True Convergence Is on the Horizon

We’ve all heard about it: the convergence of technologies onto one platform, making technology more powerful and easier to use. TV programming in a PC environment, your PC on a TV screen, telephone and email on your TV, PC, or both. We know we’ll have to adapt to these environments someday. What if that someday is just around the corner?

And what about portability, when we can carry that convergent media around with us? What happens when all media become portable, carried on — or called up from — a device the size of an iPod? How do media consumption habits change then? And what will that mean from a media planning and buying standpoint?

Why do I think convergence is at hand? Consider the things we talk about as prerequisites for convergence to “really take hold”:

  • High bandwidth. High bandwidth is no longer an issue. More than half of U.S. households have a broadband connection, making convergence totally feasible. Telephone and cable companies are looking for ways to provide even better connectivity. They’re testing platforms that will let users download stuff at up to 30 MBps. That’s 30 times faster than what current broadband connections offer. I’m not sure my processor chip will be able to keep up with my Internet connection.

  • Hardware. DVRs and other set-top box solutions are currently being adopted at a modest pace. Expect that pace to accelerate. With Rupert Murdoch and Bill Gates giving them priority at their respective companies, such devices could quickly become as ubiquitous as PCs.

As we emerge from the dot-bomb doldrums, telecoms are investing in convergence with a vengeance. History tells us to get a feel for upcoming consumer communications trends, we should look at communications trends in large enterprises. Companies such as Nortel are innovating technologies that allow true multimedia communication to thousands of desktops and wireless devices, affordably and efficiently.

Telcos and cable companies are already furiously competing to bring the “triple play” to consumers’ homes: providing bundled voice, data, and TV. Currently, the telephone companies are playing catch-up. For instance:

  • Comcast already offers video email as part of its current high-speed Internet product. Plus, cable industry observers say universal messaging is on the way. Users can get email over the phone, voicemail over computers, and both on TV screens.

  • SBC is rolling out its U-verse service. This $4 billion effort uses fiber optic and existing telephone lines to deliver bundled services at speeds of 20 to 25 MBps. The company plans to be able to reach 18 million households in three years. That’s a significant number, and three years isn’t far off.
  • Verizon has launched its FIOS service. Again, fiber optics will enable people to connect at up to 30 MBps. Verizon’s goal was to reach 1 million customers by the end of 2004 (no word on whether it was reached). The plan is to add cable TV to the offering in 2005. Prices will range from $35 per month for 5 MBps to $45 for 15 MBps, all the way up to $199 for 30 MBps, as part of a bundled package, of course.

All this will have implications on media consumption habits and publisher/broadcaster content development and delivery. I’m sure you’ve heard a lot about “time shifting,” the idea that TV and radio prime time will go away. People will have control over when they watch or hear programming. And of course, people currently have the ability to skip commercials. Changes in broadcasting may most powerfully affect on the way we plan and buy media.

With the exception of live events, all TV content could be made available at any time. Conceivably, a whole season of a show could be publicly viewable at once. When this happens, there’s no season premier or season finale. Sweeps periods go away. People will watch whatever, whenever. The broadcast model we’ve operated under since the dawn of TV goes away. Rating points… what will we mean by “rating points”?

Another consideration is “place shifting,” people controlling where they consume media. A product called the Slingbox Personal Broadcaster allows users to access content on their TVs or DVRs from anywhere via an Internet connection. In other words, you’ll be able to sit in an airport with your laptop and stream any content playing on your TV or recorded on your DVR. The company is working on making that same content available on mobile phones and PDAs.

It seems the industry will move to selling impressions against programming rather than a rating-point model. Publishers and broadcasters will likely move to a model where programming is either accessed through a subscription model or ad-supported. Once the industry figures out how to control ad-skipping, a lot of people out there will tolerate a few ads in shows to see it for free. As a result, agencies and advertisers will have to adopt new forms of measurement and optimization.

Much of the necessary technology and infrastructure is already available. Real convergence will take place when consumers adopt these technologies into their daily lives, and companies that provide entertainment programming adopt new and innovative ways to deliver and monetize that programming. Consumers have already begun their adoption process. Now, it’s time for us to get ready.

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