• by Diane Mermigas , March 16, 2012

As distinctions blur across screens on Internet-connected tablets, smartphones, computers and televisions, two things will happen. Economics and content will become more integrated and ubiquitous, and a more universal interactive experience will emerge.

It’s not a question of whether the Internet or the iPad and other connected devices will kill TV –- or if the next wave of Internet growth will come at the expense of television.

It’s a matter of how much value will be created as traditional and digital media merge across interchangeable interactive screens. The result: a viable new ecosystem that leverages -- rather than cannibalizes -- traditional television’s dominant position in the home.

A uniformly wired world provides the mechanics and economic incentives for consumers and marketers to pay as they go for what they want, and that will lead to a new wave of revenues.  

Bernstein analyst Todd Juenger points out that there is plenty of room for both TV and Internet advertiser dollars to grow within the historical norms of marketing spend relative to GDP. Internet usage is not causing a decline in TV viewership. TV advertising is not fungible with Internet advertising, from a marketing objective and effectiveness standpoint, he says.

But it is not an either-or proposition.

Content, marketing and e-commerce will play out across the digital spectrum and all mobile and stationery screens. Numerous apps are already available to bridge the television and other screens. Microsoft’s Skype provides room-sized video chat and a virtual social experience around television programs via a Tely HD adaptor. Google’s YouTube functions as a personalized channel that transports any kind of video to any screen.

It is easy to seamlessly embrace the entire marketing funnel -- from awareness, interest and consideration to purchase and re-purchase -- across interactive screens in the home, at work, in the marketplace and in your pocket. The ultimate ROI will be the individual consumer response: engage, share, buy.

That the household staple television is morphing into just another universal digital screen is borne out by the number of formidable players and virtual MSOs vying to get into that space: from Google and Apple to unlikely entrants, such as chipmaker Intel and communications equipment provider Cisco which are spending billions to expand their next-generation video services.

Apple especially is poised to upend program producers and distributors (such as cable companies) with a revolutionary streamlined TV design and paid interactive content interface that will transform the television experience for consumers and marketers. The larger, high-resolution screen and editing tools of Apple’s new iPad are designed to get a projected 2 billion users more comfortable with quality to-go video.

The ultimate driver of the universal screen revolution is the Cloud storage, providing easy real-time access to and payment for streaming video from gatekeepers such as Apple, Amazon, Google and Microsoft that uniformly supports all screens with equal access, products and services.

That new reality diminishes attempts such as the  UltraViolet offering from Wal-Mart and Hollywood’s major studios  to convert consumers’ Discs-to-Digital  and discourage streaming and piracy route-arounds.  So old school!

It will soon become evident that a smart screen is a smart screen is a smart screen as interactivity continues to level the playing field. That will fuel a new economic paradigm predicated on pay-for-access to finely-tuned targeted marketing to highly specialized socialization. It will help transition consumers to a more robust, universal pay-for-play metric across all connected devices.

That new dynamic has the potential to make YouTube’s channels as potent as any cable or broadcast networks, a targeted social mobile campaign more cost effective than a broadly placed 30-second TV spot. The seven media giants (Disney, News Corp, NBC Universal, Time Warner, CBS, Viacom, Discovery) that account for 95% of domestic television viewing will be forced to share their spoils with niche rivals that better satisfy the Internet’s one-on-one appeal. That intimate interactive connection will foster usage-based pricing that will offset television’s long-standing reliance on conventional advertising.

Still, there remains a stubborn resistance to the notion that the television screen will ever be anything more than a static, mind-numbing window into highly commercial, formulaic, old fashioned advertising-based push messages and images.

Taking and maintaining a substantive share of television advertising and subscription dollars is becoming more challenging and requiring bigger bets. Online and connected mobile are beginning to erode cable margins the same way cable has for years eroded broadcast TV.

According to Morgan Stanley analyst Benjamin Swinburne's overall earnings forecasts, the losses will become steeper as the gains moderate. For big media overall next year, the worst case is an earnings decline of 15% or a gain of 10.4% , which means many traditional media company fortunes could be up for grabs as the focus moves from time spent “watching” a television screen to the time and money spent “engaging” with any interactive screen.

The deterioration of print, radio and other traditional media platforms that fail to fully adapt will benefit Internet and TV advertising as their interests converge -- and television become a virtual screen parallel to any on mobile-connected devices. Juenger estimates a possible shift by 2015 of $14 billion in revenues to Internet and television options from other less virtual forms of media. The mainstream pervasion of ubiquitous interactive screens will seal the deal.