a limited distribution world.  These new aggregators will be filters and recommendation engines – not a list of 24 hours worth of programmes for each day of the week.  Spencer suggests that the well known internet brands might dominate – my gut is that today’s start-ups have a good chance.  (Or a good chance of selling out to these players at big prices 🙂 .)

Spencer also takes the argument further.  He points out that the barriers to entry for producing content are falling.  Camcorders have sufficient quality and video editing software is cheap and runs on your home PC.  This will disrupt the TV production industry – they will lose market share to user generated content and low budget professionals and might find themselves very unprofitable unless they cut costs and enable themselves to sell programming more cheaply than they do today.  If they don’t do this the new aggregators and filters will find better value alternatives for us.

The good news for the industry is that lower prices and more choice will likely increase overall demand.

Next I hope to look at the IPTV offerings available today from BT and others to see if the future is visible in today’s services.

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  • Scott Eblen

    Seems like MTV was listening to your comments about the demise of traditional TV channels. They’ve announced the launch of dozens of narrowly focused web sites (referred to as “channels” here) for very specific audiences. Seems like it could be a savvy short-term move if they can build new ways to monetize interest in particular shows.

    By the way, looking forward to meeting you tomorrow at MediaTech.

  • Scott Eblen

    Seems like MTV was listening to your comments about the demise of traditional TV channels. They’ve announced the launch of dozens of narrowly focused web sites (referred to as “channels” here) for very specific audiences. Seems like it could be a savvy short-term move if they can build new ways to monetize interest in particular shows.

    By the way, looking forward to meeting you tomorrow at MediaTech.

  • Good post, was blogging on same subject so added a bit and cross linked, my article is here

  • Good post, was blogging on same subject so added a bit and cross linked, my article is here

  • tomo

    I notice you don’t have any of the ecosystem type platform providers anywhere in the mix. although, i do believe goog to be a major player in that space so they are accounted for but under the auspices of content aggregation. i’m thinking salesforce.com or msft with their .net will play a big role in turning the internet into the 4th network…radio, print and tv being the first three 🙂

  • tomo

    I notice you don’t have any of the ecosystem type platform providers anywhere in the mix. although, i do believe goog to be a major player in that space so they are accounted for but under the auspices of content aggregation. i’m thinking salesforce.com or msft with their .net will play a big role in turning the internet into the 4th network…radio, print and tv being the first three 🙂

  • nic

    Thanks for the comments guys.

    Scott – I’m seeing a lot of positive stuff from MTV – they might have the nouse to transition to a new type of aggregator

    Tomo – I think you are right, to start with the web will be the fourth big network – but overtime I think it will (might) subsume the other three as all content is delivered via the web.

  • nic

    Thanks for the comments guys.

    Scott – I’m seeing a lot of positive stuff from MTV – they might have the nouse to transition to a new type of aggregator

    Tomo – I think you are right, to start with the web will be the fourth big network – but overtime I think it will (might) subsume the other three as all content is delivered via the web.

  • tomo

    Nic, I concur…..even without the parenthetical might 🙂 Bottom line is that delivering anything that can be broken down into 1s and 0s is going to be more efficient than delivering by the other three. While that theory applies to many services or products, I am really referring to advertising because, at the end of the day, advertising is what makes the other three possible and without it they don’t work. The internet on the other hand, works without advertising and was up until 11 or so years ago. I’m not ignorant enough to think the internet would be where it is today without advertising because surely the $15B a year online advertising market has subsidized a large portion of the internet as we know it. Evidence of this is happening with google and their metro wifi service that they are giving away for free in mt view. It is free(subsidized) because goog will generate more $$ selling advertisements that you’ll be the recipient of than charging you $20 a month for the access.

    I mentioned the .net and Apex because they have the potential to be a global trading platform for goods and services. Apex currently has many isv’s that have built services o top of the Apex platform which customers can purchase, set up, use and integrate with all sorts of business functions. Ten years ago getting setup on a CRM, financial system for invoicing, etc would take years and cost tens of millions. Today it can be done in a matter of minutes for less than the cost of a desktop pc. When this type of platform is available to the global population you will see, at least imho, a shift in distribution of wealth that is closer to a state of equilibrium than what we see currently.

  • tomo

    Nic, I concur…..even without the parenthetical might 🙂 Bottom line is that delivering anything that can be broken down into 1s and 0s is going to be more efficient than delivering by the other three. While that theory applies to many services or products, I am really referring to advertising because, at the end of the day, advertising is what makes the other three possible and without it they don’t work. The internet on the other hand, works without advertising and was up until 11 or so years ago. I’m not ignorant enough to think the internet would be where it is today without advertising because surely the $15B a year online advertising market has subsidized a large portion of the internet as we know it. Evidence of this is happening with google and their metro wifi service that they are giving away for free in mt view. It is free(subsidized) because goog will generate more $$ selling advertisements that you’ll be the recipient of than charging you $20 a month for the access.

    I mentioned the .net and Apex because they have the potential to be a global trading platform for goods and services. Apex currently has many isv’s that have built services o top of the Apex platform which customers can purchase, set up, use and integrate with all sorts of business functions. Ten years ago getting setup on a CRM, financial system for invoicing, etc would take years and cost tens of millions. Today it can be done in a matter of minutes for less than the cost of a desktop pc. When this type of platform is available to the global population you will see, at least imho, a shift in distribution of wealth that is closer to a state of equilibrium than what we see currently.