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Plus Report - By Thomas Baekdal - September 2010

The Real Challenge of TV's Future

The TV industry needs to forget about the old business models that distracting them from making the right decisions.

A couple of weeks ago, Apple announced it's new updated Apple TV, Plex 9 was released a week before that, the much anticipated Boxee box is now available for pre-order, and Google TV is coming soon. TV will change quite dramatically in the next few years.

We have reached a point in time where the technology, the demand, the business models, and infrastructure is ready for action. All that is left is to make the right decisions.

We need only one other element to create a huge success, which is to persuade the TV industry to have a bit of common sense. Focus on getting their shows out to as many people as possible, via as many channels as possible-without bogging it all down with bureaucratic licenses, and controlled distribution.

The Change

The future of TV is going to go trough three stages:

Pre-2010: Traditional TV via cable. You decide what channel packages to get, but not what shows to watch. Non-connected mass-market distribution.

2010-2015: The internet TV battle. A lot of players will try to disrupt the old business models, which leads to unprofitable services, huge mess, battle over licenses, controlled devices, and very fancy but little real difference.

2015+: TV becomes a part of people's personal stream.

We have just entered the second stage. It's a period of time where we see all kind of interesting experiments, but none of them actually work. They are workarounds.

E.g. via Plex you can watch Hulu via the built in browser component. It's very well made. But here is the thing. I don't want to watch Hulu. I want to watch "Stargate," "Lost" or "Family Guy." Hulu is just another cable provider that just happens to be on-demand on connected to the internet. It doesn't actually change anything.

Plex is a TV channel aggregator, but the future is in TV *show* aggregation-not channel. I wrote in "The Future of News, Tablets, and Business Models" that the future of news is to create news, not newspapers. The same can be said for TV. Create TV shows, not TV channels.

The new Apple TV is slightly better in the way that you can rent specific shows, instead of connecting to TV channels. But, the renting business model is fundamentally flawed, and Apple TV is way too expensive.

Consider this: The average viewer watches roughly 4 hours and 30 minutes of TV every day. If you live in the UK you can subscribe to SKY and get 450 movies per week, five sports channels, and 98 entertainment channels for $92/month. That's their full pack, the standard pack goes from $29/month.

With Apple TV, a regular TV episode is 45 minutes long, which means that the average viewer will watch six shows per day. Multiply that with 30 to get a month-and the result is: 99 cents x 6 x 30 = $178/month

...or twice as expensive as the most expensive cable TV package, and six times as expensive as the standard cable TV package.

It just doesn't work. Plex, Apple TV, Boxee, Google TV all entices us with their interactive experiences, but none of them actually solve the problem.

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Thomas Baekdal

Founder, media analyst, author, and publisher. Follow on Twitter

"Thomas Baekdal is one of Scandinavia's most sought-after experts in the digitization of media companies. He has made ​​himself known for his analysis of how digitization has changed the way we consume media."
Swedish business magazine, Resumé


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