New Ways to Watch TV

(Updated on September 24th)

Little by little, the way we watch television is changing, in ways great and small.

Netflix just released their new app making Watch Instantly service available on the iPhone.  You can also access and update your standard mail service queue on your iPhone without needing to purchase any third-party apps.  [Correction: not true!  Not true!  The free Netflix app only manages your Instant Queue, not your mail-delivery queue.  You’ll still need to purchase a third party app to manage your entire account.]  My AT&T service contract without data caps expires in a year, so, for the short term at least, my son can stream the first three seasons of SpongeBob on our car trips (among other uses).  This is yet another in a series of increasingly bold moves from Netflix lately — the other day I read that surround sound could be arriving to streaming content in Netflix’s future as well.

It’s no secret that I’m a huge Netflix fan. And while they continue to impress in the area of content acquisition deals, I would still like to see them take a more aggressive stance with regard to the marketing of lesser known titles. If a good movie comes out on Netflix that no one has ever heard of, due to its low production and promotional budget, then I don’t think it would threaten the relationship Netflix has cultivated with major studios to create either an on-line channel or, preferably, something accessible though any Watch Instantly device, that could advertise new titles and offer interviews with the films’ directors and actors.

Apple refreshed its Apple TV.  While Netflix is the go-to service for streaming content these days, they don’t seem interested in competing in the on-demand space, meaning that to stream or download new releases of movies or episodic television, you’ll need to look elsewhere.  So, although an Apple TV is not the most exciting product in the world, and in some ways it feels a little redundant — which is surprising coming from Apple — it does finally offer 720P access to Netflix, and it’s still the only way to rent movies and television episodes on your HD television through iTunes.  The hard drive is gone, but there have been upgrades to the service, such as the 99 cent per episode rentals from ABC and FOX.  The raison d’être of the Apple TV is a little tough to pin down: as a product, it’s not nearly as revolutionary as many of Apple’s other offerings, nor is it really a differentiator in that, other than iTunes access, it doesn’t really do anything that consumers couldn’t already do with similarly priced devices.  But it’s also only $99, and many people may decide that it delivers a lot of bang for the buck.  I’ve also been reading a little bit about AirPlay, which should allow consumers to wirelessly transmit video content at home from an Apple TV to a portable device.  This is exciting, but also seems a little unnecessary to me.  Just because I can watch a movie on an iPad (if I owned one) in my kitchen, does that mean I should?  Can’t I just watch movies on my 46″ widescreen instead? [Correction: Engadget’s somewhat negative September 29th review of the new Apple TV makes it clear that AirPlay only pushes audio and video from a mobile device to the Apple TV, not the other way around.  Oops.]

Amazon introduced a similar 99 cents per episode service on ABC and FOX programming, but one that includes downloading rights as well.  As already reported in the New York Times, a lot of the best original programming that people enjoy on basic cable won’t be available for download from iTunes or Amazon, but that’s likely to change as streaming options gain more and more market share, giving these content providers more leverage with the networks and studios (the same thing happened in the music business).  What I like about Amazon Video on Demand, and why I think it will succeed in today’s competitive landscape, is that its service is hardware neutral.  Anyone with an Amazon-capable device can buy these episodes for 99 cents, whereas there is only one device that will enable you to access iTunes on your living room TV.  I also think that this streaming vs. download question plays heavily into Amazon’s favor, especially if mobile phone providers continue to cap data usage going forward.   It’s my understanding that you could download five episodes of something on Amazon from the wifi connection at an airport to watch later during your flight — on the mobile device of your choice — but, with iTunes service and, let’s say, an iPad, you would need to have access to a wireless connection throughout your flight if you wanted to view the same content.  If I’m wrong about this, please let me know. [Correction: I’m half wrong: the Apple TV only lets you stream content, but an iPad, iPhone, or computer will still let you purchase content through iTunes.  But the 99 cent deal only applies to streaming, not downloading!]

Roku has stepped up and is really joining the fray.  Roku isn’t a household name by any means, but by staying under the radar for a few years they’ve made significant improvements to their hardware while continuing to expand their content services.   They cut the price of their flagship $99 HD-capable player to $69 the day before the Apple TV announcement, and are also releasing a 1080P software upgrade to their top-of-the-line $99 player later this year.  Have a look at this helpful chart put together by Engadget that compares the Apple TV with the Roku and other hardware alternatives.

Besides Netflix, a Roku device can access Amazon Video on Demand, which offers most of the same movies and television programming available on iTunes.  In other words, consumers are demanding Netflix on multiple devices, but they aren’t necessarily wedded to iTunes.  If they can get the same content from Amazon they’ll do it, especially if they can download it instead of stream it.

— Blu-ray players continue to evolve, offering more and more cutting-edge services, sometimes through firmware updates.  Using your Blu-ray player to access the internet feels a bit radical to a forty-something curmudgeon like me; it may take many years for Internet TV technology to catch on, but, for the time being, Blu-ray players today serve as a bridge technology to get us on the internet as we watch TV.  One part of the experience that will need to evolve alongside increased demands on broadband connectivity is what to do about the mouse and keyboard.  As it is, my family drops our various remote controls on the floor at least five times a day.  These poor remotes take a beating.  And that’s when they aren’t getting lost between sofa cushions.  So any talk of using a pricey tablet-like device as a TV remote is foolish.  Whatever device we end up using to type data into the TV is going to have to be rugged as hell, and can’t cost more than 30 or 40 bucks to replace.  That seems like a major hurdle to clear, but we’ll get there.

Google TV has yet to hit the market, but when it does, it will possibly do more to blur the line between a television and a computer than perhaps any other technology.  The problem is, of course, that consumers will need to be trained to accept that integration.  Right now, it looks like Sony is on track to release a Google TV-enabled LCD soon, but don’t expect anyone to rush out and buy one.  My guess — and it’s only a guess — is that devices that require the lowest upfront investment while providing the widest range of viewing options will be the winners in the short term.  On the other hand, we shouldn’t underestimate how exciting some consumers may find the experience of sharing screen space on their televisions with the internet.  As long as the mouse/keyboard question is properly addressed — and Google may be experimenting with voice activation — this could be a killer technology.  But Google won’t have the Internet TV market all to itself: LG will launch its own internet sets and Opera is working on widgets that it will license to multiple manufactures.

Like any new technology, consumers will first need to be convinced that they want it, and then manufacturers will need to spend a few years getting the kinks out.  I definitely won’t be an early adopter on Internet TVs.  I actually prefer the experience of having my set be the dedicated device I use to watch movies and television.  I’ve tried watching YouTube through my Samsung Blu-ray player, and I can tell you that cheaply made handheld footage looks weirdly out of place in the living room.  I prefer watching YouTube on a computer; these things need to be experienced contextually, and YouTube will, in my mind, always be associated with the desktop computer, not the living room set.  But, as I said, I’m a forty-something cynic, so what do I know?

Finally, as we do reprogram our viewing habits — purchasing episodes instead of paying for all those crappy shows we don’t watch, renting movies only weeks after they’ve left the theaters — studios will need to devise new ways of marketing this content to us.  I don’t think people truly realize how much content advertising we’re able to avoid these days.  Fewer people go to the movies each year (box office is only up because of inflation and 3D premium ticket pricing), meaning fewer people see trailers for upcoming releases in the theater.  Sure, online banners are ubiquitous, but does anyone actually click on them? And, yes, you could visit a movie trailer site every week, but other than movie geeks, do you know anyone who does?  I use Comcast for cable, and the remote can be programmed to fast forward in 30 second increments.  Every time we DVR a show like Mad Men, we are automatically guaranteeing that each commercial break will get completely skipped over (which I’ve always found ironic in the case of Mad Men, in that it’s a show about advertising).  I imagine many people are doing this.  What this means is that as networks and studios attempt to get us interested in new programs and movies through traditional methods, their efforts may be wasted on people like me who have simply learned how to skip the commercials.

This stuff will all get figured out, eventually.  HBO doesn’t have commercials (a half a dozen other premium channels have followed HBO’s lead and now create original programming, much of it quite good).  They’ve survived and flourished using an entirely different model: subscriptions.  And without needing to rely on advertising revenue, they’ve been able to cater their programming to the tastes of their customers, not to the crass, often moronic demands of the lowest common denominator target audience.  Because there have traditionally been so few alternatives to the advertising-revenue model, we’ll never know what television could have been like over the past half century if networks hadn’t been reliant on advertisers to keep good shows on the air.  No matter how good the series, whether it was M*A*S*H or Hill Street Blues, it still had to sell dog food.

I think the 99 cent per-episode fee model could work, but it will definitely take some getting used to.  As I mentioned in a previous post, I’m not sure I’d be willing to pay a separate fee for a new program that I knew nothing about.  On the other hand, networks could offer their pilots, or maybe the first four episodes, for free, and then maybe enough of us would get hooked and sign on for the rest of the season.

If this approach works, and if studios can make money on shows by selling them one episode at a time for 99 cents, then it’s possible that a show that today would get canceled due to low ratings could actually survive, assuming a portion of the per-episode money went to subsidizing the cost of that show’s production.

The downside for the studios is that if anyone can buy anything from anyone on a service such as iTunes or Amazon VOD, what’s to stop consumers from bypassing the studios altogether? If Jerry Seinfeld wanted to make a new sitcom tomorrow, couldn’t he simply sidestep the networks, form his own production company, and sell his episodes on iTunes and Amazon?  In other words, in the past the allure of working for a network was that your show would get distributed to the widest possible audience, in the most prestigious format imaginable: a timeslot on a major network.  But if the timeslot is a thing of the past — and, let’s face it, it pretty much is — and the hippest viewers are watching TV in their living rooms through an internet-connected service, then what’s the role of a network?  I suppose they’re still the ones putting up the cash, but somehow I doubt Jerry Seinfeld would have any trouble lining up investors.

As it is, most audiences have no idea which movie studio produced the movie they’re seeing in the theater.  Audiences don’t associate a movie with the studio that produced it because a movie theater is a neutral zone (the studios of course once owned theaters as well, which they packed with their own pictures, until the government put a stop to it).  So when you go to the multiplex, you see posters in the lobby for movies from every major studio.  On television, the dividing lines between networks is much more enforceable.  You’ll never see a promo for Modern Family on NBC.

But iTunes and Amazon will resemble movie theaters, not networks.  They will tend to be studio-neutral, just as Netflix already is.  Consumers won’t care who made the program they want to see.  That, I imagine, is a huge concern for a network that can now promote a new series during a hit show.

Let’s assume that consumers embrace this trend and find their favorite new shows one program at a time, regardless of which network produced it.  In such a world, the most important differentiator will not be the manufacturer of the hardware used to access the content on your HD set, but the availability of the content itself.  The content provider.  Apple is hoping, as usual, to serve both needs, hardware and “software.”  I wouldn’t bet against them, especially in the short term, but I can’t see this strategy succeeding over the long haul.  Regardless, all this talk about which technology will win the day could end up being secondary to the really exciting narrative now coming into focus.  Because if we do truly end up watching television through a fee-based or subscription-based model one day, what may end up mattering most to us is not who manufactured the hardware, but who is the talent behind the show.  Who’s in it?  Who produced it?  Is it any good?  That would be the greatest, and most significant, innovation of all.

September 24th update:

A couple of related announcements:

Netflix Watch Instantly service will begin receiving more NBC Universal content, including Battlestar Galactica, The Office, 30 Rock, Friday Night Lights, Law & Order:SVU, and Saturday Night Live.  In addition, according to Engadget, new episodes of SNL will become available the day after they air!  And for those no longer interested in receiving disks by mail, there is also reportedly a streaming-only option in the works.

Roku has gone and completely redesigned its media streamers, a move that makes the player even more competitive with the newly refreshed Apple TV.  Roku devices provide access to Netflix and Amazon VOD, among other content.  The 720P version will now cost only $59 — a pretty great deal — while the $99 model features 1080P, optical audio out, and USB-in.  The USB-in functionality may be of particular interest to video production folks who are always looking for inexpensive ways to view their HD projects via HDMI on widescreen monitors, and could now presumably hook up a mini, self-powered USB hard drive containing HD Quicktime files to the Roku — just as they’ve already been able to do with devices such as the Western Digital HD Media Player, which retails for $129 and doesn’t feature Netflix connectivity. [Correction: Western Digital does sell a $149 version called WD TV Live Plus that does stream Netflix movies, and, according to this Gizmodo chart, the Roku XDS does NOT allow you to play back your own movies.  Engadget disputes that slightly, writing in their review that “USB playback is limited to MPEG-4 video, MP3 audio, and JPG and PNG photos.”  Oh yes, and Roku is now offering Hulu Plus subscription service.  To be continued…]



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