After visiting the expansive show floor for hours and sitting through many insightful conference sessions, my main take away from this year’s CES is Internet video is over hyped. I’m not convinced it’s going to kill subscription video any time soon. I’m not suggesting it should be ignored. Quite the contrary – it should be embraced. But definitely not feared. Consider this – according to Nielsen, traditional television viewing is still growing. So much so, that even if you take the total amount of online video viewing (in total hours), it doesn’t even add up to the incremental growth in traditional television viewing (in total hours). Early indications are that online video is a tide that is ‘raising all ships.’ That’s not to say there aren’t consumers who will opt for Internet video only. There certainly will be – but they won’t be replacing everyone else for decades. There’s more than enough ‘pie’ to go around for everyone for the foreseeable future. Service providers who offer subscription video should find ways to complement their traditional video service with web based content, not fear it.
There is an ‘inflection’ point coming. The point at which the Internet is simply a distribution method for television displayed video is the point at which the lines are ‘blurred’ even further. In this coming reality, there won’t be a distinction between ‘Internet’ and ‘TV’ video. There will just be video, and it will be consumed on multiple devices, the TV included. We’re seeing glimpses of that now. But contrary to many reports, the premature death of subscription video is being greatly exaggerated. That’s my story, and I’m sticking to it. Agree or Disagree? Comment below.
First: We need to separate an IP or Ethernet Network from the Internet.Not the same.
Second: We need to recognize that CATV/MSO get their video feeds (Broadcast) over satellite from Aggregators who pool video and add MetaData and deliver to MSO Head Ends. Then connect to customers TV over Fiber/COAX Nets. Their data nets are separate and are full duplex.
Third: If one looks at a Google or an AMazon one can very easily see a new Aggregator that will acquire similar video content/add meta data and then offer the Video (and all its other Content/Apps)over existing Internet links to all Service providers (ILEC/CLEC Cell Carriers etc.)or better yet via new high speed IP based fiber links to Cache Servers located on the Local Service Providers data centers for delivery to customers DSL/FTTH and or Ethernet (IP). The latter approach will dominate this space in the next few years effectively using IP Core Backbones to deliver these service directly (over local networks)to both the HDTV,PC and other IP based access devices.
In effect obviating the need for a COAX based simplex Cable TV distribution network. MSO know this today and are racing to get their DOCSIS 3.0 networks (primarily Fiber and IP) in place.
Jim
I believe the Nielsen research is from May 2008. I think 2009 may be the year we see a significant decline in traditional TV viewership. Some of this will be economic, as people realize they can watch some of their favorite shows over their Internet connection, cutting their “video” bill.
But, I believe the real impetus for this change will come with the ability for people to more easily stream the video content to the big-screen in their living room. Not many people want to sit in front of their PC, unless they missed a show and forgot to set their DVR. With devices like TiVo and others making it easier to stream from the Internet to the family TV, I expect to see more and more people opting to watch more and more content right from the Web. I think even Cisco made some noise at CES about a home media system that is supposed to facilitate that. If someone can package it up and make it easy, it will precipitate a surprisingly fast change in how video is watched at home.
In terms of reaching a targeted audience Internet video is in now way “Over Hyped.” In fact it’s a secret.
Web video, be it a web series or a stand alone viral video is way more effective in emotionally engaging a target audience and measuring that group than “Nielsen traditional television viewing.”
You can’t send TV viewers to your website with one click and tell where they came from yet.
Right now is a great time for marketers and advertisers to take advantage of the power of online video in reaching consumers who care about their brands, products and services before the prices of advertising or sponsoring online videos goes up.
I think how video is delivered to the customer will be as much if not more dependent on the content provider than the technology. From the demonstrations I’ve seen of Hulu and the like, I’m convinced that consumers *will* be able to watch movies and programming via the Internet in huge numbers in just a few years, but it’s unclear if any of these companies will have access to the content.
Will the future of video migrate from MSOs to content providers in the same way that mom and pop dial-up ISPs gave way to the RBOCs and MSOs?
Okay, there was lots of cool stuff at CES. But the mix of screens available to consumers has been changing and will continue to change.
Curiosity and use of video outside the Pay TV walled garden will be accelerated by the economy (“If I can only ditch some or all of my cable bill…”), as the availability of mainstream TV and long-tail content over the top increases.
Yes, if I can get “whatever” video to “whatever” screen that happens to be within reach, that’s a plus in terms of convenience. But the sky is not falling.
Pay TV operators shouldn’t immediately jump to the conclusion their jig is up. People still want (and still pay for) high-quality commercial video content. Pay TV is still the default outlet for many (not all) sports, high-def TV programming and for most movies.
In fact, this is a great time for them to experiment – with local content, new kinds of advertising, customer surveys – all the stuff that consumers don’t expect from their local provider – and it could even help the loyalty factor.
The other game-changer, seemingly not so widely noted, was Apple’s dropping of DRM from iTunes the same week as CES. This may have quite a ripple effect, first on music, later on some video downloads – and who knows, maybe even on premium VOD someday (especially if watermarking and fingerprinting become more of the norm).
Unlike DRM and CA, watermarking and fingerprinting technologies don’t penalize the consumer for having the “wrong” device, and properly implemented, can be used to trace piracy back to the IP and MAC address of the individual pirate’s STB or PC.
I am willing to predict that Apple’s announcement will help advance the cause of watermarking and fingerprinting. That, plus the potential creation of a home theatre window for VOD, which the studios have been pushing for.