By Scott Jones
Oct 31, 2013
Internet-based innovation has upended everything, and more change is coming. Where do you place your bets?
Once upon a time, the entertainment industry had discreet business segments that rarely overlapped. If you wanted to see a movie (and this week’s newsreel), you went to the corner cinema. If you wanted to watch television (on one of just three national networks), you sat in front of the big box and watched what the networks said you could, when they said you could. If you wanted to hear the latest music, you turned on the radio.
Cable and subsequently the Internet turned everything on its head. Now you get around 700 channels via your cable box. New music can be found all over the Internet in far greater variety than what the record companies produced in the retail days. And you can watch a movie on your smartphone.
Whether you are a business owner ensconced in the film or TV industry, an entrepreneur looking for the opportunities that flow from disruption of those industries, or a consumer enjoying the evolution of entertainment, change is coming–and quickly.
So where do you place your bets? It’s getting to be a bit like the Wild West with few rules, lots of shootouts, conquests, compromises, persistence, much merging, and some sheriffs trying to keep an eye on things.
Traditional distribution is facing upstart competition.
The distributors are essentially pipelines to get content to viewers. Traditional cable and satellite TV giants such as Time Warner, Comcast, Cablevision, and DishTV have millions of subscribers paying high monthly fees. But they face increasing competition from the telecoms that are stringing optic fiber lines across neighborhoods and from tech giants such as Google, which will soon offer fiber optic plans in Kansas City, Austin, and Provo, Utah that are “100 times faster than today’s average broadband speeds.”
Content creators were married to distribution companies, but that may shift.
TV and movie studios and others produce thousands of hours of programming at great cost, but they have to pay the distribution companies to get most of the programming into your home. Studios recoup their costs through theatrical release of movies, licensing or syndicating their shows to TV and cable networks (and Amazon, Netflix and Hulu), and a share in advertising revenue when a show goes into syndication.
Is the day coming when they will sell access to their shows directly over the Internet on a pay-per-view basis and bypass the TV distribution companies?
The Internet may be a game-changer if content creators can be profitable.
In June, during a panel at the USC School of Cinematic Arts in Los Angeles, Steven Spielbergsaid that three to six “mega-budgeted movies…crashing into the ground” would lead to changes. George Lucas predicted that after such a meltdown, movies appealing to smaller audiences would migrate to streaming video-on-demand–Internet television. Spielbergsaid that Lincoln came “this close” to being shown on HBO rather than in movie theaters.
Lucas also predicted that there will be fewer movie theaters, but that they will be fancier and will show the same movie for about a year. He estimated that a ticket might cost up to $150.
Streaming video and other emerging technologies will continue to innovate.
Developers of emerging technologies (such as web-based streaming video companies Amazon, Netflix, and Hulu) are rapidly changing the way many people view their entertainment–as they continue to lure more subscribers. In the third quarter this year,Netflix had 31 million U.S. subscribers and thousands of international subscribers, compared to HBO’s 114 million international subscribers.
Netflix makes much of its money streaming TV shows or complete TV series after their original airing, but it has received critical acclaim from original shows like House of Cards andOrange Is the New Black.
New products and services will let you view content in different ways.
The growing ability to watch programming on any kind of device–from giant LCD screens to tablets to smartphones–and the widespread use of storage devices such as digital video recorders that let you watch shows whenever you want have radically altered the ecosystem.
One example is the Roku 3 streaming-video box, which offers more than 750 channels and which caused Larry Magid to comment: “My favorite channels, including Netflix, Amazon, HuluPlus and Vudu, either charge by the month or per view, but you’d have to subscribe to a lot of channels or watch a lot of pay-per-view shows to pay anywhere near a typical cable bill.”
Aereo is an $8-$12 subscription service that lets viewers in eight cities (and soon many others) watch live free television programs on computers, tablets, smartphones, AppleTV, or Roku. With a tiny remote DVR in the cloud, a viewer may be able to record programs and watch them later online or on a television. Although major networks have sued, alleging violation of copyrights, Aereo has won so far.
Will there be advertising?
Yes and no. Yes, if you want the content free or at a reduced rate. No, if–as with premium cable today–you’re willing to pay a fair price per viewing or outright buy the content.
If there are ads, they probably will zero in on things that appeal specifically to you and yours.
But hey, it’s television’s Wild West. There will be plenty of showdowns, shootouts, alleged outlaws, shifting sands, and, ultimately, clouds of dust. Where’s your six-shooter?
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