First, ultimately the Internet would become the preferred distribution method. Apple's iTunes store is already the biggest music retailer having surpassed Wal-Mart ant Target. In South Korea about 70% of all music is sold over the Net. As William Gibson put it, "The future has already arrived; it's just not evenly distributed".
Second, hardware manufactures would (1) develop new devices and (2) add features to existing products in order to accommodate the consumer preference shift. Examples include not only the iPod and iPhone, but also jukebox software such as iTunes and Windows Media Player.
In bitterness, some record label executives complained that hardware suppliers tacitly acquiesced to MP3 piracy and low prices for legitimate tracks because both stimulated demand for hardware. By noting that iPods and iPhones are far more profitable for Apple than iTunes digital tracks, the executives implied the existence of a silent conspiracy. Presently video copyright holders are circulating similar conspiracy theories. As Yogi Berra might put it, "It's Déjà vu all over again" but without any validity.
In truth, the present transformation of television has been evolving for 30 years. It all started in the early 1980s as TV makers sought to accommodate the desires of video producers to increase revenues. For example, the market for pre-recorded video tapes required that set-makers provide sockets enabling VCRs to be connected to the TV. Gradually more devices designed to mate with TVs were introduced. Examples include video game consoles, DVD players, camcorders, digital cameras and cable set-top boxes. As a result, connection panels became increasingly versatile, ultimately emerging as the center-of-gravity for the transformation of television.
Today the ever growing variety of connection jacks in the panel facilitates the attachment of Internet-connected devices such as laptop computers, iPods, iPhones, multiplayer video game consoles, TiVos, and dedicated appliances like Roku and Apple TV. The recent appearance of HDMI jacks is particularly significant because they permit the transport of High Definition video and audio in a single cable. Previously, audio and video were transported over separate, and often, multiple wires.
In sum, even the most unlikely of today's devices is capable of exhibiting Internet content through connections to the TV. For example, consider the iPhone. Since the unit has a built-in iPod users can purchase, or rent, movies from Apple's iTunes online store. Alternately, it can download free video podcasts, some of which include popular TV shows. Yet the iPhone will conveniently attach to a TV thereby providing a big screen display for the unit's videos. As a number of instructional videos demonstrate, generally only the uninitiated insist that the set-up is too complex.
An inevitable result of the evermore versatile TV socket panel is vigorous growth in the practice of viewing Internet content on the TV. The proliferation of video rentals at iTunes and Amazon.com is only one example. But it is an example that portends the death of Blockbuster and similar businesses. Consequently, the amount of time consumers spend watching CATV, Satellite, and Broadcast TV must almost certainly decline. In our analysis, consumers will ultimately spend more time watching Internet content on their TVs than in watching conventional television.
Initially, the change will be almost imperceptible. For example, consider a TiVo user with a model that connects via WiFi to the Internet. Presently it's still mostly used to record favorite TV programs. However, it can also display YouTube videos and selected video podcasts, like David Pogue's of The New York Times. It also enables users to rent movies directly from Amazon-Video-on-Demand. It's as certain as tomorrow's sunrise that TiVo will be adding new Internet content in the future.
There is no conspiracy. Television's transformation is merely continuing an inexorable evolutionary trajectory.