The Transformation of Television

I don’t normally post directly about my work, but as I enter my second year at KIT digital, post CES, I’m compelled to write at least a little bit about what’s happening in the world of television.

If you’re based in the U.S., then you recently went through the adjustment to HD TV. And if you’re based in the U.S., then there’s a growing chance that you’re a “cord cutter” — that you’re abandoning traditional pay TV, for some combination of Netflix, Hulu, streamed TV stations, Youtube, and stolen content. The latter defines my job — we’re helping companies provide TV over the Internet. But the former is interesting to me; and the two combined are particularly compelling.

There are some fundamental preference, performance, and pecuniary changes happening in people’s viewing habits. It’s actually happening slower than most people would like (as it’s constrained by historical business models, contractual agreements, and regulatory pressures), but it’s happening. All over the world, we’re moving beyond terrestrial broadcast technologies, moving beyond cable and satellite, and moving to watching “TV” over the Internet.

The reason I’m writing about this in my blog, is that it proposes interesting economic and philosophical questions. If you talk to your (or your friends’) kids, you’ll likely discover that they’re not watching a lot of TV on TV. But it’s not just anecdotal. According to Microsoft’s “Young Adults Revealed” survey,

Already 42 per cent of young adults regularly watch TV online, through a PC. Of the 65 per cent who stream
or download TV content once a week, 26 per cent do so every day. The PC’s growing role as a media consumption device is reflected in the perceived importance of owning one: for young adults, a PC and internet connection is now the item of technology they can least bear to live without, nominated by 45 per cent compared to 28 per cent for mobile phones. TV sets came in at a lowly 11 per cent.

Simultaneously, the broadcast industry isn’t standing still. If you’re a cord cutter in the U.S., then you already know that you can watch sports over-the-air, and that it will be a higher quality of HD than is available over satellite or cable. What you may or may not know is that “HD” in the U.S. is already a 20 year old technology.

As people move away from traditional television sets for watching their “TV”, simultaneously televisions are advancing. Beyond the U.S. HD roll-out, we already have 3D and so-called smart TVs. But HD TV is (at best) 1024 lines. At CES this year, we were introduced to 4,000 and 8,000 line TVs. Of course this enables larger displays, but it also enables a higher quality viewing experience in the same size. We’re legitimately getting to the point where looking at a TV will be like looking at something in real life. But this remains contrasted with the youth, who are not only not buying televisions, but are watching low-quality on-line videos as their primary source of video entertainment.

The “battle for eyeballs” is beginning again. Pay TV operators are fighting for their lives against new, upstart, Internet TV companies. Content providers (think Hollywood studios and HBO) are wondering what value traditional distribution channels provide them. Smaller attention spans are leaning viewers towards short clips — including purely brand-based videos like the BMW commercials. TV set manufacturers are trying to come up with the next best thing that will get the youth of today to purchase a television when they leave their parents’ houses. And the youth of today are moving farther and farther away from traditional televisions.

No matter how you look at it, there are radical transformations happening in the industry. No one can predict the future, but the one thing of which I’m sure is that 20 years from now, “television” will be a completely different thing than it is today.


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