Over the past few days, two things have really started to shape my view on where the Future of TV is headed. First, on my flight back from Miami on Friday, I read a post by Henry Blodget entitled “The TV Business is Toast.“ Blodget makes the case that the “the traditional TV industry — cable companies, networks, and broadcasters — is where the newspaper industry was about five years ago: In denial.” Furthermore, he states that TV is headed for a fall because:
As with print-based media, Internet-based distribution generates only a tiny fraction of the revenue and profit that today’s incumbent cable, broadcast, and satellite distribution models do. As Internet-based distribution gains steam, therefore, most TV industry incumbents will no longer be able to support their existing cost structures.
And similar to what Fred Wilson recently wrote regarding Boxee, Blodget goes on to declare that in the future:
You won’t have 5 channels, or 50 channels, or 500 channels. You’ll have millions of channels. You’ll be able to watch anything you want, live or taped. You’ll be able to watch it wherever you want — TV, computer, mobile device… This is where the future is going. That’s obvious. The only question is how long it takes us to get there — and who gets killed along the way.
On Saturday Night, I saw first-hand why the TV networks might be one of the casualties of the Future of TV. Instead of watching Prime Time TV that night, Cindy and I decided to log onto Xbox Live to play 1 vs 100. If you haven’t heard of it, 1 vs 100 is a massively multiplayer online Xbox Live adaptation of the trivia game show of the same name. The “Live” mode is hosted by Chris Cashman in North America and pits a single contestant as “The One” against a group of 100 that make up “The Mob”, with the rest of the players making up “The Crowd.”
Though still in Beta (it just launched June 1st), the game is already pretty remarkable. For starters, on this past Saturday, over 70K people were playing the game live. I say “over 70K” because 70K accounts were online. But it is pretty obvious that 1 vs 100 is a “party game” so I guarantee that most of those 70K accounts actually had 2, 3 or even 10 people huddled around the TV playing the game. That’s a lot of people that weren’t watching Law & Order, Harper’s Island or America’s Most Wanted on Saturday Night.
Second, this Xbox Live’s version of Prime Time is a lot more fun than traditional TV. Instead of sitting back on the couch and staring numb at the screen, 1 vs 100 makes Prime Time an energy-filled social experience. Web 2.0 has been successful because it helps meet the basic human need for connecting with others. That is what Social Networking and Social Media is all about. 1 vs 100 is the blending of the best of TV with the best of Web 2.0.
And even more interestingly, it does all of that with an advertiser friendly model that includes both advertising in the form of ~3 short video ads in a 30 minute span and non-intrusive sponsorship. Unlike traditional TV where you have 8 minutes of ads for every 30 minutes of programming, 1 vs 100 is selective with the interruption. And even the “interruption” isn’t very dramatic since the ads appear on the scoreboard / projection screen in the game. What ends up happening is that as a consumer you actually remember the ads. In fact, I think I remember all of the advertisers from last night including Doritos, Sprint Now Network, and Axe Dry. I can’t even think of the last time I could say that about TV…especially since I skip through most of them on the DVR.
What do you think the Future of TV holds? Who will be the winners? And just as importantly, who will be the losers in this future landscape?
Tags: branded entertainment, future, television
This online gaming application sounds like it may actually cut into beer sales. And I'm not kidding. Very cool example of a future technology that's is goind to hit, David.
Interesting…
I am not a big gamer myself but you are right about the product placement and the fact this could be a party game and more entertaining then prime time television. I know I don't even want to turn my television on during the off season of hockey and then the summer because it is all reruns. The few shows I do watch are done for the season!
I think the TV Networks which invest the most in the digital based distribution will be the winners of tomorrow. They have to make their content available on EVERY media channels, including social media. If they think people still sit on a couch and watch TV every night, they will soon become the NY Times in this era.
Right now, Craigslist takes away a lot of revenue from the newspaper industry. And who knows which web site will do the same to the TV industry? Tech is a fast changing world. You can't always play catch up game. You have to test and try new methods all the time. But I think some TV networks are smarter than the Newspaper guys. At least they have Hulu and Current trying new things. And they still have an important asset that web companies can't replicate anytime soon. It is the celebrities who are famous in a national or international level. It's not like you can easily invite Brad Pitt to show up on a YouTube channel anytime soon. Celebrities are limited assets for TV networks. They will become competitive advantages for them against smaller startups.
TV networks have to smart about licensing issues too. It's hard to calculate the potential revenue Hulu can get if they are willing to open the site to countries other than the US. I know it's really hard to do that because of licensing problems. But that's THE future. They just have to figure out a solution. People outside of the US are already watching their content via bit torrent or video streaming web sites illegally. If Hulu opens to those countries, at least they can control how to monetize the site.
Tomorrow winners:
CNBC, ESPN – for their laser focus and brand
Fox, NBC, ABC – for Hulu (willing to try new things)
Current – for continuous experiments in internet and traditional platform
Tomorrow losers:
Local TV Channels – lack of investment in digital distribution
Funny, I'm reading this after just finishing setting up a mac mini as our new tv computer. I think you're absolutely right in your definition of future of "tv"
It's not too far of a jump to see how this decline in the typical cable TV company will lead to the rise of newer, smarter, or at least re-vamped cell phone companies. Can't you see a day coming where your phone acts as your phone, CD/movie collection, personal assistant, computer, and Cable box? Get the TV service from your phone company and plug it in to any TV or monitor your around and stream the millions of channels. The technology is coming, hopefully I can latch on to the company that does it successfully!
KEN …. research RHN (Real Hip Hop Network)
I heard this was coming 5 years ago ….invested …. just waiting on the Fure to come !
You are dead on Dave, and many big operators will get hit between the eyes on this. They do have the deep pockets to buy many of the major online content players as they grow, however. They also have DRM and QoS hooks across the network to prioritize packets as they deem fit,
Can you imagine your TV provider giving you a Denial-of-Service attack?
More on this soon..
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