Television is beginning to show its stuff online these days. Already touting the concept of veiwing their programs online after the show has aired, the networks are hoping to reach that YouTube audience. They have seen the light…or at least that billion dollar deal between YouTube and Google. They want in on the action. With 2007 sales of movies and television shows estimated at $1.5 bilion, can the convergence of the television set and desktop computer be far behind? Wouldn’t that outrageious online video be more enjoyably viewed from your couch on a television screen than hunched over your significant other’s shoulder at the computer desk? Although it is clear that the convergence of televsion and the desktop computer is predestined, it may be farther away than you think.
What’s standing in the way? In a word, “cable.” Until the revenue can be made from delivering Internet material to the television set–and passed along to the delivery provider–it will be awhile. According to the “Chicago Tribune,” despite the fact that the number of videos downloaded each day on the Internet is staggering, “Pay-TV providers, the prime distributors of television programming will have to be convinced Web video is more than just a niche.”
There are several factors that give the pay-TV providers pause, none more than how they will continue to make money in this business. They have seen the fallout in advertising revenue within the newspaper business as readers turn online for free news and ads, and they don’t want a repeat of that scenario. The cable folks are in this game to stay, zealously guarding their customer base. In addition, today’s “hot” new Internet trend can be gone in a flash, replaced by something else in minutes. That’s how the web works.
More than these issues is the question of what customers really want. Technically, it’s possible through a cable TV box attached to a TV to achieve the convergence of television and the Internet. Anyone remember Microsoft’s WebTV product a few years back? That venture was a dismal failure by any standard. However, as the “Chicago Tribune” notes: “But pay-television purveyors be they phone companies like AT&T or cable operators like Comcast Corp., don’t have a good economic reason to offer unfettered access to Web video.”
Several problems rear their ugly heads for pay-TV providers, not least of which is the certain to arrive legal headache of copyrighted material used without permission, the bane of YouTube and what industry analysts see as a definite problem on the road ahead for that company. Many think that the Google buyout of YouTube was done without proper accounting for the legal battles that YouTube, to date, has managed to avoid. AT&T, for example, has managed to sidestep this thorny legal trouble in its Homezone service, where it offers access to films through Movielink and video through Akimbo, which include both television shows and web offerings like the Anime Network. Both of these video sources are carefully controlled for the viewer and the company, without the worries of the wild, wild web’s pirated material. Comcast, too, has develped its own video site, Ziddio, giving free reign to the consumer to post videos, while carefully vetting for copyrighted material. Comcast is also partnering with Sony and Lions Gate Entertainment to provide more weblike material to its customers.
Another problem for these middle men is the quality of the video being uploaded to sites like YouTube. With consumers shooting video on handheld digital cameras, the quality of the product is uneven at best, and when pay-TV providers want to sell product, this online content seems to fall far short of the mark. Movies and television have a lot better looking product, with a more certain market share.
Yet the real heart of the matter centers on money, but that’s no surprise, is it? In short, notes the “Tribune,” “[pay-]TV providers don’t want to steer customers away from programming they distribute to watch videos that other firms distribute via the Web.” In short, any material downloaded by the consumer from a site on the Internet would see the revenue going back to the site from which it arrived, not to the pay-TV providers. No money in it for them. Even worse, this Internet video surfing may actually cut into the video-on-demand offererings of the cable companies. Although phone companies who are pay-TV providers may have more of an incentive than cable giants to bring Internet video offerings to the public through their services, the phone companies have only recently entered this market and, as a result, have far less to lose than their cable brothers.
This leaves the customer wondering if a convergence of video, television, and the desktop is truly on the horizon. The short answer is “yes,” but the long answer is that this will take time and the development of a formula through which the middle men (cable and phone companies) can make a buck. For now, there’s only the annoying banner ad or advertising video clip masquerading as something worth watching. It seems a small price to pay for free video.