In my previous blog post I explained that 2014 was going to be the year of taking digital content into the home. That affordable devices such as Google Chromecast, Apple Kindle Fire TV, Apple TV and Roku are set to drive a digital content revolution by connecting digital content with the familiar context it needs for the mass market. These Content Connectors will transform consumers’ relationship with digital content but they will also turn the existing digital content marketplace on its head:
- Breaking down the home entertainment silos: our digital content experiences have evolved entirely isolated from our other media experiences. We multitask because one device is connected and one is not. Our homes have become a collection of content experience silos. Content Connectors break down those walls, brining our digital content experiences onto that most un-connected of devices, the TV.
- On-boarding late adopters: In most developed markets, most consumers are digitally engaged, using Facebook, YouTube, email, tablets etc. on a daily basis. These are digitally savvy later adopters, where their behavior lags is in paying for content. Sure, some will never pay, but others simply haven’t yet been given a solution that makes sense to them. Content Connectors can change that by giving digital content experiences familiar context in the home.
- Smart boxes will leave smart TV’s still born: TV manufacturers are still figuring out how to deal with the hangover of having accelerated the TV set replacement cycle too aggressively with HD. Too many homes have perfectly good HD ready flat screen sets that they won’t need to replace anytime soon. So manufacturers are desperately pushing 3D and Smart TVs as a reason to replace. The problem, for TV makers not consumers, is that Content Connectors turn ‘dumb’ TVs into Smart TVs for a fraction of the cost. A TV isn’t a computing device but plug a Content Connector into it and it becomes one.
- Breaking down media industry walls: Hardware used to create great big walls between different content genres. TVs were for broadcast video, DVDs for recorded video, CDs for audio, games consoles for games. Multifunction devices such as smartphones and tablets started to erode those barriers by being content genre agnostic. Apple’s iTunes Music Store became the generic ‘iTunes Store’ and now Content Connectors want to take this paradigm shift even further by freeing the biggest screen in the home form the constraints of broadcast video.
- Leaving stand-alone stores and services stranded: The disruptive threat of the TV’s liberation is immense. Broadcasters instantly lose their monopolistic hold on the TV and find themselves in the middle of a disruptive threat pincer movement: first non-traditional broadcasters like Netflix and YouTube can get themselves right into the traditional TV heartland; secondly non-video content suddenly finds a home on the TV, whether that be music, photos or games. No matter, all of it competes for TV viewing time. And no coincidence that Amazon’s Kindle Fire TV is equipped with a game controller. What’s more, if you only offer video – which of course applies to most TV broadcasters – you look decidedly limited in the Content Connector era of multi-genre content offerings.
- Using the TV to get consumers over the ‘ownership hump’: While industry leaders obsess over how to make subscription business models work, most mainstream consumers have not even started thinking about moving from the ownership paradigm to a consumption one. That shift will need a generation to truly play out but Content Connectors will give the process an initial adrenaline shot. How? By putting digital content onto the device that consumers already associate with ephemerality. The TV is not an ownership device nor has it ever been one. At most it is a device on which temporary copies are viewed before being deleted. But the majority of the time it is purely access based content consumption. So getting mainstream consumers used to accessing but not owning digital content via the TV is the perfect environment for making an entirely alien concept feel strangely familiar.
- Another changing of the guard: The reversing into the CE market by internet, software and PC companies was the biggest disruption the CE sector ever endured. The likes of Sony and Yamaha used to compete in an almost chivalric manner, agreeing on standards and then competing on implementation. Google, Apple and Amazon pursue no such niceties and compete with incompatible platforms and technology, and in doing so are wining the CE war. The Content Connector revolution is helping the same thing happen to content distribution. A new generation of content providers are emerging that collectively have their eyes set on world domination.
The coming shift in the digital content markets could occur at breakneck pace. Within five years Hulu and Netflix could easily have a 100 million paying subscribers and YouTube’s ad revenue could easily be near $8 billion. If the transition process goes the whole distance traditional content walls could disappear entirely. Google Play could move from selling video, apps or music to simply asking consumers: “How would you like to enjoy this content? Watch? Listen? Or Play?” Traditional broadcasters and media retailers should be scared, very scared.
Reblogged this on daniel findikian.
Very insightful, thanks
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I’ve used Roku in the past, nice service, but it has a long way to go. Once fiber optics wiring is done one day this article would likely be more true I think. Try using Roku or these other services with a household with a lot of wifi users and you’ll learn why these services have a long ways to go before satisfying the typical consumer.
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The piece about TV getting us over the “ownership hump” is a remarkable insight. Thanks!
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