As techies everywhere braced Tues for Sony’s 5:30pm unveiling of a Google TV-enabled TV set, it’s yet another reminder that a battle of sorts is raging over television’s future. One camp sees a world in which the “long tail” of micro-niche content mixes seamlessly with premium fare in a Wild West cyber-bizarre in which all content providers become squatters on the dumb broadband pipe. Another envisions a more ordered if not completely closed off system of controls in which traditional distributors such as cable and satellite ops essentially remain gatekeepers and tastemakers, albeit with perhaps a bit more openness than in the past.
But all of this is really a false choice. Consumers already consume content across multiple platforms, from multiple sources and of varying levels of production quality. The genie has already… well, you know the rest. Whether this stuff pipes in over a TV set or a computer screen, it’s all fusing into one big content marketplace. That technological reality won’t change. Ever. The only question at this point is how those business rules will shake out. Will authentication catch on? Will distributors start metering those bits to manage traffic? Who controls the ads? And will consumer habits morph into something “controllable” and profitable for this vast entertainment ecosystem that remains the best in the world and a major U.S. export?
The news over the last few days highlights just how confusing this landscape has become. Take AT&T, which starting this week will allow its subscribers to receive its U-verse TV service over Microsoft’s Xbox 360 gaming console. That’s a big step, and one that cable operators have avoided like a Redmond-coated plague for years (Remember Web TV?). Then there’s TiVo, which has already shaken things up with its Netflix-enabled Premiere box, recently striking deals with RCN and Suddenlink, and over the last couple of weeks adding access to Hulu’s subscription service and the popular Pandora music streaming service. And amid all of this looms Google TV, whose widely anticipated Logitech Revue box that debuts on Oct. 17 comes amid buzz about Sony’s Tues announcement (and perhaps PS3 integration soon). And speaking of Hulu, it’s no secret that the Wall Street rumor mill sees an IPO in the near future, with expectations that it will raise $200 million to $300 million in the public markets. That will only pump more money into the effort to forcibly converge TV into this mish-mash of linear distribution and broadband streaming. Perhaps at some point, the two will be interchangeable—although we’re certainly not there yet. And what about the new Apple TV’s pay-per-show model? Will Kevin Martin’s dream of an a-la-carte world finally come to fruition by default as all of these business models vie for dominance?
Nobody knows. But one thing seems certain: In the future, content distribution competition will rise, distribution pipes will get dumber and business models will shift. One thing that won’t happen, however, is that multibillion-dollar corporations will sit back and let cord cutting kill their businesses. It just won’t happen. Something will give. If content owners put too much high-quality content online, distributors will simply start metering to manage bandwidth or demand lower license fees that in turn deter content providers from putting more up online. Google and consumer groups won’t like that. And at some point, the courts might have to get involved, which frankly may not bode well for the pipe riders. As everyone knows, cable built those pipes with private capital and with no government guarantee of a either a monopoly or a rate of return. It’s tricky to use the public interest or some murky argument over public rights of way to justify a “taking” of that property… not to mention various First Amendment issues that would crop up.
In the end, let’s all hope that cable operators, content providers and the Googles and Apples of the world work out their differences in the context of privately brokered agreements. Cable will most likely need to give up some distribution control. Content owners will probably need to cede some advertising control. And Silicon Valley giants will need to acknowledge business realities that they have so far ignored (ie, content owners and distributors need to make enough money to keep making new content and expanding bandwidth to get it out to the masses). Everyone must compromise. That’s the only way for everyone to win.
(Michael Grebb is executive editor of CableFAX).