State of the TV Industry: Part III

[Editors note: This is a guest post by Adam Perlis who has a continuing series at Marketing.fm on the State of the TV Industry]

At the very beginning of 2007 I published a two part article called State of the TV Industry. Now in the spirit of Marketing.fm I am continuing the conversation. In my first article I described what I thought to be the future of digital media. In doing so I made a few predictions about what I thought might happen over the course of the next few years and low and behold, some of these things rung true. To begin lets revisit some of the predictions made in State o the TV Industry: Part I,

The Future: So its 2009, and TV still exists! Ads are continuing to support the framework of television. But TV has changed quite a bit since 2007, the new form of TV integrates the Internet, Live TV, and Recorded/On Demand TV and it’s all at your fingertips. You can choose to view a show at any time recorded or not. Let’s say you missed last night’s episode of 24, well you can pull it from the database and watch it even if you didn’t record it. Live TV still exist, and so do traditional TV spots, but now they are much shorter because there is so much Ad content out there that longer spots create too much clutter. Finally, the internet has been fully integrated into your digital media space. You can access your desktop right from your big screen, pull up multiple windows showing TV, internet content, and media content simultaneously. The possibilities with these three integrated technologies are endless, we are talking pre-show ads, post-shows ads, in-show non-intrusive ads, show selection screen Ads and they will all be relevant to YOU! Though these ideas are dreamt up, it will remain to be seen what kind of creative ways advertisers will use this platform. Keep in mind that theses are very real possibilities and the technology is there.

The Bridge to the Future: It’s 2008, awareness has been generated, the technology is ready, it’s affordable and relevant to the consumer, and advertisers are starting to put money into it. But we need people to adopt it, make it part of their everyday lives. The success of the platform will be largely dependent on getting consumer to make it part of the norm.

Present Time: Today is January 16^th, 2007 and the technology is ready to be presented to the world. But only the techies have caught on. It will be up to a few brave companies to break the mold, put money into R&D, and find the new medium that could change the way advertising is done. Whether it will be Microsoft, Apple, Google, Viacom, one of the major networks, or one of major cable providers, there is a serious opportunity for one group to rise above the rest. Only time will tell.

Today is April 15th, 2008 and we are very close to being at the halfway point of my predictions. The paragraph that I want to focus on is The Bridge to the Future. Many of the things I discussed in this paragraph have made headway. I believe awareness has been built, people are really understanding the concept of internet on TV. Affordability and relevance, well Internet TV is free and people are starting to adopt it as part of there daily routine. Advertiser are starting to put money into it, I think Hulu.com does the best job of this.

TV on the Internet is by no means traditional and has certainly changed peoples viewing habits and the way they watch TV. Everything is “On Demand” but this hasn’t changed much, people are used to it with Tivo/DVR. The real challenge will be in getting people to site and to actually view shows. But remember websites are going to turn from your PC to your living room. Picture this…you click menu on your remote control, you click web TV, you click Hulu, you click The Office, you choose which show you want and tada you have web TV in your living room. It’s not too far from what we are doing now, people just need to get used to the idea of a totally integrated entertainment system.

So the question remains, how do you monetize a system which seems to take away the amount of advertising space and inventory? Two solutions that I can think of. Targeted advertising specific to each individual users via charging more for less. What I mean is sometimes less is more…ok, let me explain. When I watch my shows on Hulu. I see one advertisement every 15 min or so. It is almost always the same advertisement for the same company each time. After seeing the same ad at least 4 times per show, I tend to get the idea. Is this annoying…yes! But is it potentially more effective at getting the point across, I think so. My point being that advertisers will be more willing to spend the extra money for fewer spots if they know that the value of their impressions will be greater and more targeted. The other area I see potential for advertising space and monetization is within the user interfaces a la “On Demand” video box.

That is where I think the real creativity will come but that is a discussion for another time. Just understand that there will be more and more spaces for untraditional advertising within the user interfaces.

Monetization is important, but when will people be ready! As I had mentioned in my previous articles, I don’t think people will be ready for a fully integrated digital home entertainment system until 2009. Early adopters will most likely begin to catch on to the trend and I think that the Comcasts, RCN, etc. of the Cable TV industry will improve their software and start catering towards this integration. I also believe that there is room for another major player to be involved, perhaps Apple TV and other competitors will step into the market. It seems a likely story considering you will only need cable TV for live entertainment. Everything else will be available online and on demand. I guess we just have to wait and see…