Industry Perspectives: The Transformation of Television on the Internet

Finally, and crucially, over the past decade, the Internet has become the primary media and entertainment source for consumers worldwide, taking their time and attention away from broadcast and into broadband—media that offers them powerful communications tools, highly targeted content and communities of interest, dramatic choice and control, and commerce vehicles that are unmatched by traditional media and retail. This global ‘audience shift’—articulated powerfully by Advertising Age’s editor-in-chief Bob Garfield in his seminal ‘Chaos Scenario’—is combining with these other important forms of fragmentation to force a wholesale re-evaluation of the economic underpinnings of the $300+ billion television industry.

The Advent of Internet Television
As noted already, the Internet has continued its steady and relentless march forward in global footprint, technology capabilities, and impact on media, communications, and commerce. One of its next major frontiers is the realm of video and television production and distribution, promising to radically amplify the already significant fragmentation that digital technology has wrought on the TV food chain.

A range of technology and business process drivers are forcing this opportunity. These include the following:
• Global broadband reach, with hundreds of millions of users worldwide now on broadband connections and the number expected to reach nearly 500 million people in the coming years, a footprint that no single carrier or operator could ever conceive of matching.
• Home and wireless networks that make it possible to move high-quality video media over open networks.
• Powerful and open media formats that deliver rich, interactive media experiences that have not been possible on television (e.g. Macromedia Flash), and compressed and downloadable formats that deliver DVD-quality experiences that can be secure and portable (e.g. MPEG-4, Windows Media).
• The convergence of the consumer electronics (CE) and personal computer (PC) industry, with an emerging explosion of open, consumer media devices (TVs, game consoles, DVD players, media center PCs, portable video players) that can acquire media from the Internet and personal computers.
• Patterns of distribution on the Internet that are disruptive, decentralized, and favor massive new economies of scale for any size Web site or content owner (e.g. Long Tail economics enabled by search, social software, recommendation systems, and new forms of syndication).
The Tipping Point for Internet TV
Between the macro-trends in television’s fragmentation, the adoption of new digital platforms, and the sweeping force of Internet adoption and technology innovation, it is likely that we are at a tipping point in the convergence of television and the Internet. In this coming age of Internet TV, one can envision a world characterized by dramatic choice and control for the key stakeholders in this unfolding drama.

Producers and programmers of video content will have significant and direct control over how their content is packaged, branded, monetized, and distributed. They will no longer need to negotiate complex carriage agreements to determine when, what, where, and how their content can be distributed.