Thursday, February 1, 2007

TV moves to the net

A version of this was first published in Marketing in 2007; this piece looked at the future of TV, seeing Joost as a seminal moment in TV's move to the net.  It was (even though in the end it didn't happen for Joost), and we're now seeing online TV move to the big screen, closing the circle.
In the early days of satellite TV (back in the analogue era), hours of harmless fun could be derived from channel surfing the weird offerings of foreign TV.  In those days, Eurosport (no Sky Sports at that time) would fill the many hours between recognisable sports with live log-rolling from Arkansas, and the desperate late-night viewer would be left with no alternative but to watch ‘70s Bavarian soft porn on German TV where lederhosen and white slingbacks were the uniform of choice.

Satellite TV didn’t seem important then – it was just a laugh to have an alternative to the four channels available to mere mortals then.  Sky and its rival BSB fought it out over meagre audiences, and balance sheets ran red.

All that’s changed now.  Sky is in over 8.5 million homes in the UK, and three-quarters of homes now have digital TV of one sort or another.  Multichannel TV is mass-market nowadays, and the novelty’s gone.

But recapturing some of that feeling right now is the internet.  Want to catch up on the latest from Kabbalah TV?  Cuban TV?  Albanian?  Ten channels of Vietnamese TV?  These and hundreds of slightly swivel-eyed religious channels of various denominations are available right now on the web.

But the explosion of availability of channels over the internet doesn’t mean internet TV is set for the big time.  There’s a fundamental problem faced by TV on the web, a technical barrier which prevents the market growing with demand.

Conventional TV is highly scalable.  You broadcast the signal once, and as many people as are awake can receive it (though BARB doesn’t insist they’re actually awake).  The ‘load’ on the transmitter is the same whether ten or ten million are watching.  With web TV, the signal is streamed from a server to your PC.  Each new viewer requires a stream of their own – and demand on the server therefore scales in proportion to the audience.

So there’s a high price to success in the web TV world.

That’s why so much interest was generated by the recent debut of – a peer-to-peer TV system founded by the people behind Skype and KaZaA, using part of the $2.6bn eBay paid for Skype in 2005.

Peer-to-peer networks break this viewer/server relationship by distributing the task across thousands of users, each of which serves a part of the file to other users.  So rather than grinding to a halt, peer-to-peer networks actually become more efficient as more users come online. 

It’s not the first peer-to-peer application to be applied to TV – the BBC’s IMP did it last year, and KaZaA’s been at it for years.  But Joost does it to streams – in other words you can watch live, rather than downloading for watching later. 

This is crucial for the viewer, as it removes the ‘planned viewing’ nature of downloading, allowing impulse-driven behaviour and a more TV-like environment. 

There’s a virtuous circle that must be in place for online TV to succeed.  Content (stuff to watch), devices (things to watch it on), delivery (how it gets there), audiences (people to watch).  According to PwC’s Global Entertainment & Media Outlook, there will be 286m broadband households globally by the end of 2007 – that’s three times the size of the US TV market.  Joost have cracked the distribution conundrum that’s held online TV back, and built in the piracy protection that content owners demand. 

Currently, the system’s still in limited beta, but the picture quality’s impressive for such an early stage – not DVD, but better than VHS.  It still takes too long to change channels, and the content’s fairly limited – music videos, extreme sports and channels that hark us back to where we started, the good old days of satellite – Wet ‘n’ Wild and Paris Hilton. 

Skype took just three years to reach 136m users – if Joost does the same for online TV, we won’t be watching log-rolling much longer.

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