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« Parody | Hoffmang.com | 9/12/10 »

June 06, 2010
Viva the Internet TV revolution

(Cross Posted from Blog.vindicia.com)

Bill Gurley recently wrote an in depth blog post lamenting the overly anxious technologists who were foretelling the demise of cable and satellite TV.

Bill makes a host of very good points about the $32 billion at risk and the depth of the channel conflict. I had this point repeated to me by someone who has long been a part of the television business and he added how the even more widely split rights packages would lead to even more stickiness in the coming video channel transition.

However, the Services Tsunami is not going to spare television and movies.

I reminded the individual in question that I heard every single head of the major recording companies tell me how dis-intermediation was not going to happen on their watch. At the end of the day, the only senior record people gone from the industry left because their company was sold to someone else because of the consolidation caused by the Services Tsunami.

I think the item missing from Mr. Gurley’s analysis is the base practical argument. Today, when the television goes down in my home, as a DVR hard disk crash recently caused, there is no real panic. We move comfortably to either the Wii or Roku and Netflix to offset toddler television demands. However, when the internet is down for as little as an hour, for whatever reason, there is a sense of panic.

Most consumers will scream far more about a DSL or cable modem outage than a video satellite out of alignment outage. Once IP connectivity is superior in each consumer’s life, then the tsunami is pulling the tide far past mean low water.

There is an Average Revenue Per User (ARPU) argument of which I’m suspicious. The argument goes something like this: IP is subsidized by television content or Plain Old Telephone Service (POTS) and thus the current cost of broadband is artificially low. That may be true, but everything I see shows that actually quick (5Mbp+ or 1080p capable) broadband is worth more than $30 to consumers. Turning off POTS and satellite/cable is a wonderful proposition to many of the folks with the most disposable income. I’d rather buy a UPS and a generator for when the power goes out.

Add in the demographic shift – my children have a hard time understanding why the TV in a hotel isn’t on demand – and the consumer pull really doesn’t care at the end of the day what the $32 billion reasons against adoption of television over the internet to PC equivalent means to them. To those consumers it means easy access to the DVDs or Blu-Rays they ripped so the kids don’t scratch them up. It means on-demand access to sports, movies and their few favorite brands (Mythbusters, Top Gear, American Experience, NOVA, and The Pacific are some of mine – No Reservations, Simpsons and agreement on American Experience and NOVA are my wife’s.). Excluding the indirect subscription business of HBO, I care little about what channel those brands use to get to my HDTV. My DVR has taught me not to care and I can’t wait to not have to think about using a DVR to mimic what Boxee.tv will deliver me. Further, don’t get me started on how hard it is to immediately move that which I find on the web to my HDTV to watch with my wife or my whole family.

Boxee Boxes, iPads, and a storage system are far more functional for my whole family. Why would I keep paying $60 to $100 for less functional video? MLB and NHL have made the switch. Boxee was a superior NCAA Basketball Tournament experience this past spring . I’m not the only one thinking about cutting off my DirecTV soon and I’m more than happy to spend more on a faster link. Too bad no one wants to offer me that, but luckily my neighborhood DSLAM will get me to 720p comfortably and usually 1080p as well.

$32 billion is a wonderful market to cut in half while enhancing the consumer experience. Viva the Internet TV revolution.

Posted by hoffmang | June 06, 2010 09:33 PM


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