Commentary

Mobile DTV Could Help Crack A La Carte

TV is purposeful in how it evolves. The remote control and color were introduced in the mid-1950s because these features were the natural next steps. As consumers craved more content, cable distribution took off and satellites began delivering programming nationwide. It's as if the collective will of the nation moves the television platform forward. Today I believe consumer behavior -- such as the universal characteristics that go along with multitasking and time shifting -- are currently forcing our industry to adapt the TV platform to satisfy modern needs.

One of the key components of the Telecommunications Act of 1996 was to provide consumers with increased options on how they could receive and pay for television content. To date a common complaint has been that the rising rates of cable have outpaced innovation. But I believe it is still too early to fully explore pricing options, as the entire industry has simply been too busy building out the basic infrastructure for digital. TV Everywhere and mobile DTV might be indicators that change is on the way.

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Today broadcasters -- as discussed in yesterday's mobile DTV Pearl Project announcement-- are in the unique position to launch something that I would describe as a new wireless service: one that could blend free over-the-air content with a la carte programming.

How I think it could work is that consumers -- while watching over the air television -- could click show promos or listings, and this action could bookmark premium content in portals like iTunes or a local broadcaster's web site. The "ease of use" of a remote control "push" that deposits consumer interest right into sites like iTunes could open up the possibility of an a-la-carte pricing tier controlled by broadcasters. Within a few short years, theoretically, price-sensitive consumers might rediscover the broadcast spectrum.

Millions of Internet-enabled HDTV sets, primarily those located near strong digital signals, might be attracted to a blended free and a al carte service. If five million homes opted for this solution, each spending $35 a month on a la carte content, it could turn into a $2 billion+ annual gross revenue stream for broadcast television.

For those consumers who do subscribe to mobile DTV they probably would be able to purchase al la carte content either "on the go" or from the comfort of their home TV sets. Perhaps broadcasters can evolve into a low-cost wireless alternative that can potentially complement cable's high-end TV Everywhere service?

Cable has been rebuilding its infrastructure into smaller customer nodes that enable fast two-way communications to a data center. So as TV Everywhere matures, I think we should expect Web interfaces that empower cable subscribers to manage their own content services (like network DVR, linear, video on demand, and Internet content).

Today cable looks to me like it might evolve into a hybrid solution of fiber/coaxial, remote technology, partly managed by the consumer through a TV Everywhere portal. Steve Jobs has maintained a consistent standard for the iPhone App Store. Broadcasters and cable should learn from Jobs and also maintain uniform standards for the revenue-driven applications (apps) that they might offer at the click of a TV remote.

Together with digital content, the "TV apps" (majority probably created by advertisers) can add a deeper dimension to the consumer experience. All the television platforms, in my opinion, are one to three innovation cycles away from evolving into clickable cross-platform delivery models. It's plain to see that this is the direction consumer behavior is taking the platforms.

Today, though, broadcasters, separate from their cable distribution strategies, are positioned to introduce a la carte content to an untapped market via the mobile DTV initiative and through the growing number of Internet-enabled sets that are now getting connected to the spectrum.

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