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The Sudden iTV Revolution

  |  December 5, 2005   |  Comments

After a decade's worth of talk, is the iTV revolution upon us?

There's a rumor that Apple will spin its Mac Mini device into a sort of set-top box, complete with a remote control and DVR (define) functionality. Google is in deep discussions with Viacom about offering some of the entertainment company's content (such as "CSI: Crime Scene Investigation") on Google Video. The FCC is considering unbundling cable channels to allow them to be purchased individually. NBC is moving its Trio network onto the Web.

Oh, and I finally bought a TV. Just in time.

The Problem With Broadcast

You're probably thinking, "You cover advertising, and you just got a TV?" I've owned a TV, but it's only recently been hooked up (plus, I can watch ads online anyway). The set we decided to buy is an LCD screen that can be used as an external monitor for a computer. I was seriously considering buying a Mac Mini to hook up to the screen. I figured I could watch various streaming video sites, including the greatest site ever put on the Internet, cycling.tv. I also figured I would buy TV shows from iTunes. Perfect! No need for cable, Netflix, or even rabbit ears. TV on my terms.

Technology is becoming organized around this idea. Back in April or so, a few colleagues and I said all the programming-on-demand, interactive-television (iTV) stuff we've been talking about for a decade would be available by the end of the summer. OK, we were a bit premature. But all of a sudden, broadband penetration is accelerating and content deals are being cut left and right.

This will solve TV's ultimate problem: it's not the Web. Not that TV and the Web are or should be the same, content-wise. Rather, the Web experience is totally user-based. If I wake up at 2 a.m. and want to see the candy factory episode ("Job Switching") of "I Love Lucy," I should be able to. With regular broadcast, I can't do that. The model that appears to be fast approaching would let me do that.

It's essentially the Web experience applied to TV. By its nature, it can change viewing habits. And when viewing habits change and the underlying technology is unique, the window to new ad models cracks open.

The "Interactivecast" Ad Model

Roughly speaking, the primary quality of broadcast and online ads is this: broadcast ads take advantage of the medium's inherent linear nature. Valuable programming is temporarily suspended, and ads are shown. Broadcasters must find the appropriate time span viewers will allow before becoming impatient (and therefore distracted).

Online ads take advantage of the medium's inherent interactive nature. The ads, in and of themselves, must have a value proposition. They must be seen as worth clicking and exploring. This is the genesis of the depth and entertainment value associated with the best online ad campaigns, such as the magnificent, new M&M's campaign.

What happens when broadcast content rests on an interactive, infinite medium? A few things, all of which are important to the future of ads:

  • Content changes form. TV shows are built around a template that allows for ads. This is immediately apparent when watching a DVD of a show like "Seinfeld." There are breaks in the action, fades to black, and cliffhangers. It's somewhat disorienting not to have a commercial break at these moments. As content is made specifically for a format not interrupted by commercials, this template must shift. Whither ads? Perhaps pre-roll or more sponsored-by messages.

  • Contextually aware content and services come online. A mash-up (define) of a viewing application, a search service, and an RSS (define) reader must be lurking in someone's garage or lab. This mash-up has the ability to gather content and services around the decision to view programming.

    Imagine I'm watching the World Championships on cycling.tv. The viewing application searches on an associated set of tags ("cycling," "worlds," "tom boonen"), providing blogs, articles, and chats. The interactive content becomes the background, like percussion in a symphony. And because there's a different mindset and attention span associated with interactive content, ad opportunities abound. Plus, it can be targeted.

  • Niche channels go online and into the tail. There's a well thought-through theory that when the cable companies allow consumers to purchase individual channels, only the most popular will survive. Niche channels simply won't attract the audience and dollars necessary for survival. But that assumes a cable-only world for video content. Other channels will follow Trio online. When a channel's online and delivered to an opt-in audience, the opportunity for targeted ads is significant. And let's be honest, a channel that goes online will feel a little like a challenger brand. It may be willing to take a risk or let an advertiser experiment.

The last decade of iTV discussion and planning has been so top down. There have been big plans and big investment from big players. All those failed. This is far more bottom up: collections of technologies are converging to make this experience possible.

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Gary Stein

Gary Stein is SVP, strategy and planning in iCrossing's San Francisco office. He has been working in marketing for more than a decade. Gary lives in San Francisco with his family. Follow him on Twitter: @garyst3in. The opinions expressed in Gary's columns are his alone.

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