The Future of TV is Cobbling Together Digital Services
The future of TV is a patchwork of digital services rather than cable providers dominating markets around the country, panelist after panelist told the audience at Ad Age's Digital Conference today.
Of course, the speakers in question -- CEOs of the growing disruptors Aereo, Redbox Instant By Verizon and Hulu -- have big stakes in the outcome. But so do the big broadcasters trying to sue Aereo out of existence or the consumers clamoring for more choice and lower bills.
Unless you're an ESPN fanatic or HBO loyalist, Aereo CEO Chet Kanojia said you can combine his service, which allows users to watch live broadcast networks sans a cable subscription, with Netflix, Hulu or iTunes for a total experience at one-tenth the price of cable.
While Aereo does have a carriage deal with Bloomberg TV, for which it pays traditional carriage fees, and is open to other such deals, Mr. Kanojia is not interested in recreating the broad cable bundle now making consumers' bills so high.
"[Aereo] is an alternative for consumers who chose not to consume TV in conventional way," Mr. Kanojia said. One of the biggest problems with the industry is that traditional pay-TV providers are carrying, and charging consumers for, hundreds of channels, according to Mr. Kanojia. The average consumer only watches seven or eight.
As sports costs drive cable subscriptions bills higher, Mr. Kanojia said, a breaking point will come.
Aereo has engendered unrelenting ire from broadcast channels, which are trying to sue the service out of existence. They argue that by carrying their signals without paying retransmission fees, Aereo is infringing on copyright. Several networks have even gone so far as threatening to pull their broadcast signals entirely if Aereo ultimately prevails in court.
At the Digital Conference today, Mr. Kanojia said such a move would disenfranchise the 54 million people who are still using antennas. It would also free up spectrum that other companies might grab to serve those disenfranchised, he added.
Even if Aereo and the other upstarts succeed, however, nobody thinks they'll become the sort of local heavy that cable and satellite providers still are. Redbox Instant CEO Shawn Strickland said the average streamer subscribes to 2.2 services, seeking different things from each. Netflix includes a lot of TV and now some original series, for example, while Redbox Instant is dedicated to movies. Mr. Strickland said he expected many more of these services to emerge, moreover, each finding a specific niche.
While everyone wants to write the "Netflix killer" story, Mr. Strickland said, there are many models out there that can co-exist. "The over-the-top industry is working to reinvent the business model," Mr. Strickland said, using industry jargon for video delivered over web connections. "It's really a la carte."
And it's not just consumers, significantly, who are looking for other options. Actors, producers and writers are also turning toward digital platforms as hubs to create content. "Desperate Housewives" star Eva Longoria said at the conference that she is introducing an original animated series called "Mother Up" to Hulu.
"Hulu has become a great destination for content," Ms. Longoria said. "You are not contained to the normal laws of telling a story, can get creative with time, content and characters. It's a good destination for us."
Hulu interim CEO Andy Forssell expects more private-equity money to come in to fund content, he said, arguing that that one advantage of a platform like Hulu is that it doesn't have to program to one audience. The only questions it needs to ask are "Is it good?" and "Will some part of our audience love it?" he said.
Redbox Instant by Verizon will also likely become an outlet for originals. "I don't see how you can avoid having original content," Mr. Strickland said.
In the same way the creative community took an interest in cable after hits like AMC's "Mad Men," it is now turning to digital after the success of "House of Cards" on Netflix.
As a TV star, Ms. Longoria said there is a nervousness over the changing TV landscape. "TV in general is an elevator that's gone down," she said. "It's not affecting just one network… Those [big] numbers just don't exist."
Still, while TV is changing, Ms. Longoria contends it will always be a viable medium. And Aereo's Mr. Kanojia said a complete shift won't happen in the near future. "My last company was acquired by Microsoft, and Bill [Gates] always used to say that change takes 10 times longer than you think it will," he said, "but it's 100 times bigger."