The Future of Television
July 31, 2012 / /
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Thanks for an interesting piece. I work in the TV business and some things I see differently. Can you clarify the reasoning you have?
Why do you think that bandwidth caps will limit the amount of cables being cut? In many places (in Europe at least) FTTH and DOCSIS 3 are making bandwidth available in volume. Even for wireless LTE is a step in the right direction, meaning that you will be able to stream in high resolution to portable devices in most situations. You can even reason that bandwidth used over cable is the same as bandwidth used over IP infrastructure. Cablers and telcos in Europe already over triple play (phone, internet, TV) over a single cable, be it cable for cablers and DSL or FTTH for telcos. And that will continue.
You seem to assume that MVPDs are the traditional cable companies with addition of satelite companies and such. Why cant an MVPD be an internet company like Google or Apple? The model becomes “content creator’ -> MVPD -> ISP -> customer for the physical flow and the ISP and MVPD both have direct relationships with the customer. You cut out the middle man and go direct, the ISP selling bandwidth as they do now and the MVPD selling a content package. That seems to me a more likely scenario, especially because that gives you freedom to get the content you bought over whatever connection you choose, be it mobile, at home or through the connection of someone else and watch it on the screen of your choosing.
Last but not least, that Smart TVs will be replaced by STBs. Why do you think that? In any case people will always have a need for large screens. That means that what you predict is that TVs will become large monitors with an STB attached. That is possible today. One reason this is not happening is that large monitors tend to cost more than large TVs. Volume plays a big role there. Another reason is that an integrated product like a TV can be made at much lower cost than a monitor and STB combined. Are you referring to the fact that performance is an issue with SmartTVs (though arguably less then with say PCs) which means the chip of the TV will have to be replaced sooner and as such it is more efficient to do it with an STB? That is true if not for the fact that panels also evolve rapidly with technology. 4k resolution, OLED, thinner, translucent, 3D, etc are all things people will want to upgrade sooner or later too. I am guessing that by the time they will want to upgrade their TV, they may also want to upgrade their panel. Meaning for a little extra they can get a full new TV and instead of just an STB. Last but not least, MVPDs have so far been really bad at UIs and STBs in general. It is simply not their core business. Maybe they will get it right one day but I think it is more likely that electronics companies (who’s sole reason to live is building these devices) will get it right sooner.
The strange thing about the current situation is that content and delivery are combined, ie MVPDs deliver you the cable and the content. That is weird as it limits your options on when to see what where and how. This to me means MVPDs will either focus on delivering bandwidth or on content. Both is unlikely due to delivering the content to so many screens means that the method of the content getting there will be less important. And if they do focus on a type of means, other content parties will over more options and get the customer in the end. Do you agree with that or do you see a different course?
@Robert: thank you for your thoughtful comments.
When the company that provides you with pay-TV service also provides you with broadband, they really have you over a barrel. It’s in their interest to keep you paying for both services via a bundled package that created the impression you are saving money. It doesn’t really matter that everything is delivered over the same pipes – what matters is that you are paying them two fees, not one. Cut the cord, and they need to find a way to make up that lost revenue, especially since you are now using up more internet bandwidth.
That’s why you won’t see internet-only MVPDs, right? Because the last thing any MVPD wants is to have someone take away half their revenue and bandwidth caps are the best weapon they have to make sure that doesn’t happen.
As for STBs – and the tablet-based apps that will replace them– I think you vastly underestimate their utility. They are easily replaced and updated. And not by the consumer either, which is huge: no one wants to have to replace a 55 inch TV every few years, because the software is outdated. TVs are dumb terminals that beg for a single intuitive, sleekly-designed interface. Not a series of apps that work differently from set to set.
Panels, on the other hand, are not evolving all that rapidly. Videophile TVs are still very expensive and other than price, there’s not a whole lot of difference between the Panasonic Vieras of 2006 and today. Consumers expect TVs to last longer than 2 or 3 years – they are furniture, not devices. New features are adopted slowly, if at all (3D).
As for your final question, it goes back to the losing-half-our-revenue problem: current MVPDs want to use their own web connections, and charge for both. They feel they have the resources to succeed in both. GIven that there are no viable challengers yet for either category, that sounds like a logical plan for the next 12-18 months.
The biggest challenge that a consumer has, is making the right choice and spending their hard earned cash in the best way. Lets remember the famous stories of betamax and laserdiscs etc… As a consumer today, I think you expect your TV to last 5-6 years, but you accept that your smartphone will last 2 years max. People in that respect don’t mind risking a small investment on a set top box, which may live or die, but they do spend their money carefully when it comes to a large LED display which they expect to hang on their wall for years to come.
But, here is the fun part. Just look at how affordable large screen TVs have become, and consider that the price and lifetime of these products will only reduce. I guess then you will be more relaxed about how you spend your AV investments at home, if you know it’ll be cheap to rectify if you make the wrong decision. In this case, it makes no sense to have a TV and a STB, if you can combine everything into the TV anyhow… I guess the biggest step forward we have seen is the alliance between various screen vendors to create a common development platform for the SmartTV apps, thus reducing the costly process of developing for multiple platforms.
@Nigel – not sure I’m following your logic.
The TV is an MP – my problem. If it’s outdated, it’s up to me to replace it.
The STB is a YP – your problem. If it’s outdated, it’s up to my provider to replace it. That’s always going to be the more compelling option
STBs are now the size of a thumb drive (Roku’s upcoming model) and will likely go away as tablet-based apps take over
The key is an interface that works on any TV in the house and provides a consistent experience throughout.