Disrupting TV: Can you pick the winner?

NBC, along with everybody else, plans to launch its own web-based video service, called the National Broadband Company or NBBC.

Getting video right suddenly is a popular idea with many competing efforts including:

• Google
• Amazon
• ABC + MobiTV
• Apple
• YouTube
• JumpTV
• CNN Exchange
• LuluTV
• RocketBoom, etc.

How are broadcasters, programmers and advertizers to figure out the winners?  Here's one approach, bet on the big guys who know TV:

“It is so early that who knows who has the right formula?” said Mark Larkin, an executive producer at CNET. “It seems like aligning ourselves with a brand like NBC is a pretty safe bet.”

Let's consider whether a different framework may help: Perhaps too simple, but ignore what the experts or anybody else says and watch what the consumers are doing.  More to the point, watch what they are paying for:

• 60 million Ipods sold as of July 1, 2006
• 1.5B million songs sold as of July 1, 2006
• Average selling price has not fallen substantially

This is not to say that Apple has a lock on video, although Apple's pending iTV device is an  incremental concept sale to iPod users. More importantly, some of the attributes of the iPod/ iTunes products and business model are important to consider as key ingredients to its success as a disruptor:

• Simple: Single-function device; Not a PC/phone/swiss-army knife etc
• Easy to use
• Closed architecture: Apple integrates standard hardware technology with proprietary software
• Apple started with marginal market (Mac users only)
• Apple started with limited selection of music inventory
• Users pay for content
• Apple had nothing to lose and the most to gain by cannabilizing the music business

The disruption of an industry has very little to do with who controls the technology or who is the largest incumbent player. Being in the video business already, as is the case for CNN, NBC, ABC and arguably Amazon, may be the largest handicap to creating the next generation video system because these companies all have something to lose.

Sony had all the hardware expertise and music content to allow it to create an iPod. Apple, seemingly, had none.

**Other Views **

Robert Scoble says he is disappointed the new iPods and Microsoft's Zune have small screens: "I’m shocked that Steve Jobs hasn’t gone 100% widescreen yet, Apple used to be so proud to be the most innovative company out there bringing us things like wifi before most other companies. I guess we’ll have to wait on widescreen, though (hey, Sony, here’s your opportunity!)"

New York VC Fred Wilson  says in the future media content has to be turned into micro-chunks which are syndicated widely. He says the popularity of YouTube shows the Web, not Apple, will be the future interface.

HD Broadcaster and maverick Mark Cuban says Apple has a winner because the iPod interface will show up on the HDTV: "the Apple interface, because it already has tens of millions of consumers trained to buy content on impulse has to have the edge."  Cuban also has big doubts about Amazon's effort with downloadable movies because of DVD-burning restrictions imposed by the studios.

Jeff Jarvis has rude things to say about NBC's effort, arguing that as management at NBC attempts to control distribution, it will destroy its opportunity.

Tech lawyer Rob Hyndman says NBC's timid first steps look more like a job preservation system for VPs. He raises some questions about a centralized aggregator that allows users to vote their preferences to create customized content, including directed advertizing.

Matthew Ingram says NBC is trying, which is a start. More importantly, the network is putting itself in a position to learn by experimenting with new approaches, such as streaming all its new fall shows on the web.

Comments

[Haydn]

Hi Michael.
I missed this post when if first came out but wanted to drop by and comment.

There are now about twenty five different categories of content and I doubt TV will continue to be the dominant form.

The disruption we see goes beyond who watches what and how.

I think television screens will become a function rich environment where a number of environments coincide but principally underlying these changes is the one that allows us all to make a little income out of our points of view, relationships, networks etc.

People will go to the screen in part to particiapte, to watch, to create but also to seek income sources for themselves, family, community, charity.

The reality for TV is most content options are now played out - shock jock TV, car crash TV, babe TV, drama, comedy.

The margins where originality might intrude are so distant that not many talented people bother pursuing them.

There's always going to be a content pool for people who don't prize their own creativity. But I think talented people will choose to create different kinds of applications through the TV set.

What if for example I could create a small wine buyer community through the TV and put pressure on my local supplier to diversify his stock and lower his prices in return for guranteed custom - we already do that with farmers.

These are the kinds of issues and there are many of them.