Internet TV: present and future


Internet TV is growing like a fire, getting larger as it’s fueled from the outside. Mike Panic, a contributor on a general interest blog Randomn3ss, wrote a post this year outlining the full list of websites that “stream full TV shows and movies.” Since that time 47,388 people have viewed it, over 10,000 just this past month. According to his blog, 32 major networks, including MTV, CNN, USA, Cartoon Network, History Channel and Comedy Central, allow live streams of full episodes on their websites. According to this scenario and looking back to the infancy of Internet TV, we can expect to see positive trends for Internet TV viewing well into the future. With its rising popularity and convenience, Internet TV takes power away from traditional cable networks and puts it in the consumer’s hand. Time Warner Cable CEO Glenn Britt voiced his concern in a February interview about losses and the emergence of “video cord-cutters… [who] choose not to buy subscription video if they can get the same stuff for free.[2]” Growing technologies like mobile devices, DVRs, and Netbooks help consumers decide how to consume TV, making traditional cable networks revisit their business models. Entertainment and technology shape our culture, therefore it’s important to see how our culture might be influenced by internet TV in the future, this paper will discuss this.

There are many ways to watch TV programs today. We can plan an evening around the original air time, wait for the season DVD to come out, view it later using a DVR or TiVo, download it online using a bit torrent program, view it OnDemand, or watch it online anytime using the network website or an aggregator like Hulu.com. Traditional TV viewing is based on a timetable, which has influenced our culture to coordinate around our favorite shows. In the popular sitcom Friends, character Joey asks astonished, “you don’t have a TV, what does all your furniture point to?” This assumes a cultural norm for the TV to be the center of one’s life.

There has been a trend in recent years for older companies to stumble at adapting their business plans to meet the demands of competition. For example, Apple succeeded in the music space as the newcomer because the industry could not act quickly enough, now Apple is the leader in the music industry. Newsweek reporter Daniel Lyons calls these old companies “old-media guys,” but asserts we should not underestimate them. One of these “old-media guys” is NBC, who Lyons discusses in his article Old Media Strikes Back, as exercising their latecomer position against YouTube by thoughtfully creating Hulu. Unlike YouTube, whose philosophy was to “figure something out,” NBC took the time to create a clear business plan. According to advertisers, YouTube “has lots of content, but…much of it is utterly worthless,” while potentially all Hulu’s titles “can carry advertising and 80 percent of the streams… have advertising attached.”

Hulu, launching this last March, has proven to be a very creative and smart player in the industry. NBC seemed to harness the right content for the right price at the right time because online video viewing has steadily become a viable form of entertainment. In December 2008, Hulu played 24.6 million videos, following YouTube who showed 5.8 billion. According to a report by the San Francisco Chronicle, online video viewing is up “81 percent over the previous year.” These high numbers are sure to fuel the expansion of Internet TV.

Therefore what are consumers looking for in Internet TV content? Hi definition is quickly becoming mandatory, while just a few years ago the novelty of watching Internet TV had consumers accepting pixilation, long buffering time, and poor selection. TV.com has recently announced their plan to stream shows in full 1080p to compete with Hulu because they feel that could win them a slight advantage; although Hulu is already offering high definition options. But with today’s expanding technology, people don’t understand why the same experience can’t happen at home, online and on their mobile devices. According to a recent Nielson study[3], Americans are watching more TV, “the average American older than 2 years watched television for 151 hours per month…That was up from 146 hours in the same period the previous year.” The reason for this increase, Nielson states, is due to an increase in “digital video recorders like the TiVo…and those who watch video on the Internet and on cell phones.” This data shows an easy adoption to new technology, a break from past cultural norms and the importance of convenience.

Forrester analyst James McQuivey, talks about the path of media during poor economic times and cites a process called economic substitution. This means, “substituting one good for another when resources get scarce…specific to media, substitution occurs on three levels.” According to McQuivey the substitutions are as follows[4]:

  • “Vicarious experiences for real ones: When you choose to watch Hannah Montana’s concert on DVD instead of paying to see her live, you’re engaging in an act of substitution. This one helps home media and will generate a few rays of sunshine that will brighten the tough months ahead.”
  • “Existing devices for newer ones: That’s right: Simply delaying the purchase of a Blu-ray player and relying on your existing DVD player to get you through the economic winter is a form of substitution. This will be the most common form of substitution and the one that does the most damage to whatever momentum the home video devices market had at the beginning of the year.”
  • “Free services for paid services: This is where TV has come in so handy historically. TV is free. If you already have the screen, as 98% of homes do, you have a multitude of entertainment options available to you at all hours of the day. This will actually accelerate the growth of things like online TV watching, hampering rival offerings from iTunes. Similarly, free video on demand (VOD) will take precedence over pay VOD.”

Looking briefly into the future 2 years, the cloud of economic stress might still be lingering, therefore McQuivey’s idea of economic substitution is quite relevant. While technologies will advance, the lure of free entertainment will prevail and force traditional cable companies to adapt and provide content online. The “recession will only increase people’s desire to get something for nothing – and to have it on their own terms… the average online adult today watches 56 minutes of online video a week, we expect that to rise to 1.5 hours by year-end, a 50% increase in video watching.” Culturally, this will change how we expect cable companies should be compensated. UGC (user generated content) and its rise could become an even greater player in the next few years, while homemade sitcoms and dramas are created in basements and broadcast on YouTube along with minimal marketing campaigns. The role of celebrity will change, even more that today with the masses of reality stars.

Even today companies are taking great advantage of the internet as a portal to display more consumer friendly information in the form of video; this can be expected to trend upwards in the next few years. For example financial companies are launching portals to provide “video-on-demand service for its financial services clients, with thousands of searchable videos and transcripts on a range of topics, hoping to become a one-stop source for business people.[5]” Stephen Johnson mentions in his book Interface Culture that “no significant cultural form springs into existence fully realized. There is always a gestation period,” (p. 39) Today’s state of Internet TV is in that gestation period as we see more adopters come on board and people realize it is a force to be taken serious.

Every technology has speed bumps. As the initial enthusiasm and awareness of Internet TV fades, consumers will become more familiar with the tools and more wary of the company turning corporate and forgetting about the customer. Blogger Mike Panic writes, “The downside is most sites wait 24 hours to seven days to air the most recent shows;” and hopefully with the increased popularity companies will have an incentive to post content sooner. However, a large obstacle to watching Internet TV is not just the content availability (although that is quite important), it is the hardware. We often take for granted that everyone has a computer, but this is not true. Typically the consumer would be drawn to watch a show on the Internet because of another source, possibly their TV. So if they didn’t have a computer, the $60 monthly cable bill would seem a small investment versus buying a new MacBook Pro, which retails for about $2,800 currently.

Today we see a slow trend of people abandoning their cable in favor of Internet TV. The San Francisco Chronicle article highlights post-cable consumers like Hyun Gu Lee, who cancelled his cable because the $60 bill could not compete with watching his favorite shows online for free. “There are no hard figures documenting how many people are following suit and replacing pay TV subscriptions with online video viewing. But more than ever, the alternatives to traditional TV are flowering with sites like Hulu, Fancast, Joost, Sling and YouTube providing free TV shows and movies along with free content from network and cable broadcasters such as CBS, NBC and Fox. With the economy in dire straits, it’s easier to make the argument for online TV.”

Good points about Internet TV

According to a Forrester report[7], “94% of broadband consumers go online every day,” which means each of those people could be potential lead. Blogger Mike Panic writes, “While I still enjoy flipping through channels on my TV, I can see streaming video starting to become more and more of my daily life, especially since I can’t always be home to watch a certain show at any given time when it airs.”

According to comScore, “online video viewing is growing rapidly…user’s watched 14.3 billion online videos in December, up 41 percent from a year earlier.” To justify the cost of a laptop versus paying monthly for cable, we need to view the computer as a multitasking machine, where a TV usually is not. More and more people are using their computers at TVs according to McQuivery, “Also the general knowledge surrounding making your own media center escapes the common TV user, while using a computer to view videos does not.” He also states in another study[8] that “18% of online video viewers … are driven to connect a PC to the TV. And just what, pray tell, is one of the top things they do with that connection? More than a third, 37%, watch online video on the TV screen in a typical month, thus extending the convenience of online TV show viewing to the large-screen TV set. New entrants like recently announced ZeeVee have their eyes on this do-it-yourself market, hoping to provide boxes that simplify the PC-to-TV connection so that less tech-savvy viewers can also enjoy online video on the TV screen.”

Predicting 5 Years Out

According to a Forrester report[9], today’s “alternating economic currents will provide an enormous boost to free services like ABC.com and Hulu.com that leverage existing hardware and broadband access but will temporarily depress the newest nice-to-have gadgets on the market, like Blu-ray players, over-the-top set-top boxes, and mobile TV.” This will have a great influence in making Internet TV a necessity in the future. Entertainment shapes our culture and this will not become less important in 5 years.Johnson talks about the strength of hybrids in his book, “in the cultural sphere the hybrids are stronger, more innovative, more robust than the pure breeds,” (p. 40). A growing integration of entertainment devices is inevitable as consumers head towards wanting a fully connected experience. Culturally this will breed a need for simplicity in life and stress for the complicated.

The collision of TV and Internet is already happening and within 5 years the process will be streamlined. We’ll see a smooth integration of media devices and home entertainment, with simple and easy graphical interfaces. Currently devices like Microsoft’s Xbox 360 can be used as a set top box; this concept will be standard in homes in the future. The TV user interface will be run on top of easily customizable software for those who’d like to add widgets, features or program their screen differently. Personal laptops will sync with all the home TV consoles, and while at home the TV will act as your primary device coming standard with full Internet capabilities. Consumers will have another level of interaction available, by simply calling up a widget they can see who is watching the same show and interact with those people. Instead of organizing your day around primetime, consumers will forget the concept and start building social circles and creating their own viewing timetables with others who watch the same show. This could be especially helpful in education as students could watch and interact with their homework instead of filling out a workbook.

Predicting 10 Years Out

A 10 year prediction will lean towards what we see represented in science fiction movies like Total Recall (1990). In the beginning of the film the TV is represented as a simple panel on the wall that can show the news or even pretend to be a window. Because we imagine it, we’ll try to attain it because it is what we’ve assumed would come. Within 10 years there will be a full integration of most devices, eliminating DVD players, mice, cell phone chargers, etc, because they will be integrated into one device and utilize touch screen technology like Microsoft’s Surface. Like the trend today, TVs and computers will continue to get smaller and more efficient, TVs will evolve to plates of soft glass that hang on your wall, absent of wires due to advancements in wireless energy transfer technology. The TV will become more connected and more personalized; some people will have a hard time making a distinction between a TV console and a computer.

Today, consumers customize their viewing experience using their DVR to record favorite shows, or sign up for channels online; in 10 years media will find you. Living the connected experience will be the norm. All devices in your home will connect and reference data from the cloud and interpret your state of mind, thus being able to provide content to suit your mood. The experience will produce trends in your media consumption behavior and gage when you would want to see the data. For instance, if you often check your fridge for items to make for dinner, you might be greeted with a screen when you get home that takes an inventory your fridge and provides you recipes according to the cuisine you prefer. Traditional habits of TV viewing would still be available, like channel surfing. Instead of using a clunky remote, you would gesture using a clear panel or voice command.

Conclusion

There is not so much a shift happening right now, rather a defining of a new way to consume entertainment. This is particularly due to consumers reacting to the ability to effect change due to the growing technology. The convenience of Internet TV will be the key for its survival, along with the importance of free services due to the current economic situation. If Internet TV sites start charging for their services, they will lose the trust of their customers. Daniel Lyons claims in his article, “Hulu insists it’s not really competing with YouTube… its real victim might be cable companies. Why pay $100 per month for a cable subscription when you can get so much great stuff online at no cost?” Personal devices, computers and TVs will always remain a part of our daily lives, and there is no evidence to support a substitution for entertainment that would cause a loss of interest in the category.

While people will never find the experience of hunching over a computer monitor favorable to lounging back on your couch looking at your TV console, it will be the integration of the two technologies that will make the best experience, not the loss of one technology.

Works Cited

Andrews, P. (2009, February 22). How to topple the TV industry with computer and couple gizmos. Retrieved February 18, 2009, from http://www.techflash.com/How_to_topple_the_TV_industry_with_a_computer_and_a_couple_gizmos_40455092.html

Johnson, S. (1999). Interface Culture: How New technology forms the way we create and communicate. New York: Basic Books.

Lyons, D. (2009, March 2). Old Media Strikes Back. Retrieved March 7, 2009, from http://www.newsweek.com/id/185790

Panic, M. (2009, February 6). The complete list of websites to stream full TV shows and movies . Retrieved February 28, 2009, from http://www.randomn3ss.com/the-complete-list-of-websites-to-stream-full-tv-shows-and-movies-from/

Forrester report “US Broadband’s Two-Pronged Growth Strategy” http://www.forrester.com/Research/PDF/0,5110,47572,00.pdf, accessed 2/28/09

Forrester report “Video Devices Vulnerable In A Down Economy” http://www.forrester.com/Research/Document/0,7211,47410,00.html, accessed 2/28/09

Forrester report “Modest Demand For Video On Demand” http://www.forrester.com/Research/Document/0,7211,44940,00.html, accessed 2/28/09

Forrester report “What It Really Means To Watch TV Online” http://www.forrester.com/Research/Document/0,7211,44201,00.html, accessed 2/28/09

http://www2.warnerbros.com/friendstv/container.html, accessed 3/17/09

http://www.betanews.com/article/TVcom-blasts-competitors-with-1080p-streams/1236871909 accessed 3/17/09


[1]http://www.randomn3ss.com/the-complete-list-of-websites-to-stream-full-tv-shows-and-movies-from/

[2] San Francisco Chronicle, Internet taking piece of cable TV business

[3] Provided by http://www.courant.com/technology/sns-ap-tv-screen-time,0,645308.story.

[4] Taken directly from “Video Devices Vulnerable In A Down Economy”

[5] ttp://www.nytimes.com/2009/03/03/business/media/03reuters.html?_r=1&partner=MOREOVERNEWS&ei=5040

[7] “US Broadband’s Two-Pronged Growth Strategy”

[8] “What It Really Means To Watch TV Online”

[9] “Video Devices Vulnerable In A Down Economy”

6 thoughts on “Internet TV: present and future

  1. Pingback: Trendspotting: Week of 4.06.09 « TV on Your PC

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