two solitudes: Alan Sawyer's views on the media industry

Saturday, April 22, 2006

Press: Television to morph into new medium

Television to morph into new medium

Rosie Lombardi

(16 Feb 2006)

Television has come a long way since the simple, halcyon days of rabbit ears and a tiny three-channel universe.

According to a new report from IBM, disruptions in the television industry today will lead to long-term upheavals as dramatic as the music industry's trials and tribulations. By 2012, the landscape will change so profoundly that the television industry will need open content and standards-based delivery platforms to generate revenue.Text

The report, dubbed The End of TV as We Know It: A Future Industry Perspective predicts that by 2012, the landscape will change so profoundly that the television industry will need open content and standards-based delivery platforms to generate revenue.

The report identifies several forces that are threatening TV's traditional business model and its traditional lifeline: advertising. These forces include:

· Fragmentation of viewing audiences, who divide their time between multiple media choices, channels and platforms;

· On-demand, self-programming and search features that allow consumers to bypass ads entirely.

· And competition between telcos, cable companies and Internet for viewers, and the associated ad revenue

"This is happening faster than the entertainment sector has recognized – the established supply chain is changing under their very noses," says Alan Sawyer, a Markham-based strategy consultant with IBM consulting services.

According to IBM, these disruptions will likely have a negative impact on Canada's television industry and culture, Today, Canadian advertisers have an advantage due to the CRTC's (Canadian Radio-television and Telecommunications Commission) requirement to substitute Canadian signals, which run Canadian ads, if programming is available simultaneously on both Canadian and U.S. channels.

It says that advantage will evaporate if alternate sources of content exist. Moreover, the CRTC's Canadian content rules will be harder to preserve as an increasingly Internet-based television (IPTV) landscape emerges.

But not all IPTV is created equal, says Sawyer. Two different types of IP-based television are being developed, he says, and they have different regulatory requirements. "IPTV as offered by telcos – television delivered over their existing twisted-copper phone lines – will have to address the CRTC's regulations. However, this is different technology from acquiring television programs via the Web and viewing them on a computer, which is not regulated today by the CRTC. Whether the CRTC can or should attempt to regulate that is a question up in the air."

But Carmi Levy, a research analyst at London-based Info-Tech Research Group Inc. says there is no question the technical capability exists for the CRTC to control both types of IP-based television. "The CRTC can, if it so chooses, continue to lock down advertising as television evolves," he says.

He points out that Google Video already screens searches for the originating country, and will return a "Not available in your country" error message if a Canadian IP-address attempts to access the US-based Super Bowl, for example.

The IBM report states the entertainment industry will need to address the co-existence of two major types of viewers/consumers with different content delivery requirements. The "Massive Passives", the largest group today, will continue to support the traditional passive TV viewing experience. However, smaller but more influential early adopter segments, personified by "Gadgetiers" and "Kool Kids", will demand a more interactive media experience, driving radical change in the industry.

Platform-agnostic content, mobility of the media experience, individualized pricing and an end to traditional broadcast schedules and release windows will be needed to satisfy these tech-savvy consumers, the report says. "Kool Kids want to watch television when and where they want on whatever device they choose," says Sawyer. "And the lines between television and gaming will blur."

Demand for delivery of television to cell phones is starting to become significant in North America, he says, But hard numbers are difficult to come by, as there is limited availability of content and few cell phones have this next-generation capability in Canada and the U.S.

"With the upcoming Olympics, there will be much more broadcasting to cell phones, and we'll be able to see what the real demand is, if wireless providers disclose how much audience they draw," says Sawyer. "So this is also the early adopters' Olympics."

Industry observers will all be avidly watching the evolving scene, "Pull up a chair and watch the show – the fun is just beginning," says Levy. "It will be interesting to watch this over the next couple of years as content providers, televisions stations, cable and telecom companies all jockey for position. Who will own the conduit to consumers' homes? Whoever prevails will be sitting on a huge revenue stream."

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