The Power of Now

There is nothing quite like getting what you want. Especially if its when you want it. 2007 is shaping up to be the year of 'on demand' entertainment. Apple will consolidate its media pedigree by adding more video content to iTunes as well as bridging the gap between the computer and the home television with its ITV device. Peer to peer technologies like Bittorrent and the Venice Project will go legit, as publishers discover bandwidth savings from decentralised distribution. Upstart aggregators like YouTube will try and toe the line on copyright infringement. And Studios, just like music labels, will wake up to the fact that consumers are starting to view channels as another form of forced consumption like record albums.

In fairness, I'm not a particularly good TV consumer. For one, I'm never home. And when I am, my favorite TV shows are never on. If like me, you are fan of multi threaded, complex plotted and subtle entertainments like Lost - after a few missed episodes, you may suddenly find yourself feeling as stranded as the residents of the island. Complexity is a great argument for watching TV shows on DVD rather than on broadcast. But its an even better argument for TV on demand. It took me a while to figure out how to buy TV shows on the US iTunes store without a US credit card, but once I had, I was in heaven. I could buy a season pass, get my entertainment delivered to me automatically and watch it when it suited me (like on a traffic congested taxi ride to Shanghai airport). In all, a seamless experience.

However, its a temporary honeymoon. The problem with 'on demand' is going to be the last bit. Demand. If you are looking for legal entertainment fare at the moment, its slim pickings. Look at the legal movie download lists and there are titles present for no other reason than the limited selection available. But by the end of this year, that will change dramatically. Suddenly it won't be a case of five hundred channels and nothing on, but five zillion pieces of content and no idea where to begin. Once you have downloaded all the obvious stuff, then what?

This is where some of the massive investments in social networking platforms made in the last few years should start bearing fruit. Shared preferences in movies, television and music are at the heart of many communities like MySpace, Cyworld and QQ. If you add in the ability for social recommendations to initiate 'on demand' entertainment purchases, then you have the beginnings of a new kind of channel aggregator. Its not a new idea. Using online community to generate entertainment sales is a model which is already working in China in the mobile ring tones space, where traditional CD sales are beset by piracy issues.

Linear broadcast will not go away. Niche channels are still a great way to discover content that you didn't know you were looking for. But on the whole, channels will need to rethink their aggregation model if they want to continue being valuable to consumers. Assembling material for an average consumer demographic is not enough. Packaging needs to be more personal. If you want an example, compare the way that Disney TV shows and movies are presented on iTunes as compared to the website for the TV network ABC, which is actually owned by Disney itself. Then ask yourself, where would you rather go to make your entertainment decisions?

There are three main hurdles that need to be overcome this year. The first two are tricky, but not insurmountable. They are rights and technology. The issue of rights is a pragmatic one. Most channels and TV networks license third party content with limited rights that rarely extend to new media platforms like mobile or internet. That makes it tough for channels to extend their linear broadcast brands into 'on demand' platforms. Content creators can usually get all the rights they need, but by going direct to consumers they will increasingly hurt their traditional distribution partners.

The second problem is technology. Protecting content from privacy is always going to be a moveable feast, no matter what the uber geeks tell you. Sure, the next crack to the DRM regime may not fit on a t-shirt like happened with DVDs, but like everything - with enough smart kids, cola and computers - nothing is unhackable. But that's not a complete disaster. People are still prepared to pay for content even when they can get the same MP3 or video clip free from an illegal source. The important thing is, consumers are no longer just paying for entertainment. If its on iTunes - they are also paying for the complete experience of a quality authorised clip, with embedded data, properly organised, formatted and neatly delivered to their device. Its the 21st century equivalent of nice packaging.

Which raises the final and toughest hurdle. Namely, money. Whether its pay per view or inserted advertising, the simple fact is, the incoming business model for 'on demand' entertainment does not appear to be as large or as predictable as the model it replaced. For all of its faults, the Studio system of producing television and filmed entertainment was able to mitigate production risks by through pre-sales to distributors and aggregators worldwide. The end audience mattered, but not until it really didn't. Many people are now wondering whether the new landscape will be able to continue to support high budget features.

Its an open question. Certainly, the book hasn't been closed on how to monetise entertainment content. We will see more novel experiments with integrated marketing platforms like 'The Lost Experience' which allowed advertisers to engage with fans of the TV show in an alternate reality game format. Such efforts, however, are much harder to scale than merely selling thirty second advertising slots on a prime time channel. Or for that matter, fancy box sets of DVDs at Christmas.

But one thing is for certain. The instant gratification genie is out of the bottle. And there is no going back.

Comments

[Rupert M]

Mike,

Get Foxtel IQ installed it'll fix your short-term TV problems.

[Andrew]

Any tips on where to find instructions for buying US iTunes content outside the US?

[Dean Collins]

Or better still, get a MythTV www.mythtv.org installed and solve your long term problems.

Oh and in case you are never home but stuck in some hotel with nothing in english - hook up a slingbox and watch whatever you want from your home server.

http://deancollinsblog.blogspot.com/2006/01/sling-media-gets-466-million-dollars.html

Cheers,
Dean

[Jonathan Lowe]

Power of Now novel:
burjreview.blogspot.com

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It's fun.Very worth to read.

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