“Convergence” between TV and the web has been a holy grail of consumer electronics and media for decades. There have been many breakthroughs, and many false starts. Most significantly there hasn’t been an underlying network technology to really support TV on a PC platform. Until recently those technical limitations made it impossible to have an effective “converged” experience. TV continues to rule the day and now demands even more network throughput. While limited computer video slowly gets better relying on compression for lower quality video.
Another simple reason is social; TV has been the undeniable well-entrenched winner for video distribution for decades. Consumer’s habits with TV watching are ingrained to an extreme, consumers clearly enjoy it, so what could possibly drive them away? There is all that stuff about “lean back” passive entertainment as opposed to “lean in” and interact entertainment, but, beyond games, we still don’t know what we’d lean into!
The most radical change in TV viewing in its history is the DVR. The DVR converges the broadcast TV metaphor with the recorded video metaphor. Beyond DVR bringing “store and forward” to TV, few innovations have had an impact to get consumers to “interactively use” TV. You could possibly add the remote control to the list, but what else is there? Even HDTV and game consoles didn’t really change “TV.” One could argue that cable is a significant change, but it merely adds channels and choice for the same activity; staring at a glowing box. I’d argue, that adding channels has created as much confusion as it added benefit.
Many attempts to build interaction into TV have been tried — only the game console has survived. Worse for networks and advertisers, almost every new innovation functions to shift consumers to an activity that is not engaging advertising. This argues that whatever shifts consumer behavior has to have a big economic bang to it.
The economic downturn has collapsed ad budgets for TV advertising. In particular, the auto industry was the backbone of ad support for many genres of programming at networks. The economic downturn is part of a cascade of events thumping TV revenues. It started decade ago with the TV show “COPS” which created compelling programming with no scripts and lower production effort. COPS created a tidal wave of reality TV programming slashing the value of high production TV. The changes in the advertising industry, the changes in buying patterns of corporate America, and the decline in the value of high-production TV are colliding to create a radical market shift in TV network business profile — certainly advertising is cheaper. A good argument exists that the hackneyed YouTube home video is maybe the wave of the future following in the footsteps of COPS. A radical market shift for corporate TV means that there is a window opening for the web to offer a different, hopefully superior, product for video entertainment.
With the launch of web television services like Hulu and Boxee, we now see consumers canceling cable services to watch TV programming on their computer. Up to now, TV has had 99% penetration of American homes. Even as late as December 2008 the web only had 72% penetration of American homes. Consider that the prices of both digital TV service and Internet services are increasing, at the same time many consumers have a shrinking ability to spend. Even if web-based TV delivery doesn’t compete with full service TV programming for all consumers, it still offers some “TV” along with all the other benefits of high speed Internet. Remember, high speed Internet is slowly but surely supplanting home telephone with voice service as well. It becomes clear that with the Obama administration hoping to increase the penetration of broadband, all these trends are problematic for the corporate TV entertainment industry.
The question remains what does the ultimate form of “converged video” look like? The answer is we still don’t know.