Archive for March, 2011
What will a TV “app” look like in the future? How will interactivity between viewers, social networks, and advertisers evolve? Is the linear model of TV dead? Will people continue to pay for content? What’s the frequency, Kenneth?
A few weeks back I attended a TalkNYC event on TV Apps, social TV, and Interactivity. More recently, the Connecticut Digital Media group hosted a similar panel covering online video. Quite a diverse set of speakers representing interests that spanned the spectrum of content owners, creators, advertisers, and technologists. Because of the multiplicity of viewpoints it’s not clear anybody really had answers to any of the above questions. Frankly it’s just too early to say with any certainty how everything will turn out. However, that’s not stopping many companies, investors, and other stakeholders from trying.
Nor will it stop me from sticking my neck out.
Interactivity is not new. It just jumped networks.
People have watched TV together, talked about it, and read about it, nearly since the time when television sets replaced the family campfire (radio). Discussing the popular show of the day at school, or over the back fence, is a time-honored tradition. I’m not sure which was invented first, the TV or the office water cooler, but they seem to always have been linked.
The difference now is that this interactivity, this social connection about video, has gone online. That means it’s no longer geographically bound. And technology has allowed viewing habits and preferences to be accessed, measured, monitored, interrupted, shared, and influenced, in ways that nobody dreamed possible.
In effect, social interactivity over video is now at scale.
The interesting question is whether that scale has come at the cost of depth. Are we now more involved with our TV, or less? Are we more deeply connected with those we share it with, or are our relationships numerous but more shallow?
If there’s nothing to watch on TV, maybe we don’t care
I see this as a massive tradeoff, because in the end attention is a finite resource. Teens and tweens are increasingly watching TV while at the same time reaching out over social networks, looking up facts, tweeting about what they’re seeing, and controlling what they watch. (Even digital immigrants like me sometimes embrace this multitasking.)
On the one hand we’re more involved with each other, as we converse over our portable, miniaturized water coolers, make an online purchase of the purse some actress is carrying, and signal an advertiser we like the blue convertible more than the red. On the other hand, how much attention are we really paying to the TV show now?
Are we seeing a move from long-form content to short-form video just because we require time between clips to text each other about it?
And this doesn’t even address the move to content-on-demand. What will there be to talk about when nobody is watching the same thing at the same time? Are we then simply interacting with databases? Or will we instead find ways to queue up our shows in synchronization with our friends?
Does Interactive TV even require a TV?
Watching “lean back” media like television still tends to be a shared experience. Conversely, using a screen on a computing device has typically been a solitary activity. You might be communicating with others over a social net but you’re likely to be physically alone.
This disconnect might explain past failures at “interactive TV”, and seems likely to limit the amount that televisions themselves can become interactive, despite the claims of some that want to build apps and widgets right into the device. Or—heaven forbid—turn your TV into a large screen PC.
I certainly wouldn’t want someone in the room updating their Facebook profile on screen and interfering with my enjoyment of whatever I’m watching. Or expanding an app that eats up screen real estate.
This means the TV isn’t going to get very smart, despite manufacturers ramping up production of internet-connected sets. Oh, there will be some small, useful, unobtrusive apps or “bugs” that will get built in, but for the most part widgets will be D.O.A., and the TV itself will remain passive.
Interactivity will be a multi-device experience. And the smarts will be—as they already are—in the other gadgets.
Whether via a laptop, an iPad, a smartphone, or some combination resembling a remote control, such connected devices will allow viewers to interact with shows, products, celebrities, ads, and each other. We will “check in” to the shows we’re watching, vote on outcomes, rate shows, comment on what we’re seeing, buy items, and share everything.
We will control the horizontal. We will control the vertical.
More importantly, our external devices will allow us to efficiently find content we want to watch, and then control how it gets to our TVs or other viewing devices. And even move it between devices.
These last two interactions—filtering and directing video—represent the stickiest problems. It’s clear that consumers are increasingly demanding a migration from strict linear programming (TV shows on a set network and schedule each week) toward a video-on-demand world. And the ability to move their content to any device they want, often in the midst of watching it.
But how do we find anything? What replaces the filtering function the old style networks performed for us? To what extent is passive profiling by content providers and marketers, and active participation in social networks, going to keep us from sinking in a sea of video dreck?
Even if we find the things we really want to watch, will we be allowed to access and consume them the way we want?
There is a lot of experimentation going on in the marketplace around these questions. Set top boxes, iPad apps, content aggregation sites, changes in theatrical windows, new DVR functionality, smartphone integration, and more. Precious little standardization and no agreement on business models, though.
Because of conflicting corporate interests, differing technical approaches, content licensing agreements, regulatory quagmires, and general resistance to change, it will take years for common approaches and standardized technology to make them a reality for a majority of us.
But many are trying, and a few will succeed. It will happen. Because after all, we humans are interactive creatures. And we still want our MTV.
Disclosure: I hold no position, either long or short, in any stocks mentioned here.
Recently, blogger and journalist extraordinaire Dan Gillmor tweeted about how some publisher was selling an e-book at a higher price than the hardcover. Dan’s comment was that the publisher (Penquin in this case) just “didn’t get it.”
I think Dan’s wrong on this one.
People buy e-books (and e-book readers–more on that in a minute) for a lot of reasons. But most of them are related to convenience. The ability to download books, a large and growing selection, the ability to carry an entire library with you, low weight, getting a new book the day it debuts without fears it will be sold out. And yes, they’re almost always cheaper.
Consumers have always been willing to pay for convenience.
If people really like e-books, why wouldn’t they pay more for the convenience? Now that they’ve shelled out good money for their Kindle (or Nook, or whatever) they’re sort of stuck, aren’t they? Are they really going to go back to buying hardcovers–and trashing their e-readers–just because the book price went up?
Let me get a show of hands. How many of you walked back into the bank to use a real teller once they started charging a few bucks to withdraw money from an ATM? Not many, I bet. Remember when there were hardly any commercials on cable TV, because you paid a subscriber fee for it? Did you cut the cord because ads started showing up? Nope.
Publishers aren’t stupid. They’re going to charge as much as the market will bear for an e-book. But they have to be deliberate in how they go about it. For this to work they need two things:
- Enough separate e-book outlets so they maintain a measure of pricing control (no iBook store to monopolize distribution), and
- Enough e-book readers on the market so they have a critical mass of customers.
It’ll happen gradually, but e-book prices will drift up. They may never exceed hardcover prices–perhaps they’ll end up somewhere between that point and retail paperbacks. Whatever the level, it’s clear publishers will be raising prices on more titles in the future–particularly popular authors and hot books.
Which brings me to my second point. If publishers and sellers require lots of e-book devices in the market to maximize profits from e-book sales, what do you think will happen to the price of e-readers?
Sure, e-readers might not actually become “free”. Perhaps they’ll be subsidized like cell phones by the operators whose networks are used to download the e-books. Sign up for AT&T service (NYSE:T) for 2 years, get a starter cell phone, and we’ll even throw in a Kindle. Or agree to buy 2 e-books a month from Barnes and Noble (NYSE:BKS) over the next year, and your Nook costs you nothing.
- The number of available e-readers has grown significantly
- You can already read e-books on other (multi-purpose) platforms like PCs or tablets
- Apple (NASDAQ: APPL) has sold more than 8 million iPads already, while Kindle sales are at best less than half that
- Entry-level e-readers have dropped dramatically in price since they premiered (though new ones with more features still command a premium).
This all maximizes publisher profit . It also increases revenue for distributors like Amazon (NASDAQ: AMZN) and Barnes & Noble who provide the devices. They will more than make up the cost of e-readers with increased profit on e-book sales.
The real beauty of this strategy is that it effectively takes the cannibalization of physical book sales completely off the table.
Disclosure: I hold no position, either long or short, in any stocks mentioned here.