TV Is Dead! Long Live TV!

Does the impending death of a small TV startup mark the beginning of the end for TV?

Last week, four-year-old Canoe Ventures announced that it was laying off 120 employees and shifting the final 30-or-so employees to concentrate on video on demand. The company, created by cable giants Comcast, Cox, Time Warner, Charter Communications, Cablevision, and Bright House had promised to “reimagine” the “television experience” by allowing viewers to request information by mail from advertisers by pushing a button on their remote controls. They’d also hoped to allow cable networks to target ads down to the neighborhood level, but scrapped those plans in 2009 due to technical issues.

It would seem on the surface that the shuttering of such a relatively small company wouldn’t be that big of a deal to anyone except the employees affected and maybe industry insiders, but Canoe’s capsizing may be the canary in the cable TV coal mine that augers something much bigger. Why? Because if some of the biggest TV companies in the world (most of them local monopolies, no less) couldn’t get advertisers jazzed about “the future of TV,” then TV as we know it may have no future.

Before you get out the butterfly net and drag me to the loony bin, note that what I said is “TV as we know it.” The issue isn’t that people are going to stop watching video content any time soon, but rather that how they watch it is in the midst of a radical change as big as the change faced by the music and film industries.

The signs are unmistakable. According to comScore’s recent “2012 Digital Future in Focus” report, online video viewing increased 43 percent in 2011. In December 2011 alone, Americans watched 43.5 billion content video streams. About half of that was on YouTube, followed by Vevo, Hulu, and Netflix. That’s a lot of video.

At the same time, Nielsen is reporting that the number of “cord cutters” (people ditching cable to go with a combination of over-the-air and Internet content) increased nearly 23 percent over the past year. And while this group still watches more “traditional TV than online TV,” overall cord-cutters watch half as much broadcast TV and twice as much online TV as the rest of the U.S. population.

But it might be those whom Analyst Stefan Anninger calls “cord-nevers” who really show us where TV is going. “Cord-nevers” have grown up with the Internet and the content-is-free culture and believe that pay-TV is a “rip-off.” They’re also growing up in a down economy where the average cable bill is around $100. When faced with the choice of a $100 monthly bill for cable or around $20 a month for a couple of streaming video subscriptions (say Netflix and Hulu+), cutting (or never getting) “the cord” seems like a no-brainer. Just take a look at the Hulu and Netflix paid subscriber numbers. The trend seems to be pretty clear…even more so when you look at the demographics that show that the biggest users of these services are the Millennials.

Of course, the naysayers among you reading this may point to the fact that “cord cutters” only make up about 5 percent of U.S. households today. True. But it’s also true that in every instance where the Internet has offered an alternative to “old media,” old media loses. Just take a look at newspapers, CDs, books, and magazines. If content can be gotten cheaper, faster, and easier (with more choice), it will be.

But if we want to glimpse the future of TV, the music industry probably represents the best model. Even with all the hand-wringing going on by the Recording Industry Association of America (RIAA) about digital content and “piracy,” music sales have actually been going up in the U.S. as a result of the explosion in digital music sales. While CDs may have gone the way of CRT TVs, music – the content contained on CDs, the stuff we actually care about – still continues to sell at a rapid clip. What’s happened is that the Internet has separated the content (music) from its former means of distribution (shiny plastic discs sold in quaintly-named “record stores”). Content and container have been irrevocably separated.

That’s why the demise of Canoe that I mentioned at the beginning of this column is so important. It’s not that people don’t want to watch and interact with video content, it’s just that they don’t want to do it in a format that seems increasingly inconvenient given the new choices they have. Why would a consumer want to wait for information about a product to be sent to them by mail when they can just go online and find it in a manner of seconds? If the record-breaking social numbers racked up during the Grammy Awards are any indication, the “digital omnivores” of today want their interaction now.

So is TV dead? If “TV” means the traditional broadcast-sit-down-and-watch-one-screen-with-the-family model, it seems pretty clear we’re headed that way. But if we broaden the definition of “TV” to just mean commercially-supported video content, then the future is pretty bright. As advertisers, we just need to get over the fact that the old model is on the way out and start looking to a future where all “TV” will be interactive, online, and watched whenever and wherever viewers want to watch it.

TV is dead! Long live TV!

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