Monday, June 25, 2012

User Generated Content

An oft-told story... When color TV was first introduced around 1964, the median price was around $400. TV set pricing stayed almost exactly the same until the CRT was replaced by LCD and Plasma. However, after a brief run up, set pricing has been gradually inching its way back down to a median of $400. When color TV was first introduced, programing was limited (3 channels if you lived in an urban area) but it was free. And, your stereo system was completely independent of your TV. This article is about the loss of revenue by the the TV set hardware providers to video content providers and other types of hardware.

Loss of Share of the Consumer Dollar
Cable TV
In the interim, cable TV was introduced. At first it was a way to get content to those that were out of reach of a broadcast signal. The very first cable TV system was implemented solely as a way to sell Television in a market that was not reached by broadcast and therefore had no TV set demand. In addition to providing basic network TV, of course cable eventually enabled much more variety than just the TV network content as well as a way to charge for content.

The next big development around TV viewing was the development of the VCR. The VCR (or Video Cassette Recorder for those of you unfamiliar with tape media) revolutionized the TV market. It enabled not only charging for content but charging for specific content. Rather than negotiating with the networks, moviemakers could albeit indirectly, sell their content to end users without getting bundled together with other content in a content services agreement. This further enabled smaller producers, too small to have network contracts, to make and distribute content down to individuals that could make, show and share their own content. This created the video rental channel as well as enabling the making and distribution of more exotic content that would not be handled by any large/shareholder owned corporation. The variety of content available became limited only by what could be stocked in the local video store, the opportunity to charge for content was narrowed specific creations, and the range of content providers grew substantially.

Flat TV
The arrival of flat TVs and certainly the transition to HDTV that flat TV enabled was a great boon to the Consumer Electronics industry. It virtually required that everyone replace their TV set. However, it did have one disadvantage in TV sound. In general,consumers will associate the sound quality of their TV viewing experience more closely with picture quality than actual picture quality. The development of the home theater concept capitalized on that as well as the move away from broadcast content to removable media and digital content. The implementation of flat TV meant that TV set speakers got smaller and, in some cases disappeared. This development didn't require that separate speakers be purchased, but it certainly encouraged consumers to consciously split the TV hardware dollars between the screen and the sound system. Further, as most LCD TVs have complex image enhancement schemes that necessitate a sound delay to accommodate the video processing, removing the speakers from the TV add to the complexity of TV setup. In order to have the TV sound synched with the image as the setmaker intended, the sound signal must be taken from the TV rather than other points in the device chain in order to get the proper delay. But complications aside, overall, the move to flat TV encouraged more spending on hardware other than the TV set itself.

The flat technology also enabled mobile video devices. Although watching video on a mobile device is somewhat limiting, these devices do offer a variety of games that obviate the need for a gaming console and TV screen to view it on. A common destination and partial reason for purchase of a new TV is in order to move the livingroom TV to the kids room for watching and games.

Internet Connected TV
The video cassette was replaced improved forms of removable media, in-turn: CDs DVDs, then BluRay. However, all forms of removable media are just means of communications, so it was inevitable that improved high-speed internet availability would replace the need for physical media altogether. The disappearance of physical media further expanded the range of individuals that could produce and distribute content as the need for any intermediary (TV network, video store, etc.) vanished as well. With virtually no content distribution costs, content owners and content bundlers command the vast majority of consumer TV viewing spending.

The Consumer TV Dollar
Though the price of a TV set has been virtually flat since 1964 the price of TV view has risen substantially. The stand-alone TV set has been replaced by a home theater system with multiple components. Traditional home TV viewing is being augment by mobile devices. However the bulk of the consumer TV dollar now goes to content purchases. With the TV set/consumer electronics industry mired in the doldrums of the current weak economy rather than focusing on more features to add to the TV set, it seems that the hardware makers would most benefit by envisioning some way to lower content costs.

A digression... my first experience with anything that was internet-like was viewing Mini-Tel in France. Mini-Tel was an internet like service provide by France Telecom. It had a lot, but limited, information such as what was showing at the local movie house and show times. On my viewing of Mini-Tel, I thought that it was a nice service but I could not see the leap between that and the life altering implications of the internet. Mini-Tel was a centralized service with limited content. The internet is a similar service but with virtually unlimited content. The big difference is the decentralization and the opportunity for user generated content as well as that from established big business. Although you pay something for an internet connection and you can obviously pay as much as you want for whatever you purchase over the internet, be it product, services or content, the internet essentially provided free and unlimited data content. If there were a service that provided free and unlimited entertainment content, suitable for a standard US coach potato, then that would have as big an impact as anything else mentioned here. And If that service were embodied in hardware, there would be quite a bit of value there.

The Smart TV Alliance is something of a move in that direction. It enables apps to be written that work across a variety of TV brands. It enables the grass roots type of content development that made the internet what it is. It provides an operating system that makes the TV a platform rather than just an output device. Ultimate, I expect that it will encourage input component integration (microphone, camera, maybe even touch) on the TV itself much as has happened with the notebook PC and cell phone. It maybe even will bring the excitement back to the category that other platforms have enjoyed over the past few years.


No comments:

Post a Comment

Note: Only a member of this blog may post a comment.