Today’s issue of The Economist includes a fascinating article about Internet television. Economists love talking about disruptive technologies, and this one seems to be a classic. According to the article, cable TV companies are doing everything they can to resist the adoption on Internet TV because they are terrified that it will destroy their business model.
Having said that, once of the things that opening up the market will do is emphasize the power law nature of the market. Right now minority taste TV companies make money because they get packaged with more popular channels by cable and satellite companies. In the ultra-competitive world of Internet TV, consumers will eventually only pay for the programs they want, they won’t even have to subscribe to a channel. And that means huge viewing figures for whatever is popular, and a very tiny share of the market for everyone else. Just like trying to sell a book on Amazon. This will doubtless be good and bad in varying quantities.
Personally I won’t care too much as long as I can get baseball on TV when I’m in the UK, and cricket and rugby on TV when I’m in the US.
Meanwhile I’d be interested to hear from anyone who is using Boxee. The only Linux machine I have with me is the Asus, which is not ideal for TV-watching.
And the current business model is working so well for ITV, C4, Five…
Steve:
ITV, C4 and Five all all free-to-air broadcasters funded by advertising. The Economist article is talking about cable and satellite companies that sell access to their programming.
Ad sales are, of course, plummeting, but that’s another issue.
True, though ITV2-4 are all cable/satellite.
The point I was trying to make, and making badly, is that all of the existing business models are collapsing. I have several friends who do not have a television in their home, but do have access to BBC iPlayer, 4oD, etc. As the technology switches over, I’m not surprised many programmers are terrified.