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1/6/2006
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Watch This

The TV industry is being pressed by programming and distribution alternatives. See it play out any way you like.

For years, the television industry has been pleading with viewers, "Don't touch that dial." But the audience is no longer listening; it has pressed for more control, variety, and flexibility in how it consumes content. With the increasing penetration of broadband connections, powerful home computers, and time-shifting digital recorders, the public has gotten what it wanted and become more than mere "viewers." Now, the TV industry is scrambling to keep up.

Old-guard broadcast and cable networks find themselves at the intersection of two seemingly opposed forces--passive TV and the interactive Internet. The computer industry wants a hand in how this plays out, too, as evidenced at last week's Consumer Electronics Show, where Intel, Google, and others unveiled new strategies for media delivery and consumption. This week, it's Apple Computer's turn. Apple is expected to increase its growing influence in digital entertainment with new content-distribution technology.

The impact of Internet video will mirror that of the Web on print media, Brightcove's Allaire says.

The impact of Internet video will mirror that of the Web on print media, Brightcove's Allaire says.

Photo by Mark Ostow
A key technology driving much of the convergence is IP-based television, a best-of-both-worlds medium where digital content gets delivered via the Internet Protocol over broadband connections, as opposed to broadcast, satellite, or cable delivery. It's still evolving, but IPTV promises to encompass live programming, video on demand, two-way interactive communications, personalization, digital video recording, and integration with computing platforms such as PCs, E-mail, Short Message Service, and search. IPTV isn't the same thing as Internet TV, a more open approach to video downloads and streaming video over the Web. But both bring flexibility where little previously existed.

"Your TV isn't really part of the digital age as we know it," says Christine Heckart, general manager of marketing for Microsoft TV, who thinks IPTV could change that by making it possible to interconnect in new ways TVs, PCs, and other viewing devices with one another, and with mainstream TV outlets. "It will let you have much greater control over not only the experience of bringing the world into your living room, but also extending your living room out to the world."

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A Rush To Participate

Every major cable, networking, telecom, and software company is rushing into production their script for the future of TV. Intel last week debuted its Viiv digital-entertainment platform. Intel has more than 40 partners that will offer related content and services, including subscription-based, pay per view, and free video on demand. Rival Advanced Micro Devices Inc. unveiled an agreement with STMicrolectronics to ensure AMD-based computers work with ST's processors for set-top boxes.

At the Macworld Conference this week, Apple CEO Steve Jobs reportedly will unveil a video-on-demand offering designed to strengthen Apple's new and enviable position as a gatekeeper to the emerging market for online digital entertainment. In the same way that Apple's iPod MP3 player upset the music industry by making it easy, affordable, and fun for people to download songs, the company is changing expectations about how, when, and where viewers get their programming. What started with a few prime-time programs that could be purchased for $1.99 each--ABC's hits Lost and Desperate Housewives--is turning into a broad array of programs to keep a new generation of iPod potatoes occupied for hours. The choices now include more than a dozen popular shows, with more expected soon.

The opportunity to get into TV programming and delivery, and to enjoy the advertising revenue that goes with them, is driving new partnerships across industries. Google was expected to reveal late last week new relation- ships to deliver TV and video programming over its Google Video service. In December, Google disclosed plans to acquire 5% of Time Warner Inc. subsidiary America Online for $1 billion. Part of the deal includes collaborating in video search and showcasing AOL's premium video service within Google Video.

No longer content to be just an aggregator of other people's content, Yahoo is creating more of its own. Last year, it hired journalist Kevin Sites to provide original news for its Hot Zone area. And the company is planning a reality TV show called "Wow House," which it intends to broadcast online in a few months.


Hewlett-Packard's 50-inch high-definition plasma TV

Hewlett-Packard's 50-inch high-definition plasma TV
Comcast Corp., the largest U.S. cable company, last month said it would partner with Cisco Systems and Nortel Networks to form the Open Transport Initiative, an effort to improve interoperability between the cable industry's optical networks and the Internet. A few weeks earlier, Cisco said it would acquire Scientific-Atlanta Inc., the second-largest maker of set-top boxes in the United States behind Motorola Inc. The acquisition puts Cisco in a position to better serve cable providers that want to offer data, video, voice, and wireless services. "Very soon, all TV will be broadcast over the Internet," Cisco CEO John Chambers told analysts recently. He predicted network traffic for carriers could increase 500% annually over the next few years, driven by such traffic.

All this activity carries implications for any business, in terms of both advertising strategy and network planning. While yesterday's TV had little to do with corporate computing, the plethora of new viewing devices, access options, and programming sources changes everything. Just as the BlackBerry extended E-mail into every nook and minute of the workday, businesspeople can now view live TV on cell phones and sitcoms from desktop PCs. Whether to support that kind of access or block it is a call every IT department will have to make.

Businesses will be more than mere observers in the changing mediascape. They can create new ways to package ads (think Google Video), interact with customers, and tap into APIs with their own services. Microsoft's Heckart says there eventually will be a multitude of APIs to which developers and content providers can write. More information on Microsoft TV APIs will be revealed this year.

New Direction

For television and cable networks, the changing landscape represents both a source of terror and an opportunity. The threat is that old revenue streams will dry up, and the opportunity is that new revenue sources will be found. Their best possible scenario would be the ability to sell content or collect a subscriber fee each time a consumer watched a program on IPTV, but that may be a tough sell. No one is certain emerging media markets will match or surpass the traditional way of doing business.

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