 INTERNATIONAL | CASE STUDY |
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| Alan Wolk: 10 things you need to know about the future of TV |
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In the following article, we present KIT Digital's Global Lead analyst, Alan Wolk's thorough presentation on the evolution and opportunities in the future of social TV.
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In a practical and simple way, Global Lead analyst at KIT Digital, Alan Wolk, prepared a report entitled 10 things you need to know about the future of TV, with answers to the main questions and speculations about where the TV industry is headed.
Q: What's the main thing stopping viewers from cutting the cord?
A: bandwidth caps. Even if you're cutting the cord, you still need an internet connection. Most people buy internet and TV together as part of a bundle that offers unlimited bandwidth and deep discounts. Cut the cord, and you're looking at bandwidth caps for internet use, along with higher prices for a reliable high-speed internet connection. Since video eats up a lot of bandwidth, cutting the cord can prove more expensive than keeping it intact.
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Q: When will HBO start selling HBO GO as a standalone solution?
A: Not any time soon. There are several reasons HBO is unlikely to take this step, no matter how much the internet speculates: HBO is not set up to accept payments. They get their money from the MVPDs who do the collecting for them. HBO makes a lot of money for MVPDS and vice versa. 3 months free is allure for new customers. HBO's easily bundled into premium packages. Why give up a good thing? HBO GO is a Trojan horse. If the MVPDs get too tough on fee negotiation, HBO can point out that they've got a great alternative that's all ready to go.
Q: What's holding up TV everywhere?
A: Lawyers. The big road bump right now is around. Rights issues and whether the broadcast channels or the MVPDs are responsible for authenticating viewers. In addition to the legal wrangling, WIFI still isn't everywhere and that holds up real demand. The ability to sit on your couch and watch the Mets game on your iPad isn't quite the game changer that watching the Mets game on your iPad in the backseat of a taxi would be.
Q: What's the best option for a smart TV?
A: Waiting. Smart TVs are likely to go the way of the DVD player. The manufacturers can't agree on a single standard, technology keeps advancing, and consumers are not used to buying TVs with the same frequency as other electronics. While creating Smart TV apps makes sense right now, look for them to be replaced by smarter (and smaller) set top boxes that allow MVPDs to push out the latest updates as well as apps on 2nd screen devices that do the work of a set top box.
Q: What's keeping the big Hollywood studios up at night?
A: What isn't? Two big ones: The rapid drop in DVD sales. Ultra Violet has recovered some what from its less-than-stellar debut, but given how comfortable consumers are with streaming video, there's no indication that Ultra Violet can save the DVD. The push to shrink the window between theatrical and pay vod release. MVPDs see big pro?ts from early VOD releases, but cinema chains are freaked out by the prospect. Studios know the VOD market is growing and will slowly but surely start to shorten their windows.
Q: When will consumers be able to click and buy something they see on TV?
A: They won't. Though the "Jennifer Aniston's Sweater" paradigm has long been a fantasy of advertisers, there are very few products that can be ordered with just one click. Factor in decisions like size/color/model/quantity/shipping mode and you've annoyed the viewer by taking them away from the show they want to watch. The solution: Consumers will be able to purchase items after the show from their 2nd screen device. The big winner: Product placement; as 2nd screen devices provide more opportunities to turn placements into sales.
Q: What makes 2nd screen apps the best thing ever for MVPDs?
A: Data. Viewers will all have individual 2nd screen accounts, which will provide MVPDs with detailed data about who is watching, what they're watching, where and when. This data can be used to negotiate better deals with the networks whose content they broadcast. MVPDs can use the data to approach advertisers directly and negotiate a Groupon-like deal for their subscribers. Better data also means a better user experience as discovery engines can be pre-tuned and commercials better targeted.
Q: What's the Achilles heel of most social TV apps?
A: Incomplete data. Social TV apps only collect data on viewers who are using their app or whose tweets they've collected. Thus, the data they collect is incomplete and often inaccurate: without hashtag filtering, tweets about a rough day at "the office" get credited to the eponymous sitcom. That may not matter, because the end game of most social TV apps is acquisition. Their functionality will be bought by and rolled into much larger, "Swiss Army knife" type apps that offer more refined data. Along with the ability to change the channel.
Q: Who is going to dethrone Netflix?
A: Someone who gets the value of a great user interface. Most users are inherently technophobes. So the simpler you can make anything for them, the better. Netflix may not have the best selection of movies, or the best prices, but it's got the best user interface. That gives it a huge advantage over its rivals, none of whom seem overly concerned with what their sites look like. Any future rival will need to create a better user experience. That means intuitive search, no extra passwords and a taxonomy that doesn't read like a secret code.
Q: Will MVPDs begin providing direct access to OTT channels?
A: Only if they want to remain competitive. While Roku, Apple TV and other OTT devices are simple enough to use, TiVo was almost put out of business by cable company DVR/STB combos, despite their inferior interface. SIMPLICITY is one of the most appealing features of any type of technology. OTT-enabled set top boxes put the onus of updating and maintaining on the MVPDs. Add in the demand for OTT channels, and the decision is a no-brainer.
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