Next generation TV over the Internet: This revolution will be televised

By Leonard A. Giuliano, co-chair of the MBONED Working Group at the IETF, Network World |  Business, Internet, television

Since the advent of cable television, consumers have always griped about bundle pricing. Cable TV providers act as a middleman between TV stations and consumers. Stations like ESPN and CNN charge the cable provider for each viewer capable of receiving their content. Cable providers pass that charge along to the customer, with some markup along the way. Cable providers also bundle a number of stations into packages or tiers. For example, if you want to subscribe to ESPN, you typically have to subscribe to a basic cable package that includes numerous other channels, like Lifetime Television. So no matter how little interest an ESPN viewer has in watching abduction-themed movie marathons, he will still have to pay for Lifetime when he subscribes to ESPN.

TV stations have always wanted to cut out the middleman and charge subscribers directly. To free themselves from unwanted bundles and tiers, viewers have sought to subscribe only to the channels they want. TV stations would also find that distributing their content to viewers over the Internet is far cheaper than operating the video distribution networks typically used today to bring content to cable providers.

At first glance, cable providers would be the obvious big losers in a world where they can easily be bypassed. A new beneficiary would be content aggregators. Today, companies like Google, eBay and Apple, using different business models, have developed a core competency to connect individual buyers/sellers of content/information/services/products. Companies like these could find a great opportunity to efficiently connect subscribers to the potentially millions of TV channels that could be available in the NextGen TV marketplace.

Cable providers could certainly attempt to provide this marketplace role. However, they are likely to find that their corporate DNA lacks the qualities to make this role a successful fit. Large cable providers/phone companies tend not to be strong in the area of creating innovative services and content. To be fair, very few companies are successful at this. For every Google, there's a dozen Hotbots; for every Hulu, there's a hundred Pixelons.

But failure in the NextGenTV space isn't inevitable for cable providers. They need not follow the path of obstructionism laid by the recording industry, where iTunes stepped in and dominated the online music distribution industry that was rightfully theirs. They need not fade from view slowly like the newspaper industry, unable to capitalize on the vast opportunities of online media. They need not stand athwart the train tracks of Internet history crying "halt!"


Originally published on Network World |  Click here to read the original story.
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