The Future of TV

2010 was the year that TV officially married the Internet. Actually this was the year that the Internet proposed and TV ran off into the hills. This wasn't the first year that the Internet and TV have been dating. There have been internet enabled TVs (IP TV's) for many years. In fact, many of the internet programmers of the late 90s were actually refugees from the failed interactive TV industry of the early 90s.

What made 2010 different was that companies like Boxee and Google developed set top boxes that make it super simple to interact with your TV. While tech geeks could always connect their TVs to their computer, these devices made it easy for non-techies to watch internet video in the living room. While the technology didn't change, a much better user interface allowed a large portion of the population an easy way to view IP TV. This change scared the networks.

The networks right now aren't really sure what to do with broadcast TV on the internet. They are still experimenting and almost co-creating this new format with their technology forward consumers. Some are experimenting with new features like offering one of three commercials for the viewer to choose during a break. Experimenting was fine when the only people watching TV online were geeky early adopters who had a penchant for small screen viewing or those that really enjoyed hooking up an HDMI cable from their computer to their TV. However, now that people can easily browse the web from their TVs the networks feel like they're being rushed into a medium that they aren't comfortable with yet. We've already started to see the major networks blocking Google TV. Technologically it doesn't really make a difference if you're watching from a PC or from an embedded PC (Google TV) inside your Television. But from a consumer perspective it makes a huge difference. It means that the entire audience for NBC might stop viewing it through their cable operator and start watching it through the web.

Many of the technology geeks don't seem to get it though. I was listening to the Engadget podcast and Josh Topolsky, the editor-in-chief of Engadget said, "Why doesn't Google TV just pretend to be a regular Windows based PC and to get around the blockers." This is a technology solution that would be very easy to implement. The problem is that broadcast TV is a huge priority for the networks and the internet is currently still an important but futuristic sideshow in terms of revenue. So rather than allow Google TV in, they would shut out all PC activity.

David Pogue of the New York Times says that the whole advertising system isn't ready for this change:

The reason they don’t, of course, has to do with ads; in the old model, advertisers pay to have their ads shown at a certain time of day, in certain geographical areas, and so on. The networks and Hulu show different, shorter, punchier ads when you’re watching the shows online. Showing them on your TV would violate their advertiser agreements.

In theory, "smart" television should be much more targeted and effective than traditional "dumb" television. Networks would move from advertising based on a show to advertising based on a specific audience. For example, instead of creating ads that appeal to people that watch The Office -- you could target single males 25-34. You could even make custom ads that focus on your different customer demographics (e.g., car advertisements with single man, single woman or family.) While in theory that makes a lot of sense, most advertisers don't really have customized advertisements yet -- or even know how they might create them. Each car company only has a few different TV advertisements -- partly because it costs a lot of money to make a TV advertisement and partly because you can only spin your brand in so many ways.

So where will TV's go next year? In my view we will start seeing every TV internet enabled. Even if it's just to watch Netflix and YouTube, that's a lot more attractive than 3D TVs.

Rob's Future Timeline of Television:

• Phase 1 (~2011-2012): All TVs are connected to the internet. Much like the way the first WiFi connected Blu-ray players in 2009 were followed by a slew of me-too's the following year. We can all look forward to a Internet connected TV. Google TV is nice and all but until the TV networks get on board, most people will be watching a lot of YouTube and Netflix anyway. While there was a lot of talk at the Google TV launch about creating a new "platform," people are looking to watch video on their TV. As for the platform, no one wants to check their email on their TV, but the success of concepts like new types of games remains to be seen.
• Phase 2 (~2012-3): At this point the networks figure out how to finally move from the dumb TV model to the new smart TV model -- focusing on targeted ads for specific audiences. They will allow Google TV (or their progeny) to stream any and all content. Advertisers will be more effective and everyone will get along swimmingly. The only problem is that it took so long -- this is what should have happened all the way back in 2010.
• Phase 3 (~2015): Once you can watch all of your TV online, the game starts to change dramatically. We will enter an era of disaggregation where distribution is separated from content -- similar to the way electric companies work today. One company will provide the "pipes" to your home while others will offer you various different pricing models. Today you can do versions of this like buying your content a la carte (Apple TV) or a bundle of older movies and TV shows (Netflix streaming). More importantly you could buy your entire cable service from anyone. You could buy a bundle of channels, shows and movies all together. For example, you could buy a special dinosaur package that had premium Discovery Channel content, interactive games and even museum tickets. Another opportunity would be to buy local programming from where you spent your childhood up in Oregon. And someone else might be offering a "DVR in the sky" that would provide every possible show on demand.