Wednesday, June 13, 2012

Television's Digital Future (online)

  Television has already undergone one digital revolution - the shift to digital transmission systems for both terrestrial and satellite broadcasting.  It's facing another in the Internet and online video distribution.
  When the Senate held hearings of the future of television in April, however, the focus was on traditional regulation of traditional TV media (broadcasting, cable, satellite).  One commenter on GigaOm, Stacey Higginbotham, concluded that the Senate hearing had it all wrong -
 The future of TV isn’t to be found in deregulation — it’s on the Internet. We just have to let it happen. And to do that, Congress needs to look at how broadband providers control access to content, through caps, specialized offerings and deals.
The Internet has become a platform for services and TV is just one of those services. We need to start thinking about TV in terms of who can deliver it at a transport layer (the pipes), how it gets delivered (via a pay TV subscription, YouTube channels, Netflix subscriptions) and where the value is and who gets to charge for that. 

  That revolution is likely to have even greater impact on the television industry, as it exponentially expands the television programming market.  While there's been expansion in regular TV programming access via streaming and "TV Everywhere" offerings, the greatest expansion has been in the flourishing of legal (and illegal) movies and TV program access, in User Generated Content (UGC) available through YouTube and other hosting services, and other online videos marketed directly to users.
 Sandvine, an ISP equipment provider, recently released a report of mobile Internet traffic as of March, 2012.  Among its findings was that the volume of Internet traffic generated by Real-Time Entertainment (streamed audio and video entertainment) increased 55% in North America over the previous six months.  The growth was global (40% gains in Latin America and Europe, 39% in Asia-Pacific).
YouTube, on its own, generated 27% of mobile traffic in North America, and audio streaming service Pandora contributed 6% of all North American mobile traffic.
  Looking at it another way, Sandvine found that smartphones and tablets accounted for 9% of all fixed access network traffic in North America, including 16% of Real Time Entertainment, 9% of Netflix traffic, and 28% of all YouTube traffic.
  Further, improved mobile network capacity, mobile device capabilities and screen resolutions, higher resolution content and the availability of longer duration content (and live streaming), means even greater growth in traffic, as data files get larger.  In other words, online video traffic expands to match capacity - when capacity is scarce, users downscale video quality (from HD to SD), but when capacity is there, users return to the higher-quality streams and sources.
 A very different indicator of the shift to online can be seen in the efforts of Nielsen and other audience measurement firms in redefining many of their measures to include viewing through the Internet.  In comments to the Audience Research Foundation's ;annual Audience Measurement Conference, Nielsen officials indicated that they're considering redefining the concept of the "TV Home" - the foundation of all their measures.  What has prompted this is a unreleased study showing that the percentage of time spent watching video content on a traditional TV set has fallen to 93.7% from 99.4%.  The coming Cross-Platform Report suggests that the non-traditional viewing is about evenly split between computers online and mobile devices.  A related study found that up to 25% of all media consumption takes place while people are working, and that much of that media usage isn't currently being measured.  Some 15% of American workers report watching live TV while doing their jobs.  Nielsen is working at developing better measures for such viewing, and revising current definitions and measures to include alternative viewing options and behaviors.

Add in multiscreen viewing, social TV, "TV Everywhere", and a variety of new services looking to put local broadcasts online, and you can clearly see the shifting dimensions of TV media markets, use, and audience behaviors.  The trend is towards providing TV audiences with greater choices of video content, delivery mechanism, and viewing options.  The industry is, at least, recognizing this, and looking for better ways to deal with the changing situation, or at a minimum, being able to track changes.  But one thing seems clear, the future of TV is not likely to be decided by minor regulatory tweaks to existing TV industry models and markets.  If policy is to maximize both the public and private value of TV, it also needs to raise its head out of the sand and look at the real emerging issues, not the detritus of claimed "market failures" in traditional media models.

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