One thing that not many people knew was that I was pretty keen on the whole Google TV idea when it was announced 2 years ago. I think that was partly due to the fact that it was a collaboration between several companies that I admire (Sony, Logitech and, one I didn’t know about at the time, Intel) and also because of what it promised to deliver to the end users. I was a fairly staunch supporter of it, to the point where I remember getting into an argument with my friends that consumers were simply not ready for something like it rather than it being a failed product. In all honesty I can’t really support that position any more and the idea of Google TV seems to be dead in the water for the foreseeable future.
What I didn’t know was that whilst Google, Sony and Logitech might have put the idea to one side Intel has been working on developing their own product along similar lines, albeit from a different angle than you’d expect. Whilst I can’t imagine that they had invested that much in developing the hardware for the TVs (a quick Google search reveals that they were Intel Atoms, something they had been developing for 2 years prior to Google TV’s release) it appears that they’re still seeking some returns on that initial investment. At the same time however reports are coming in that Intel is dropping anywhere from $100 million to $1 billion on developing this new product, a serious amount of coin that industry analysts believe is an order of magnitude above anyone who’s playing around in this space currently.
The difference between this and other Internet set top boxes appears to be the content deals that Intel is looking to strike with current cable TV providers. Now anyone who’s ever looked into getting any kind of pay TV package knows that whatever you sign up for you’re going to get a whole bunch of channels you don’t want bundled in alongside the ones you do, effectively diluting the value you derive from the service significantly. Pay TV providers have long fought against the idea of allowing people to pick and choose (and indeed anyone who attempted to provide such a service didn’t appear to last long, ala SelecTV Australia) but with the success of on demand services like NetFlix and Hulu it’s quite possible that they might be coming around to the idea and see Intel as the vector of choice.
The feature list that’s been thrown around press prior to an anticipated announcement at CES next week (which may or may not happen, according to who you believe) does sound rather impressive, essentially giving you the on demand access that everyone wants right alongside the traditional programming that we’ve come to expect from pay TV services. The “Cloud DVR” idea, being able to replay/rewind/fast-forward shows without having to record them yourself, is evident of this and it would seem that the idea of providing the traditional channels as well would just seem to be a clever ploy to get the content onto their network. Of course traditional programming is required for certain things like sports and other live events, something which the on demand services have yet to fully incorporate into their offerings.
Whilst I’m not entirely enthused with the idea of yet another set top box (I’m already running low on HDMI ports as it is) the information I’ve been able to dig up on Intel’s offering does sound pretty compelling. Of course many of the features aren’t exactly new, you can do many of the things now with the right piece of hardware and pay TV subscriptions, but the ability to pick and choose channels would be and then getting that Hulu-esque interface to watch previous episodes would be something that would interest me. If the price point is right, and its available globally rather than just the USA, I could see myself trying it out for the select few channels that I’d like to see (along with their giant back catalogues, of course).
In any case it will be very interesting to see if Intel does say anything about their upcoming offering next week as if they do we’ll have information direct from the source and if they don’t we’ll have a good indication of which analysts really are talking to people who are involved in the project.
I learnt a long time ago that one of the biggest factors in pricing something, especially in the high tech industry, is convenience. For someone who was always a do-it-yourself-er the notion was pretty foreign to me, I mean why would I spend the extra dollars to have something done for me when I was equally capable of doing it myself? Of course the second I switched from being a salaried employee to a contractor who’s time is billed in hours my equations for determinting something’s value changed drastically and I begun to appreciate being able to pay to get something done rather than having to spend my precious time on it myself.
The convenience factor is what has driven me to try and find some kind of TV solution akin to those that are available in the USA. Unfortunately the only thing that comes close are the less than legal alternatives which is a right shame as I would gladly pay the going rate to get the same service here in Australia. I’m not alone in this regard either as many Australians turn to alternative methods in order to get their fix of their favorite shows. What this says to me is that teh future of TV is definitely moving towards being a more on demand service like those provided by Netflix and Hulu and less like traditional TV channels.
Some industry executives would disagree with me on that point, to the point of saying that watching TV on the Internet is nothing short of a fad that will eventually pass. There’s been a couple clarifications to that post since it first went live but the sentiment remains that they believe people who abandon their cable subscriptions, “cable cutters” as it were, are in the minority and once economic conditions improve they’ll be back again. I can understand the reasoning behind a cable exec taking this kind of position, but it’s woefully misguided.
For starters Netflix alone counts for around a third of peak bandwidth usage in the USA. To put this in perspective that’s double all BitTorrent traffic and triple YouTube, both considered to be hives of piracy among the cable cartels. This is in conjunction with the fact that people are using their Xboxs to watch movies and listen to music more than they’re using them to play games, usually through online services. Taking all of this into consideration you’d be mad to think that the future is still in traditional pay TV services as there’s a very clear trend towards on-demand media, provided through your local Internet connection, is what customers are looking for.
There’s two reasons to explain why cable companies are thinking this way. The first, and least likely, is that they’re simply unaware of the current trends in the media market space. This is not entirely impossible as there have been a few examples in recent times (BlockBuster being the first that comes to mind) who simply failed to recognise where the market was moving and paid the ultimate price for it in the end. The far more likely reason is simple bravado as the cable companies can’t really take the stand and say that they’re aware of the changing market demands but will do nothing about it. No for them its best, at least in the short term, to write off the phenomena completely. In the long term of course this tactic won’t work, but I get the feeling none of them are playing a particularly long game at this point.
As I’ve said many times before media companies and rights holders have fought tooth and nail against every technological advancement for the past century and the only constant in every one of them is that in the end the technology won out. Eventually these companies will have to wake up to the reality that their outdated business models don’t fit into the current market and they’ll either have to adapt or die.
I spent the better part of my youth pirating nearly every bit of software I wanted. It’s not that I was doing it on principle, no it was more that I didn’t have the cash required to fuel my insane desire for the latest computer hardware, software and everything else that I had my eye on back then. Sure you can argue that I should have just gone without instead of pirating but in the end they were never going to get money from me anyway. For those software and games developers that did make a decent product they’ve since received a well paying customer in the form of my current self who spends lavishly on collector’s editions and any software that he needs.
One area I’ve never paid a dime for (although I happily would, as I’ll explain later) is TV shows. I was a pretty big TV watcher as a kid, even going to the point of recording shows that I couldn’t watch in the morning (because I had to catch the bus) so that I could watch them in the afternoon. As I discovered the wonders of playing video on your PC I started to consume most of my media through there as it was just so much more convenient than waiting for a particular show to come on at a certain time. Australia is also quite atrocious for getting new shows as they’re released, usually coming to our shores months after their release to the rest of the world, if they do at all. However whilst I might be able to get everything for free it’s still somewhat of an inconvienence, especially when I see a service like Steam that has no replica in TV in Australia.
It’s not like these services don’t exist either. The USA has things like Netflix and Hulu that stream TV shows to users and the latter will even do so free of charge. From a technical standpoint there’s no reason why these services can’t work anywhere in the world, they’re just another set of packets travelling alongside all the others. However both of those services employ heavy geo-fencing, the process by which anyone connecting to it is identified by region and, should they be outside the USA, be blocked from viewing the content. Primarily this is because of licensing agreements that they have with the content providers who want to control which content goes where. For places like Australia however this just leads to people pirating the content instead of watching it on TV or buying it in stores, something I’m sure they’re not entirely happy about.
This issue came up recently when a bunch of ISPs got together and proposed a new system to deal with copyright infringement. On the surface it looked like long time supporters of privacy were caving under pressure from rights holders but it’s actually anything but. More its an idea to make the discovery process more open and focuses on educating the end users rather than punishing them. Whilst I don’t like the system proposed I did like the fact that they recognised rights holders needed to do a better job of providing content to Australia residents. The fact of the matter is many turn to piracy for the simple reason that they simply can’t get it anywhere else. A service like Hulu in Australia would be wildly popular and would be as good for the rights holders as Steam was for the games industry.
Steam has shown that convenience and service are what drive people to piracy, not strictly price. Of course Steam’s regular fire sales have made sure that people part with more cash than they usually would but the fact is that they deliver a product that’s on the same level of convenience (sometimes better) than the pirates do. Right now rights holders are still delivering products that are less convenient (and sometimes, even worse overall) and so the piracy option is far more attractive. I know this is asking a lot of an industry that’s feared technology for the better part of a century but in the end the problem doesn’t lie with the pirates, it lies with them.
It’s no secret that I’m a big fan of location based technology. There’s just so much information available to us out there that the use of filters has become a given and whilst the big players do a good job of providing the general filters based on topics the lack of location based filters is part of what inspired me to create Geon in the first place. This coincides with the explosion in ubiquitous GPS technology which was still out of the hands of your average consumer only a decade ago. Without these cheap and plentiful devices Geon simply couldn’t exist as the information streams would lack the data I require to provide accurate results (I try to avoid fudging data as much as I can, but for blogs and news there’s really no alternative right now). As I’ve said before I’m not the only one looking to capitalize on this, and I’ll be far from the last.
However despite the enormous benefits that such cheap and ubiquitous technology provides there is a flip side to this coin that I don’t often talk about: location based restrictions.
If you cast your mind back about 15 years you’ll find yourself in a world with a technology that was on the cusp of being released: the Digital Versatile(Video) Disk. Designed from the get go to be a replacement for the aging magnetic tape based format VHS it was something of a slow burning success as sales of the older format continued to outstrip it until 7 years later. Unbeknownst to most there was a sinister side to this new highly durable high definition format, the Region Code. At its heart the Region Code was a lock to prevent you from playing DVDs that you might have purchased elsewhere, giving the media houses precise control of what was released where and when with no exceptions.
At the time I was a salesman at the Australian chain electronics store Dick Smith Electronics. I can clearly remember the time when DVDs began to take off and for the most part it was all good. However as time went on we started to get people in with various DVDs brought by friends from overseas or otherwise that just wouldn’t play in their newly purchased player. Whilst for the most part we were able to circumvent these issues by up-selling them to region free players it didn’t stop the flood of complaints about why they couldn’t play something that they had legitimately purchased. At the time I didn’t care enough to find out the exact reasons but recently a resurgence in these region locking principles has started to send me over the edge.
Take for instance Hulu, a free video streaming service. As a service I think its a great idea since I could get the shows I want on demand and the content producers still get paid since they can slap ads onto the feed. Additionally there’s a whole swath of analytics you can run on such a service that just isn’t available on commercial TV (like how many people have actually watched the show, not just a rough guess). Plus every so often some great pieces of work will find their way onto Hulu such as Carl Sagan’s Cosmos. If you dare click that link you’ll notice that it doesn’t go directly to Hulu itself and that’s for a good reason, the first comment there demonstrates my point exactly.
Hulu unfortunately isn’t available to anyone who is outside of the USA and they’ve taken quite an aggressive stance with making sure that people tricking their way into the service are locked out. Whilst the underlying technology might have changed (Geolocation vs Region Code) the rationale for doing so is the same. Right now the content providers overseas want to control the distribution of their media in order to create a kind of artificial scarcity. What this does is inflate the value of said content when they go to license it to other countries since they won’t be able to source it from anywhere else.
From a business point of view I, unfortunately, agree with them. They are merely trying to extract the largest amount of revenue possible from their investments and creating these scarcities on products is just one way for them to increase their bottom line. Additionally I can understand where the business model comes from as in the distant past such a scarcity was created by the mere fact that it took a long time to get media from one place to another. However this doesn’t excuse the fact that such a business model is becoming unviable and introducing artificial restrictions on products will only support them for so long.
Such behaviour is typical of the media companies as they’ve been dragged kicking and screaming through every technological revolution in the past 100 years. The good news is that despite their ranting and raving the barriers that they have put up in futile attempts to preserve their ancient business models are starting to come down with players like Apple (iTunes Store) pioneering the way. We’re probably still about 10 years away before big media rethinks their business model for the age of the Internet but at least, for now, there’s light at the end of this tunnel.