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Is That a TV in Your Living Room?

  |   jim's digital lab

cbs-logoIf you remember television in the 1960’s or 1970’s, you may recall that you had about three channel flavors from which to choose: ABC, NBC and the “Tiffany” network, CBS. In the 1980’s and the 1990’s, a new distribution platform began to emerge…cable networks delivering far more channels. Those initial cable channels, with very low content quality, have now morphed into hundreds of channels splashed across the regular cable network, the digital cable tier and now the HD channels. Today, you can select from CNN, HBO, MSNBC, CNBC, FoxNews, Lifetime, CMT, National Geographic, Travel Channel, Weather Channel…well, LOTS of options!

There used to be virtual monopolies over the pipes entering your home via Cox, Cablevision and Comcast for cable (what’s with all the “C’s”??) among others. But, DirecTV showed that you can bounce signals off satellites and roundtrip them to ground-based receivers on the roof of your home for a variety of communication services. New methods are emerging: telephone companies running higher bandwidth copper wire into the home, new Fiber to the Home (FTTH) with enormous speed advantages (but costly), neighborhood-wide and even town-wide “skynet” mesh networks using WiMAX…sort of like Wi-Fi on steroids.  While the battle has been about the “last mile” into your home, that economic fight is now shifting to something of equal or greater importance…stuffing those pipes with consumable content.

TiVo’s time-shift technology now aggregrates not only what is playing on your TV network for later viewing, but it can access movies on demand, music, YouTube videos and photographic images to create a “box” that acts as a traffic cop ( or is it a roadblock?) giving consumers a lot of flexibility as to what they’d like to see on that LCD flat panel screen…and, when they want to see it.

LCD Panel as Smart Portal

LCD Panel as Smart Portal

AppleTV, heretofore a hobby of Apple’s, is now generating some buzz among the digital elite because of its ease of use, plug-and-play capabilities within your own Wi-Fi home network and its very low price ($99). All the cable providers and other third-party hardware/software developers want to be the gateway for access to anytime/anywhere/any type information. The battle is going to get very ugly for consumers in one sense…buying a box from Apple may be disadvantageous if, for example, Cox Cable buys TiVo and makes the TiVo box the more elegant controller attached to the LCD (BTW, TiVo’s acquisition by another company is only speculation…but, I do not believe it can survive independently of all the other pipe/content purveyors). How quickly will your “box” become technologically outdated? When do you know it’s time to jump in to buy one? What’s the tech-rev cycle…is it measured in months, or in years? Will we get into a costly cycle of buy-replace-upgrade for the boxes we attach to the LCD panel?

Upload, download, reload, rewind, pay-per-view, video-on-demand…whatever term you wish to use to describe your media information consumption habits…the near future is going to get interesting and perhaps somewhat confusing. But, over the long-term, the market will settle out with 2-3 brands from which to choose and prices will decline. As in the age-old razor vs. the blade marketing argument, the access infrastructure may see huge reductions in costs to the consumer (although not quite free!) while the content itself will emerge as the highest profit margin opportunities for content producers, packagers and information streamers.

The discussion will soon shift to a “rental” model vs. a pure advertising dollar model for providers. You already lease HBO channel content with no advertising paid for in your cable bill as part of higher tiered services, and many of the top cable channels such as ESPN are driving ever higher carry-fees for the cable networks. Those costs are passed onto you. Ultimately, consumers will drive these decisions based on whether they’ll open their wallets or not. Advertisers will still have a seat at the table, but I believe they’ll need to be thinking well ahead of this curve if they hope to maintain some sense of control over when and what you see through that LCD panel in your home.

There are some brilliant minds at work on these very complicated issues, but the swirl over the next couple of years will become easier to understand for all of us within 3-5 years.