The Age of Internet TV

I was reading an article on CrunchGear today that sparked further thought on the future of marketing and technology. It is no secret that both Apple and LG Electronics/Netflix have competing Internet TV products. Now, Sharp will be including limited Internet access through TVs as well:

The most interesting point by far about the new TVs is the (restricted) Internet capability they come with. Sharp said it will be possible not only to surf Sharp’s aquos.jp homepage but also Yahoo! Japan (this country’s most popular web site). Proud owners of the new Aquos TVs can also view digitized print magazines via a Japanese Internet TV portal and access video-on-demand in HD.

Looking at the bigger picture, most of these services will need to be funded by advertising. Google has successfully developed the ability to insert ads into mainstream TV via its TVAds Adwords program. Basically, customers can bid to have their ads displayed during showtimes in local markets. As well, Apple’s current model, through their iTunes store, charges customers a fee based on an individual TV episode or season. Rumors have Apple working with a small San Francisco-based video advertising startup named Podaddies to introduce in-line video advertising to the iTunes store.

In-line ads would be video advertisements that would play at the beginning, middle or end of the content itself. In previous discussion it had been suggested that this in-line advertising would presumably discount the cost of the media itself.

Essentially, 2008-2009 will usher in adoption of Internet TV and slowly phase out Cable TV. With HD rolling out in the Internet TV world, the only two issues that need to be addressed for the set-top IPTV (Internet Protocol TV) boxes are live news and sports programs. Once those two hurdles are overcome, there would be little reason to continue to pay cable rates. Advertising will quickly shift to IPTV and eliminate consumer costs to watch TV programs leaving the two biggest forthcoming advertising markets as IPTV and without question, mobile technologies such as cell phones.

Now were I the TV studios, I would have formed a common standard for streaming my TV media and allowing any third party to distribute it: iTunes, Hulu, Joost, etc.. The TV studios could have controlled the ads released with their media instead of passing the advertising revenue further down the line to the distributors. Also, because of numerous media distributors, once a consumer purchases a device, they are locked in to only the content provided by that device distributor. If they wanted to switch distributors (for example, move from iTunes to Netflix) they would have to purchase another box. If there was a common standard, all device manufacturers would be speaking the same language and independent studios could produce content that could be shown on those devices as well. Unfortunately, the studios haven’t been the drivers in digital media so we are still in for a few years of turmoil before the dust settles.