The Digital TV Switch

Will your television set fade to black next month? If it does, should you care — or instead celebrate an event that could usher in new and compelling developments for online advertising?

The Background

Congress has set February 17 as the date that broadcasters in the United States must switch from analog to digital signals. Viewers who aren’t cable or satellite subscribers (in other words, those still using rabbit ears), must either buy and install DTV converter boxes, or accept the fact that their sets will be consigned to the dustbin of technology history.

Millions of TVs aren’t yet ready to jump the digital divide. In the middle of the deepest recession of most American’s lifetimes, shelling out extra money for the box isn’t a priority or even a possibility for many right now.

More than a million consumers are on the waiting list for federally-funded converter box coupons. The feds issued a finite amount of these coupons, and they’re all used up. Others who have installed new DTV boxes have been deeply disappointed to learn they only receive half (or fewer) of the stations they’re used to watching.

So baroque and mismanaged is the program, President-Elect Obama is calling for Congress to delay the February switchover.

What if that doesn’t happen? And what are the potential advantages for interactive marketing when the switch is finally pulled?

Non-Switchers

No fast and firm statistics are available, but anecdotal evidence suggests that a significant number of consumers won’t bother making the switch. With the economy in free-fall, even longtime cable and satellite subscribers are deciding they can live without the monthly fees associated with one more box in the house, and that their Web connection offers as much TV viewing as they want. Live news, program subscriptions from iTunes, video sharing sites like YouTube, and hit shows from major broadcasters’ own Web sites are all readily available without paying to subscribe to hundreds of channels you’re never going to watch anyway.

Simply put, this means more online media, hence more online advertising opportunities at significantly lower costs than network or cable buys would entail.

Switched

Whether TV goes really and truly digital next month or next year, a myriad of new opportunities will bloom when it does. Past attempts at convergence have fallen flat.

Now, TV set manufacturers are routinely building broadband ports into the backs of their boxes (redundant for even rudimentarily savvy flat screen owners who simply plug in their PCs and piggyback on that connection). This hardware convergence will bridge the digital divide between sofa and set.

Web companies are taking notice. Yahoo, in partnership with Intel, this week introduced a new technology called TV Widgets that will bring e-mail, Web pages, social network sites, and a host of other Internet applications to the bigger screen. (Will families fight for the remote, or to lock the living room door to keep their online activities safe from prying eyes?) The technology is open-source, so the sky’s the limit as to what direction this could take.

Of course, the platform will also eventually open up to advertisers. And you can bet Yahoo won’t be the only company working to get the Web, and Web advertising, onto the tube.

From either end of the spectrum: the non-switchers versus the early adopters who take their TV sets digital all the way, all-digital television is coming. And it brings with it a brand new set of opportunities, challenges, and advertising technologies.

For interactive advertisers, it’s a win-win situation.