A minority of viewers already get Internet access and content on their TVs through an IP hookup or set-top box. Akin to that Netflix is doing lots of streaming deals with set-top box makers. Yahoo! has its widgets initiative, and so on. There’s lots of activity in the space. LG, Samsung and Sony all have Internet-enabled TVs on sale this holiday season.
While I was in Best Buy this past weekend I saw two prominent “Interactive TV” displays for Samsung and LG. Here’s the LG display.
It’s very clear that once Internet content (broadly defined) is available to mainstream audiences on TV it will create an interesting new market that is in some ways parallel to mobile, because it will need to change to accommodate the limits and capabilities of the device — in this case a large screen “10 feet away.”
It will also eliminate the need for many to subscribe to conventional cable TV, although they’ll need an IP connection from some source. This also potentially marginalizes TiVo or other cable DVRs because it offers broader content and it’s all on-demand. In this world we also quickly get the convergence of online and TV video advertising. Pre-roll that runs on YouTube runs on my TV if I’m watching a show or content on YouTube “in the living room.” And what about Hulu? That’s even more like conventional TV today. Will Hulu ad rates go up, will there be interstitial ads? Will there be an ad-free subscription model?
Think about: Facebook on your TV . . . Skype . . . Google Street View . . . interactive/social shopping on TV. Think about new “social programs” where people watch and chat at the same time. Then there’s gaming and how it might evolve. Very interesting stuff to consider.
Cumulatively all these changes will radically transform advertising for “television,” which could result in a massive decline in traditional ad rates and revenues. And that in turn will affect production budgets, the nature and quality of programming and so on.
Screenwerk 
November 30, 2009 at 11:08 pm
Great post Greg. I have the Netflix monthly streaming package for my PlayStation 3 (looks exactly like the interface above) and I love it. I have watched 3 seasons of “The Office” without a single commercial interruption. And this from a guy who never watches TV (except for sporting events) and doesn’t know the definition of “appointment television.”
I think it raises a lot of important questions. I’m paying $8.99/month for an all-you-can-eat stream from Netflix. I love it as a consumer, but can it support the industry? I doubt it.
Anyway, at this rate I know two things: 1. I would pay more for better access to TV content in terms of time/variety than is available now. 2. As soon as sports make the full leap to the internet I will be able to cancel my cable (excepting the internet of course).
Does this point the way? Is it a highly-customized subscription model where it’s packages + a la carte based on consumption preferences? Would be nice. Then I wouldn’t be stuck paying for channels that are nothing more than speed bumps in the way of the content I want.
December 1, 2009 at 12:32 am
Timely post, Greg. The Roku box which was spawned by Netflix is a powerful example of the bridge between desktop and living room (couchtop) interface with the Web. Last Monday, Roku’s Channel Store added multiple channels besides Netflix and Amazon On Demand to include Flickr and Facebook photos, TWIT TV, syndicators like MediaFly, Revision3 (Diggnation, Tekzilla, other), Pandora and more.
To me, it’s much more than hardware. This arrrival marks a hugely important opportunity for companies to start planning their own branded content channels to make the desktop to couchtop (or pillowtop) leap!
December 1, 2009 at 3:46 am
Much of the same speculation about the effect changes will have on ad revenue was bounced around with the advent of the VCR and Cable. Even though these things did change the way we watch TV and hence, get expose to ad content, it didn’t really bring big change the money being made.
The promise of ad-free television with paid cable subscriptions turned out to be a ruse, while zipping and zapping of ads on VCR tapes had almost no effect on ad prices. So, we really don’t see this newly opened venue to be anything but a plus for marketing.
Led by the porn industry, these companies will establish themselves in their niche and charge accordingly with new angles with which to sell their service. Yahoo is already all over that. They have already built the largest online collection of porn known to man so far in their covertly disguised Flickr site. Soon, they will be able to feed this into homes via TV and cash in on that market.
December 3, 2009 at 1:37 pm
I love how this conversation is popping up in more and more places these days. I’m a three year Netflix subscriber and really started using their streaming service heavily this year. So much so that we canceled our Comcast cable service this summer and stream our content on three HDTVs 90% of the time – the other 10% we receive an uncompressed HDTV signal from all four major networks through a $20 amplified indoor antenna on each TV for Football games, local news and the occasional kids show.
A la carte programming choice is the reality that the cable companies are going to have to wake up to sooner rather than later. The truth is, we don’t need them half as much as they think we do. Thanks for sharing, Greg, I look forward to reading more.
g
February 8, 2012 at 1:08 am
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