More on the future of TV

By November 29, 2006 11 Comments

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.