Friday, July 1, 2011

When Will Internet TV be as Good as Cable TV?

There’s no doubt about it: Online television is the way of the future. We move closer to it every day. From high-technology content providers like Netflix and Hulu to network websites that stream their own content, more and more people are ditching traditional television in favor of these more net-savvy formats.

It’s an inevitable evolution of the technology. It used to be that the telephone and the amateur radio were the only two-way communication devices, with radio and television broadcasting blindly to a massive audience. The only way that the content providers could close the feedback loops was with tedious surveys (Nielsen ratings, among others).

Then the Internet came along and changed everything. Uploading became as important as downloading. Web 2.0 pushed the importance of social media and the idea that everyone’s voice is equal. Anyone with an Internet connection became a broadcaster as much as a member of the audience.

This doesn’t mean that each individual, myself and yourself included, carry as much clout as a major network like CNN or MTV. The major networks still stronghold broadcasting thanks in part to the prevailing saturation of cable television in the average household. The problem with this method isn’t just limited to the aforementioned lack of immediate viewer feedback, however. It’s also an incredibly inefficient broadcasting method. Here’s basically how the cable industry works:

Producers sign contracts with networks who help fund the development of programming. Networks make agreements with cable providers who then broadcast not one or two channels, but all channels at once to each and every home they service. Subscribers view only a few channels at once despite generally having hundreds of choices. This is equivalent to your cable company constantly spraying a massive fire hose on full blast constantly, and you use that humongous stream of water to wet a toothpick. Everyone gets their own fire hose, too. Since cable lines can only handle so much data, most television stations viewed through traditional cable get compressed to hell. They’re sub-standard quality, in effect.

The networks get paid a lot of money from cable providers for the right to run their shows, and then the cable company adds their own fee on top of this to arrive at the ghastly figure they bill you for each month. The entire system is designed to generate as much money as possible for people who benefit from being gatekeepers, one-way broadcasters, and content producers. And many of them deserve the money they make, too.

Unfortunately, you end up paying to have a fire hose of content you don't want permanently spewing into your house. The idea of being able to pick and choose the stations you want is as old as cable television itself, but cable providers have always had a good excuse: They can’t do this because they wouldn’t be able to afford all the channels, and everyone has different tastes. That means everyone has to pay for everyone else’s channels so that everyone can have the few that they actually want.

But what if we were to trim down this entire business model and make it a heck of a lot more efficient? This is the idea behind Internet-based television. Not only can you turn off the fire hose, you can choose a specific episode of a specific show that you like. This is the difference between Niagara Falls and your kitchen sink.

The next major hurdle with this concept is that it’s inconvenient to go to the website of the network or show you want to watch and hunt down the content. This is where services like Netflix and Hulu try to bridge the gap; they give you an easy interface that works not just through your computer, but within your entertainment center’s media devices such as your TiVo. The pairing doesn’t always work out, but it’s still better than the alternative of going to and looking up the show you like.

The networks still don’t like this setup because they tend to lose a lot of money this way. Hulu has a hard time securing the right to show many shows because of the deals they run with other networks and their attitude toward advertising. Also, the streaming from the networks’ own websites can carry some flaws in the way advertising works.

So it looks like we’re not going to see Internet television at the level that cable television exists until someone can figure out how to simplify and coordinate the economics of the entire thing. Media giants like Viacom are too protective of their brands, but like the idea of people paying for 10 shows just to get the one that they want. It helps secure funding for the other shows. Commercials as well don’t seem to work as effectively online as they do through cable.

Here’s my proposal for how Internet television should work in five years:

It’s like Apple’s App Store. Consumers pay for a service like Hulu or Netflix that works through any one of many home media boxes such as the TiVo, Roku, or Boxee. The consumer pays for each channel, or bundle of channels, like an app in an app store. This way you pay for exactly the channels you want, and the content providers get you to subscribe to bundles of content at once, ensuring payment for all of their shows.

Each network is responsible for providing the stream through which their media is accessed. Viewers choose episodes of specific shows, or watch the live stream from that network. This takes the burden off of the service provider who no longer has to worry about providing the stream, just the bandwidth. Content comes in more reliably, with less artifacts, and in higher resolution than before, because the information is sent when requested by the viewer. Because the Internet is a two-way communication channel, the viewer interacts with the stream in many ways, including instant feedback. Monitoring the number of streams being provided at once ensures highly accurate viewership statistics.

Instead of paying a monthly fee for both Hulu and TiVo, like I unfortunately do, the consumer pays a single bill. That bill includes a small subscription fee for the service, a larger fee for the Internet connection, and monthly subscriptions to each channel’s “app.” Therefore, the viewer can customize their bill to include exactly the channels they want; mid-month, if they choose, they could even include a new channel by paying the monthly fee for it (in my estimate, less than $3) to watch a show that they otherwise may not have.

The Wii U's controller and browser
Advertising could be more creative than just commercial breaks during shows. Viewers could choose to fill out surveys during a program or watch advertisements later for discounts off of their bills. Short quizzes after this content could ensure that the viewer is watching the adverts, with the alternative being that the viewer could simply accept paying more for the luxury of having commercial-free programming. An augmented reality remote control could be used to remotely “tap” on on-screen content to launch a mini-browser with advertisements; clicking through those ads while the show plays could allow the viewer to skip any upcoming commercial breaks. The Wii U’s controller is quite an inspirational device in this regard.

I know that what I’m describing is basically Google TV, but with Google aggressively targeting a purchase of Hulu, we may be seeing something like this in the near future. We’re not going to see cable go away anytime soon, but with viewership rates steadily declining due to poor quality and outrageous bills, these kind of Internet-related alternatives are becoming more attractive. I’d say we’ve got about five more years before we see a completely useful consumer service that allows Internet TV to surpass cable.

1 comment:

    Nicely written.