6 August 2009

Pinto's Point

Future of television

By Jim Pinto

The writing is on the wall for television; TV is getting unwatchable. CNN sticks in an ad every three minutes; and it is getting worse. Old media is imploding at a rapid pace, as the cost of producing quality content escalates.

At the same time, advertising dollars are scarce, especially during this recession, which emphasizes the decline. Ad rates are dropping, and ad-frequency is going up. Consumers are squinting their eyes (and their brains) trying to squeeze out snippets of real content. The idiot box is getting more idiotic by the day; it is simply not sustainable.

Over the past decade, traditional television content has rapidly migrated to computers. As consumers demand easier access to media, major content providers are scrambling to be ahead of the curve.

Local stations have been hit particularly hard by the media shift. The recent downturn has disproportionately damaged local stations, which rely heavily on these big buyers for advertising revenue.

The business model of TV advertising is struggling to transfer onto the Internet, as consumers seek out ease of use and quick results. However, there seems to be no real solution.

Telecoms like AT&T have spent billions on deploying U-Verse, its IPTV (fiber-based Internet) services. Satellite companies like DirectTV and Dish Network are beaming down video services into the home, but they are limited by bandwidth and cannot do IPTV or broadband services.

Then there are standard cable operators like Comcast and Time Warner Cable, who are trying to preserve their subscription world against all the new players by offering the “triple play” of video, voice, and high-speed Internet. All these operators are competing for video subscriptions, against the free-and-open Internet TV companies that are multiplying daily.

TV shows were some of the first forms of video content to appear online; viewers are quick to seek out missed episodes on their computers or video iPods. Web sites like TV.com have partnered with major entertainment groups to bring traditional TV media online, available to loyal viewers with minimal commercial interruption.

There are now Hulu, Joost, and a total of 238 different Internet TV providers, who do nothing with the TV itself, but merely provide video access via a PC. They already have millions of Internet video views daily. The media is trying hard to bring these viewers back into the living room, to utilize the rich content through their TVs.

This seemingly dangerous forecast for television has a possible upside. Consumers are spending more time—over eight hours a day—in front of screens. The next step is to make Internet streaming and on-demand services profitable enough to retain advertising revenue while fulfilling consumers’ desire to avoid monthly fees.

The ideal world of TV would be unlimited video-on-demand, perfectly personalized to the consumer’s taste, with advertisers able to push ads precisely aligned with those tastes. The delivery infrastructure must take into account the service-provider’s interests. And, the box must be “free”—not charged to the consumer.

Hey, get a bigger monitor for your computer … and a comfortable couch.

Related links:

• Is the future of TV on the Web?
  http://www.cnn.com/2008/SHOWBIZ/TV/05/01/tv.future/index.html
• The Perilous Future of Television:
  http://www.psfk.com/2009/04/the-perilous-future-of-television.html
• NY Post - The future of Television:
  http://www.nypost.com/seven/02082009/postopinion/opedcolumnists/the_future_of_television_154045.htm

Behind the byline

Jim Pinto is an industry analyst and founder of Action Instruments. You can e-mail him at jim@jimpinto.com or view his writings at www.JimPinto.com. Read the Table of Contents of his book, Pinto’s Points, at www.jimpinto.com/writings/points.html.