The Finance Monk

Will over at Clicked had an interesting link: 50% of all BitTorrent Downloads are TV shows. And not only that, streaming television shows (where you don’t have to download anything) seem to be replacing BitTorrent, with many of the major networks actually streaming their own content free of charge. It got me thinking about the future of television as it merges with internet media.

It seems like a few forces are coming together for internet media:

Targeted advertising – We already have text and banner ads that target audiences based on content. That’s not new; the same thing happens on television: there’s a lot more geek commercials on Heroes than Charlie Rose (although… ).

What we also have though is a tendency to categorize individual people as potential clients, such as Google is doing with their massive database of what we all search (I can only imagine what my distorted profile looks like to them) and, most effectively, Facebook’s recent Beacon system. When I’m on facebook, I get ads about hiking trips in Iceland because I list my hobbies as ‘travel’ and ‘hiking.’ This is huge.

Streaming Video – With 2008 being the year large companies start wising up to the nascent crowd of people that watch TV on their computers, we’re seeing some really promising (and legal) Streaming Video sites links like www.Hulu.com and ABC’s Full Episode Player. Apple is coming out with rentable movies as well through iTunes.

They’re mainly advertising it as ‘if you missed a show, you can see it online’ right now because people prefer to watch something on a real television. But anecdotally, most people my age and younger watch a great deal of television on their computers. And why not? It’s on demand, it’s got less commercial, and the quality is starting to catch up with the rise of DIVX technology (for DVD-quality movies) and streaming videos (so you can watch directly off of a website without having to risk a download or anything.

Mega-bandwidth and tech improvements – Verizon FiOS is starting to be installed in a lot of neighborhoods (at least on the East Coast), which dramatically improve consumer bandwidth: with 30 to 50 Mbps/sec for residential properties in some areas.

Of course, none of this is particularly new to the tech industry and the ‘combined tv/computer’ experiments of the past have failed to catch on. But this seems like it’s only a matter of design - nobody wants to have a mouse on their tv screen or a computer in their living room. There’s some evidence that the two mediums are blending together though. For example, a group of tech giants -Adaptrum Inc., Microsoft Corp., Motorola Inc. and Philips Electronics North America Corp. - are testing a device that allows the transmission of high speed internet service over unused tv waves.

So what’s this lead to? Naturally, targeted video advertisements for television shows.

Basically a network company streams a show or movie onto your computer, you flip a switch, and a crystal clear digital signal hits your tv screen.

Consumers benefit:

1. Choice: free, high quality TV shows and movies whenever you want to see them.
2. Increased Variety of Shows: consumers will have the ability to watch great old shows like Arrested Development or Bewitched long after they’re canceled
3. On-Demand Movies: Any movie you want on-demand, directly into your house
4. Increased national competition with Cable Companies: there won’t be a need to install cable boxes, satellite dishes, etc., which could lead to much lower monthly costs.

 

Producers benefit:

1. The Golden Age of Marketing- Every marketer’s dream: the ability to target tv commercials to extremely specific audiences. For example, a company could target a commercial to the following group of people: (a) women age 25-30, (b) income bracket $xx,xxx; (c) have recently watched three or more movies with Cate Blanchett. There’s certainly an argument that companies would pay more for this.
2. A much higher rate of Commercial-watching – Commercials are not tivo-able (meaning you can’t skip them) in streaming video. You force the consumer to watch them. (And honestly, I’m fine with that. I’m watching a free show). There’ll also be less channel flipping.
3. A better profit margin for older sitcoms – Like I mentioned Arrested Development above; they’ve already paid for production. The rest is all gravy.

So perhaps networks should not be so worried about their declining ratings. With these advances coming together, it certainly seems like an exciting time in the television industry.