There is no question that digital is massively disrupting home entertainment – and that the cable operators have some real problems to contend with such as Internet services stealing their advertising revenue. When Napster – and illegal file sharing in general – massively disrupted the music industry, iTunes emerged, and it quickly became the dominant legal solution for digital music. But so far nothing has really emerged as a dominant solution in the digital home entertainment space.
There are three major trends going on here: cross-screen consumption; on-demand content; and increased content choice.
Everyone is talking about cross-screen and it’s on just about everybody’s agenda. Wouldn’t it be great to see our favourite TV programme on our iPod Touch when we want? This can be enabled via side-loading media from a PC or set-top box, or through wireless data transfer. The Slingbox allows the ‘slinging’ of content from your home to your mobile device. DRM and content licensing become barriers to cross-screen consumption, but the barriers will have to be overcome quickly because illegal material is a real alternative.
On-demand content (‘time-shifting’) is already here to some extent, with services like the BBC iPlayer, Sky+, Hulu, etc. However, these services only take time-shifting so far, and there is no doubt that today’s child will find the concept of scheduled programming bizarre. Why would you want to do that? There are of course some exceptions to the rule that everything will be on demand – news, sports, and other events are clear examples. But as a general rule, time-shifting will be the default for the future.
We all know about the rise of YouTube, and the quick shift from watching TV and video on the living room TV to watching video on computers. Services like Boxee and Ustream are also interesting. And then there is BitTorrenting. These digital trends and services bring about a change in people’s expectations regarding the type of video content they consume. Content with high production values like HBO programmes will continue to be popular, but in addition there is an increased demand for user generated content, niche or long tail content, etc. Standard ‘channel bundling’ is still what cable companies focus on. But it feels like a very outdated solution in a world where people’s content sources are very broad and their content needs are very specific.
The cable guys need to embrace digital transformation, and quickly, before they are forced to adapt in order to survive. If cable operators try to constrain consumers to one screen or a few select content bundles and sources, then eventually people will break free and call for competition. Even the couch potato can be mobilized when the promise is better entertainment in more places at any time.
Olof Schybergson / CEO of Fjord
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