You can always count on Henry Blodget of Silicon Alley Insider for provocative industry analysis and today’s post is no exception where he insists that the TV industry will be suffering the same fate as the print industry in 5-10 years.
I think Blodget offers some good basic trends to watch in the TV market but I’m not as pessimistic because we are certain to see more “convergence power” in the TV sector than we did with print. Never underestimate the power of luddites and technophobes to influence and even drive TV marketing to some extent, and there are many of them left who have no desire to jump on the computing bandwagon.
This group alone will remain a large market for some time – certainly more than five years. Also, as celebrities increasingly interact with viewers in multiple venues and niche markets develop to cater to every interest I think TV has as long way to go, though I certainly agree with Blodget that changes are coming and only the flexible and clever may survive.
I think this point in his article is excellent and very true:
As with print-based media, Internet-based distribution generates only a tiny fraction of the revenue and profit that today’s incumbent cable, broadcast, and satellite distribution models do. As Internet-based distribution gains steam, therefore, most TV industry incumbents will no longer be able to support their existing cost structures.
He predicts the following:
The best content creators will do just fine. Video storytelling won’t go away. Compared to the people who produced Battlestar Galactica, the Sopranos, and West Wing, etc., the folks who post to YouTube generally suck at it. So great content creators won’t have to worry about them.
The lousy content creators will disappear. No big loss. And no big change.
The cable companies will become dumb pipes, and they’ll get disintermediated. We won’t need Brian Roberts to negotiate a deal with the Tennis Channel for us (or, rather, to prevent us from getting the Tennis Channel because of some contract dispute). We’ll just go direct.
The phone companies will remain dumb pipes.
The wireless companies will become dumber pipes.
The competition between the multiple dumb pipes will eventually, we pray, result in lower prices for consumers for the only thing we will really need: Ubiquitous high-speed Internet access.
Box and device companies will remain box and device companies. Unless Apple somehow creates a new global chokepoint via the iPhone.
Networks that produce live news, sports, and entertainment will offer the content direct to consumers. But they’ll no longer get paid big carriage fees from cable companies.
A few clever online aggregators–YouTube? Hulu? Cable companies? Netflix?–will create nice video portals and build powerful new businesses. At these portals, you’ll be able to sign up to watch anything in the world on any device you want. You’ll be able choose among multiple subscription models (monthly, a la carte). You’ll also have a basic “what’s on” option in case you just want to watch TV.
Some of the most interesting marketing issues of all time are now shaking out in terms of online distribution and advertising. Literally since the birth of mass media, we’ve come to expect content from heavily capitalized outlets with major advertising programs. As Blodget notes this *must* change because online distribution and advertising are both very cheap compared to legacy media alternatives. What will be left when the fat is stripped away? We can’t know yet, but I have a hunch as consumers we’ll be at least as happy, entertained, and well informed as we are now (though that may not be saying all that much!).