February 11, 2008
Pulling Out the Crystal Ball: Is Streaming the Way of the Future? (2 of 2)

In my previous post, I said, "How prevalent streaming becomes in relation to other methods (DVD, VOD, broadcast, downloads) will ultimately depend on the collective movement of five interdependent forces: content creators (including writers), technological change, cable companies, advertisers and audiences." While I looked at the first of those forces--content creators--in that post earlier today, I wanted to elaborate on each of the other four aspects I mentioned as well.

Technological change

Let's face it, most people still watch television on their TV, and moving content from your computer to the television screen isn't exactly simple at the moment. There are definitely options, but they aren't obvious, simple, or convenient for most people (myself included). They also require high-speed internet connections, relatively new televisions, relatively new computers, and the know-how to set them up.

As long as most people can use a TiVo to record and watch programs, the benefit of finding video online and recording it, let alone getting it to play on the television, isn't entirely obvious. Falling prices and better, more intuitive features on televisions and computers might facilitate changes in how people watch television. And there may come a time when we watch television on demand streaming via internet through our TVs.

Cable companies (a.k.a. ISPs)

Cable companies are the sleeper in this situation, a group with tremendous influence over the outcome that tends to stay out of the limelight. They control the channel. They have direct relationships with consumers, something that networks, writers, and producers rarely do. They hold a large degree of control over who in the country has the capability to stream video, what programs show up in VOD menus, and the pricing of both cable and internet access to consumers. There are also relatively few of them, limited competition in local markets to one or two companies, and little incentive for customers to change unless they move. If cable companies and creatives got together, why not offer many more shows through VOD, splitting revenue that comes through convenient payments on your cable bill?


Advertising money makes the television universe go round. I think that advertisers and networks always knew people didn't always pay attention, that they took bathroom breaks, checked laundry and fixed a sandwich during ads. The problem now is that we can now actually measure how many people are doing that, and with that information comes a need to act on it. Hence all of the attention to the concept of engagement lately. But, if advertisers remain unconvinced and turn away from traditional network TV, as some argue that they are, the ability to raise money could fall into very different hands, specifically whichever hands that control a very large or very specific audience. Cable companies and writers could probably do both, given the right advances in technology, and changes in audience behavior.


American consumers wield tremendous power in almost every sector of the economy, and entertainment and media are no different, especially in an environment like the United States where commercial broadcasting is so much more prevalent than public media, and competition for audience time is so fierce. As always, people want to access products quickly, easily, and at a reasonable cost (iTunes demonstrated that people will pay $1.99 to access TV shows they could get for free if it's convenient enough). That said, even though American pop culture is very commercialized, it is still a cultural product that many people feel attached to, certainly more than to a brand of soap or cola.

As we all know, making access to television difficult and treating people like criminals invites a considerable backlash when those audience members feel that they are already invested in a show.  Monetizing audiences is more difficult now I think for a few reasons: we haven't quite determined how valuable highly targeted advertising is; privacy regulations are still being written to keep up with technology; we don't know how to balance intrusiveness with information seeking online; and we are at a point when the status quo for accessing television content is in flux. The internet offers many opportunities for advertisers, as well as creatives, to reach the customer, and for the customer to find them. Ultimately, it's a two-way street no one's mapped out as yet.

Although audiences ultimately decide what technology they want to use, how much they want to pay, or how they want to see content, they are not insiders that can generate new business models, technology, or services. Everyone should be watching to see who will make the next move, and in what direction. Ultimately, all five of these groups would need to change their respective approaches to television before streaming content online becomes the "preeminent way" of accessing and monetizing it.

As I mentioned before, comments are still down on the blog, but I would still like to hear your comments. Please email me your thoughts at eleanor@sloan.mit.edu, and I will post them next week as an update to these posts.

Stay tuned...