In 2010, for the first time, e-books outsold paperback books. In 2010, for the first time, digital delivery of TV and movies outsold DVDs. In 2010, for the first time, a TV show – The Cape – premiered in an app not on TV. Brand new technologies outstripped their predecessors in 2010.
Television programming has not become less popular in 2010, as Duncan Stewart pointed out in yesteryday’s Calgary launch of the Telecommunications, Media and Technology (TMT) 2011 Predictions report, “TV audiences continue to grow”.
Smart TVs, iPads, and apps like ABC, CityTV, and Global are all less than 1-year old. The impact that 8-month old technology might have have shown to date on the TV viewing is not likely measurable. Although we were able to more accurately predict iPad unit sales than analysts by looking at our customers app sales in iTunes at the end of 2010.
The TMT report states that, “For most people, television continues to be a passive experience. Although viewers value the option to choose, often they do not exercise it. Interaction has generally been limited to choosing channels on a remote control or selecting from a PVR menu of pre-recorded content.”
Freedom from choice (or not).
Remember in the old days, 2 years ago, when people spent 30-minutes in a video store deciding what DVD to rent. Of course, we only did this on Friday and Saturday nights. All that choice when people sit down on the coach on a weekday may be too overwhelming and that may help explain why viewers don’t spend 30-minutes making a decision on the other 5 days of the week.
However, it is easy to imagine providing choice, without the drive to the video store, without the 30-minutes of agony in deciding what to rent, without the broadcast schedule. Rogers is doing this today with its Online Video On-Demand (VOD), Shaw is doing this with its pay-per-view options on television, Netflix with its subscription-based (VOD), Apple with its TV show rental and purchase model delivered in iTunes, Samsung with its TV app store, Roku with its TV app store. These options didn’t exist 2 years ago when we spent that 30 minutes in the video store.
Why are these choices available in some cases by the same companies that specialize in scheduled programming, or what Deloitte refers to as “push” programming? Money.
Global Pay-TV revenues exceed TV ad revenues. In addition, Pay-TV delivers higher margins. The number one marketing challenge for Pay-TV is making it as easy as possible for users to find the shows that are of interest to them. As social discovery replaces search as the primary means by which consumers find entertainment content of interest, providers of Pay-TV are all integrating social media capabilities into their services. Doing so benefits tremendously from, if not requires, the convergence of TV and the Internet. Comcast, Netflix, Rogers and others (including the company the authors’ of this article work for, MoboVivo) have developed mobile apps with social features, which integrate Pay-TV services.
To illustrate this point, Comcast CEO Brian Roberts disclosed recently that Comcast has an astounding 1,000 software engineers working on digital media and announced early in 2011 video playback in its iPad app. He also goes on to say that Comcast has delivered 18 billion on demand program orders.
So, what will happen in 2011?
TV’s “super media” status strengthens is Deloitte’s # 5 TMT prediction for 2011. This is a very reasonable expectation for 2011 – and even beyond.
However, the predictions suggest that Personal Video Recorders (PVRs) and consumers desire for freedom from choice will have something to do with television’s ultimate success. The TMT report argues that people may choose to spend their money on a bigger screen instead of advanced functionality on their TV. However, this choice is not even available in most cases. Samsung, the largest TV manufacturer in the world, barely offers a TV or blue-ray player without advanced functionality such as a TV app store. With the promise of evergreen revenue from content and apps every TV manufacturer has committed to supporting an app store (proprietary or third party).
While the argument for TV being the future of TV is a solid prediction. The way it holds its “super media” status may not have anything to do with PVRs, or freedom from choice, or lack of advanced functionality in new TV’s and tablets.
In the next several weeks, Apple will release a new feature, called AirPlay, available to apps on an iPhone, iPod and iPad. Later in the year, they will likely join the TV manufacturers and set-top companies with the ability to use apps on any television with its release of Apple TV App Store. Why are these new features from Apple so important?
AirPlay will send a TV networks’ web-based video content directly to a large screen TV in the living room. AirPlay will send the video and audio from the ABC, CityTV, and GlobalTV apps directly to that same TV – at a push of a button, without any cables, instantly. In addition it will send the ads delivered by that website or app directly to the TV, or, perhaps even more interestingly, keep the ads on the iPhone. Allowing interaction with the advertisers message right in the users lap while controlling the TV. Now that is “super media” – and it only gets more super when apps run directly on an Apple TV. Then, after other companies spent the last year bringing this advanced functionality into the marketplace, Apple does what Apple does so well, creates a “new” product category in consumers minds and TV really takes off.
The future of TV is TV. However, it is worth acknowledging that Smart TVs and app stores are very likely to solidify TV’s future. The TV may indefinitely remain the screen for watching premium content, but more and more so with consumers using apps, mobile devices and tablets as social and knowledge sharing tools that complement the TV viewing experience.
This article was co-authored by Mobovivo’s Alex Gault.