The Death of TV As We Know It - Daniel Ingitaraj - Site Home

Over the past few years, I have seen numerous articles (some examples below) proclaiming the inevitable death of television in its current format.

Most of them predict the death of today’s cable/satellite television model as a result of the growing availability of TV shows and videos online, pointing to the slow deaths of the music and newspaper industries as warnings of what is to come for television. While some predict that the fall of cable/satellite television will happen gradually, others claim that TV’s doomsday is imminent. Encouraged by a friend of mine, I connected my Windows 7 Media Center PC to my television, installed couple of popular Windows Media Center plug-ins TunerFree MCE and My Channel Logos. With this setup and a Gyration Media Center Remote (my living room closely resembling the setup mentioned in the New York Times article “Cable Freedom Is a Click Away”), I was set. My goal? To see the world through the eyes of the 15-24 year olds who increasingly watch content primarily through their PCs.

I have worked closely with colleagues who are helping broadcasters across the world to deliver content (primarily sports, entertainment and news) digitally over the internet. However, I wanted to experience what it was like to be the consumer of this type of content. After trying out the cable/satellite-free lifestyle for the past few months, I believe that a few important factors will need to fall into place before today’s television model will go the way of the traditional music and news models.

1. The improved convenience associated with the internet doesn’t apply when it comes to internet television

When music began to transition into a digital format, fans no longer had to go to the store to buy CDs, nor did they have to worry about converting their music to the proper format to make it usable in every device. In short, downloading music digitally saved users both effort and time. Likewise, newspaper readers began to realize that news and entertainment was available instantaneously online. By using the web, readers could access up to the minute news without having to wait for the next day’s paper. Although many readers liked reading a physical paper and enjoyed the convenience of having all topics in one publication, the decreased effort and time (not to mention cost) associated with accessing the news online outweighed the sentimentality of reading the paper over coffee in the morning. Now, compare the music and newspaper scenarios with today’s television model. The current TV model is already instantaneous. Furthermore, it is reliable, consistent, predictable and easy for everyone. Even today, most content is first available on TV.

My computer-TV experiment showed me that internet-delivered television is just the opposite. If you want to watch TV online, you should consider the following:

- Sites may have had content changes since your last visit; older shows are constantly removed to make room for new ones.

- The quality of the viewing experience does not remain consistent from usage to usage.

- Constant software upgrades are required to stay compatible; this creates work for the viewer.

- The experience is not consistent from website to website, so you never really know what to expect.

In short, while listening to music and reading the news is easier to do online than in the traditional format, with internet-delivered TV, it is the other way around. More effort and time is required to watch TV online than to simply watch TV using your local cable or satellite provider.

2. Convergence is promising, but programming options still lag

At CES 2010, the main theme was 3D technology, but every OEM’s core strategy seemed to center around the convergence of internet and television. This connectedness should hopefully result in a much improved user experience through better user interfaces on devices and greater keyboard compatibility. I am personally excited by the improved devices entering the market. What remains in question is whether internet-delivered TV will be able to compete with the strong programming options available via cable and satellite. It should be noted, however, that the cable industry is not oblivious to the move toward internet-delivered television. The cable industry’s launch of “TV Everywhere” will let those who pay for a cable or satellite subscription get to access the same content online. Essentially, the plan would turn TV subscription fees into video subscription fees.

The battle lines have been drawn, but it is going to be some time before a clear winner(s) emerges.

3. Inconsistent quality and experience of delivery over the internet

The digital experience of listening to music from an MP3 player can be superior to listening to a CD and is rarely perceived to be worse. True, some audiophiles disagree. Similarly the experience of reading news online isn’t much worse than reading it in a newspaper. Some traditionalists may prefer a newspaper, but most people do not feel that their reading experience is diminished when they read online.

These comparisons are not analogous to TV, at least not yet. While the TV viewing experience seems to be improving by leaps and bounds with HD and Blu-ray, the quality of internet-delivered TV is dependent on the quality of both your internet connection and your home network. While watching one of my favorite prime-time shows via the internet, I found that the video was jittery. It appears that the reason for the decrease in video quality was that multiple members of my family were using the internet at once along with my neighbors. My ISP recommended that my family members adjust their activities to accommodate the internet-based lives of one another to avoid interfering with each others’ and my neighbors online TV experience. Needless to say, with standard television, a household can use as many TVs as it likes without compromising the quality of the viewing experience. I know that many people predict that this problem will soon be obsolete, as it is only a matter of time before the upcoming explosion of bandwidth to homes (Google says 600 communities are vying for its broadband network). While the current quality of traditional television remains unmatched, unlike traditional music and news, the future holds promise that internet television will be able to compete with cable and satellite.

4. Live Streaming is still at its infancy

On Nov 25th, 2009, when Kiss partnered with UStream for an online broadcast, (Finally, A New Model For The Music Business) the broadcast drew more than 2 million views with more than 1.1 million unique views and an average viewing time of 43 minutes. There was lot of excitement about live streaming events reaching TV-sized audiences. While the Kiss broadcast may be the beginning of a positive trend, it seems likely that it is still going to be awhile before such live events become financially lucrative.

An international, live event with 100,000-plus concurrent users streamed in high-quality >1 Mbits/per sec format for 30-minutes could cost upwards of several hundred thousand dollars using a content-delivery-network (CDN). Typically, an event such as this would require a large amount of personnel, equipment, and bandwidth, all of which would lead to an expensive operation. Broadcasters would need to charge in excess of $3,000 effective CPMs to break even.

Internet broadcast economics is very different than television economics in that the cost is incurred per viewer. With TV, the cost to add an incremental viewer is close to zero. While live stream engagement is higher and presents more monetization opportunities, user generated video does not appear to be moving in that direction at this time.

5. Video advertising currently works best on television

Is the future of internet advertising going to be different? It requires the same people/costs to produce a 10/15/30 second ad to run as a pre roll or inserted ad online as it does to create an ad for TV. Ad execs are still producing ads on 35mm film and converting them to SD quality to run on TV. Do you really think they are doing it any differently for internet video ads? In order for internet-delivered television to be sustainable as a platform, there has to be a way to pay for it. Traditional television is winning the cost battle and by all appearances is advancing further, faster, and in a more standardized way than internet television.

So am I saying that traditional television as we know it is here to stay? No, I do believe that one of the biggest stories over the next few years will be the disintegration of the traditional TV distribution model. I would not be surprised if in another decade, today's 15-24 year olds are not paying $150/month for 500 channels they don't want.

What I am saying is that we are in the middle of a transformation here as broadcasters, content providers and technology providers experiment, iterate and learn how to make these 5 important factors fall into place. When they do that, we will cross the tipping point.

In my next few articles I am going to cover some of the stories that I have seen across the world. These stories highlight how some broadcasters, content providers and technology providers are iterating, learning and in the process diminishing some of the above barriers. These will also showcase how broadcasters and content providers from different parts of the world in collaboration with the technology providers are delivering digital content over the internet in interesting innovative ways,

1. Differentiating the internet content from television content by pushing the envelope on experience and delivery,

2. Creating sticky engagement for huge audiences by delivering live streaming of events in an immersive way and

3. Creating new opportunities for Ad model by monetizing the digital content,

I look forward to seeing how the battle between traditional cable/satellite TV and internet-delivered TV progresses over the next few years. Stay tuned!