The Future Is Here: Convergence at Last?

Convergence may be coming, but not in the way most of us anticipate. And that may not be so great for marketers.

For years, when media execs and marketers discussed convergence, they were usually talking about the merger of television and the Internet. interactive TV (iTV) was the future of television. We were supposed have a screen and a box in our living rooms on which we could surf the Web, watch TV, and do some sort of combination of the two activities (which no one was really able to describe).

It sounds like a good idea and probably is… if it ever gets here. Though there have been plenty of experiments (and limited deployments) with digital set-top boxes, hybrid Web/TV devices (and specific WebTV devices), the digital nirvana of a fully integrated “digital lifestyle” living room hasn’t come to pass for most consumers.

Why? Is it because television is a sedentary, lean-back activity while Web surfing is an active, lean-forward one? Is the technology too complicated for consumers? Is it a chicken-and-egg problem of content and technology? Is it the expense and difficulty of creating truly interactive television content?

I don’t think anyone’s figured it out yet. But maybe we’re looking for convergence in the wrong room. Heck, maybe we shouldn’t even be looking inside the house. Maybe we should be looking (please excuse the pun) outside the box.

The new video iPod may just show if our thinking about conversion has been wrong all along. Its seamless, end-to-end integration into Apple’s iTunes store allows users to simply and quickly browse, purchase, and store video content. The new iPod may provide a glimpse into a digital future where the Internet becomes a measurement and a distribution medium for television.

One of the new unit’s most interesting features is that users can download and purchase television programs such as “Lost” and “Desperate Housewives.” Miss your favorite show? Pop on to iTunes, pony up $1.99, and take the show with you on the train. If you can buy a song online (and millions have), you can have mobile video content.

Sounds great, right? Perhaps for the networks, when it comes to added revenue from content. But marketers may be interested to know ABC is providing these shows in a commercial-free format.

That’s right: commercial free. Even if you buy prime time on these programs, your ads won’t show up in the downloaded content, just like when shows go to DVD, an increasingly popular format for many viewers. ABC makes $1.99 (or whatever its cut is with Apple) and goes home happy. Advertisers hoping to reach new customers through mobile content aren’t so happy.

As network viewing continues its decline (we haven’t seen the bottom yet), networks in search of revenue are looking toward new sources. DVDs have far surpassed expectations as a medium on which to deliver television “reruns.” Consumers like being untethered from the network schedule and, let’s face it, they like not seeing commercials.

The video iPod (and its inevitable follow-on competition) offers consumers another venue in which they can pay for the privilege of ducking your ads. Not only that, they’ll be able to take content with them (albeit on a 2.5 inch screen) and catch up while they commute (hopefully on public transit and not in their cars). All commercial free.

What can marketers do? Since people are obviously willing to pay for a lack of commercials, perhaps the only way to combat this trend is to start working deals to sponsor the content, wrapping the programming (much like what happens on cable) with commercial messages and making the content available for a reduced price. If you could watch “Desperate Housewives” commercial-free for $1.99 but get the sponsored version for $0.99, which would you choose? The answer may depend more on your socio-economic status than anything else, but you can bet bargain-hunters would have to think long and hard about the choice.

The future may turn out a lot different from what many of us expected several years ago, but the trend vectors do seem to be aligning. Though the video iPod is in its infancy now, its appearance should make you think about how you’re going to deliver your commercial messages in the future. As writer William Gibson once said, “The future is already here. It’s just not very evenly distributed yet.”