What’s in a box?

August 6, 2008

If the internet TV, or broadcast over IP is such a rage, and if YouTube is all we think the future of content has to offer, have you ever wondered why TV sets manufacturers are not responding to the change and giving their idiot boxes a bit of a smart “processing power”?

I have been personally trying to look for news that might tell me that one or two TV sets manufacturers are going to add features. Fucntions such as a Wifi connection, ability to perform certain tasks such as a calendar, or a task-list or even a contacts book etc. Afterall if home PCs are the order of the day, and if the PCs of today are turning into TVs of tomorrow, why cant TVs of today be PCs of tomorrow?

Well my prayers were answered and someone thought of making the box a bit more smarter than putting just a hard-drive in it for recording of programmes (LG etc). Toshiba recently announced the arrival of TV sets in early 2009, that will have built-in applications which will allow the viewers to connect to the internet via Wifi. Toshiba are also actively talking to application builders to develop widgets for this TV sets.

I wonder what would those applications be… would their environment be “open”- i.e. allowing others to build applications? What luxury! Would I not want to “poke or ping” some of my friends while watching “All about Pamela Anderson” on late night tv? Could social media be truly integrated into the TV technology if that happens? Via a 3-way marriage of your social networking site, a widget that allows you to connect your TV to the internet, and then the sharing (or at least recommendation of) of the conventional “TV listings ” or even the on-demand content with your friends? A bit like what Joost tried to do but failed miserably… but they failed because they had the application, but didnt have the content or the community. What if my status on Facebook, one day, automatically reads “Asad is watching the BBC news at Ten”…

It is all very exciting anyway. I shall wait for such TVs to come out. I want my next HD TV to have a built-in PVR, a Wifi Connection, and an application that will play my DivX files- remotely from my Mac or PC!

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The TV industry’s most read news this week perhaps has been TiVo’s collaboration with Amazon on product purchase.  T-Commerce, or Watch-Click-Buy phenomenon is not new. Some of the big industry players like TimeWarner have tried it in the US without much success in the past.

In the UK, Sky has been toying with this for a long time with their Interactive Feature- The Red Button. They have been able to pull in some of the businesses to do “press to buy” type of campaigns. Brands like Dominos Pizza have struggled with generating critical mass of response through such campaigns in the UK though.

Imagine a situation where you are watching Jonathan Ross and suppose he is talking to J K Rowling about her new book. On your screen popsup a flash asking you to press a button to order that new book from Amazon right then and there. Or you watch an ad for a DVD release of a film and you have an option to order it right then. Conceptually, it is workable, logistically it is doable, the only question is how popular it would prove to be from a consumer stand-point. Chances of it being popular are quite good. Afterall, there is quite a lot of hype around Interactive Advertising on TV these days. My fear is that content producers might just overdo it in their search for more revenues from different sources. 

This particular partnership also has a bit more chances of success than some in the past because consumers are already quite comfortable using Amazon. TiVo or DVRs’ penetration is increasing by the day. Amazon sell a wide range of products, and hence the points of entry for consumers are aplenty. Also, Amazon’s Unbox (movie and songs download service) has already been on TiVo and has enjoyed reasonable success.

On the other hand, would there be questions on Amazon’s pricing of the products, which we all know is not the best amongst online retailors? Would consumers leave their favourite vendors and purchase products, for convenience, via TiVo?

Branded Content, if put in this perspective, also takes a completely new angle. How annoying or acceptable would it be to see a pop-up every time there is a product shown on screen- during a drama, a movie, or a talk-show? It sort of reminds me of the onslaught of pop-up windows full of advertising on the internet. Like we have pop-up blockers for internet browsers, would there will be pop-up blockers one day for TiVo or other DVRs? We know that anything that gets overly commercialised gets instantly rejected by consumers.

By the way, just in case you are wondering where the title of this post came from, Forrester Research’s Josh Bernoff once described this phenomenon of “watch click and buy” as “Buying Jennifer Aniston’s Sweater”.

One of the most popular uses of a television set has been that of a screen for the gaming consoles. TV is now beoming a lot more connected with these consoles, or should we say the new generation internet-enabled gaming consoles are now beginning to recognise the power of being connected to a device like the television set.

When you have a programmable micro-chip and gigabytes of storage on any device connected to a TV, it is really difficult to resist using it as a “record and playback” device (Like a PVR/DVR) or even as a conventional set-top box to receive broadcast signal. All the popular consoles have been trying to get into this game for quite some time now to see how can they get a larger share of “screen time”.

Just yesterday at the E3 Gaming Industry Trade Show in LA, Sony reveleaed a double-capacity PS3 (meaing it has a 160 gig of hard-disk) and launched a service that allows users to download and rent movies- a direct competition to a device like Apple TV. This is not the first entry into Video-on-demand by a gaming console- however it appears to be one with some really valuable content on offer- given Sony’s own access to such assets.

Late last year, British Telecom partnered with X-Box for their TV distribution service where viewers are able to watch the BT’s video-on-demand content. Nintendo’s Wii jumped on the bandwagon this April announcing that the BBC IPlayer would be available on the consoles. Both these efforts mean that the owners of Wii and Xbox consoles can now watch TV programming- on demand- whenever they want to- on their TV sets and not on their computer screens. The open-ness of the availability of this on-demand content, however, is not that great. It is usually limited to one or two content-providers.

It is not just the gaming console’s partnerships that are helping define TV of the future. There are some really interesting examples of how TV content is being integrated into various games. Grand Theft Auto (developed by a company called Rock Star Games) has special TV content within their newest version of the game where gamers can, for example, watch Ricky Gervais perform live in a virtual comedy club in the Liberty City. Ricky did a special recording for the game.

Gran Tourismo 5 (developed by Sony), the most popular racing game in the world with over 50 million copies sold worldwide, has a virtual TV station of its own, called GT TV. BBC cracked a deal with GT TV last year whereby 40 episodes of Top Gear were made available to watch on GT TV. GT TV also features news and updates from the motoring world.

All this is really exciting. What is even more exciting is to think about the implications of it all on the advertising and media industry. Integration of the content into games is a really clever way of getting the consumers to pay for the content. In terms of advertising time, all of these efforts seemingly fragment the distribution of content, and hence perhaps the buying of advertising. However, it is not really difficult to imagine a situation where a “central” ad-server sells time on all of these platforms- much like the Apple’s patented technique, and major media owners like BBC, Sony reserve the right to sell and place advertising into their content themselves. Not different from what the TV stations do now, regardless of which cable or satellite platform distributes them (Sky, Virgin etc).

Pricing of Content

July 11, 2008

One thing is for sure, the on-demand, commercials-free nature of broadcast has huge implications for the pricing of TV content, for both consumers and advertisers. Afterall the media owners, or the content producers, have to generate streams of revenue that would continue to justify the ever-increasing costs of production.

In an on-demand world, there is quite a possibility of doing a pricing model where consumers get to decide whether they want to see any advertising at all or not. If they do, one can even push the extent of advertising they would be exposed to. For instance, if a consumer decides to pay 100% of the price for a movie, he or she may watch it without any advertising. But if he or she decides to let advertising subsidize it, the payment might actually be just 50% of the actual price.  On devices like Apple TV or other media centres, this is quite possible to do even today.

Apple have just patented a technology whereby they can “insert” advertising into any audio-visual media file (mpeg4 etc). What this technology does is that it puts “tags” within the file at various intervals, and then when a viewer reaches that point in a programme, the programme is interrupted and a series of ads are streamed-in from a remote location. The movie or programme continues once a number of ads have been watched. This service is much like an ad-server for internet banner or search advertising. This allows for insertion of ads with precise targetting as each and every playback can have different advertising inserted.

Now from the pricing point of view, how would advertisers begin to pay for something like this? Interesting thought, as the waste element of mass TV broadcast advertising can now be down to zero. As in internet advertising you pay for a click, you would in this case be able to pay for a “view”.

Google have also started experimenting with content distribution via their ad-sense server- and are figuring out ways of incorporating advertising into streaming content. It is over the internet on computers for now, but it might well be on the televisions of future. I will write more on the innovations in the TV sets business in the later posts. For now, click on this New York Times link for a read on Google’s initiative:

http://www.nytimes.com/2008/06/30/business/30google.html?_r=2&adxnnl=1&oref=slogin&partner=rssnyt&emc=rss&adxnnlx=1214845383-dD7MC4+qhkFGE45rIjp/gQ&oref=slogin

Everyone is impressed by the growth of PVRs/DVRs. It is truly overwhelming, and of course the reason is that these devices completely changed the viewing experience for us.

The first big thing about the PVRs was that it liberated programming from the shackles of TV listings, and allowed you to watch what you wanted to watch, whenever you wanted to do it. The second advantage was that it allowed you to skip advertising- just like any other recording medium would have been able to do.

In essence, what PVRs/DVRs actually do is store hours of content on a hard-drive next to your TV so that you can access it anytime- making your viewing experience virtually that of “on-demand” TV. But do remember that it is a virtual on-demand experience. What would happen if the TV really became on-demand? What would you do with your PVRs? Why would you want to spend money buying storage capacity in your home, when your broadcast provider is already doing that for you at a remote location?

If there is ever a case of having some sort of storage or digital play-back device at home, it is that for a device like Apple TV, or a generic media player attached to your TV. What that allowd you to do is “rent and buy” movies and TV series for you to keep- just like your old DVD collection. A mixture of an Apple TV like device, with a PVR might just be a better answer. There are some devices in the market currently that aim at doing that, though without much of an organised interface, or thought behind them.

There are also quite a few services that offer video-on-demand. Virgin’s limited on-demand TV is one example. All the major broadcasters such as BBC, ITV and Channel four have their programming accessible through the internet- though ironically so far you can only play that programming on your computer.

From an advertising point of view, PVRs or on-demand TV presents a very simple challenge. How do you insert commercial breaks back into programming? Afterall, not all content can be branded, and there is a limit to a viewer’s capacity to watch “sponsored” programming, and ad-breaks still are a relatively more favourable choice then seeing a dish-washing liquid being talked about in an episode of Heroes.

There are technologies that are being worked on and experimented with to get the commercial breaks back into digital media files (that can be played back on TV- on-demand). Keep reading this blog for more on those.