• by Jason Heller , July 27, 2011

Allow me to demystify a monumental shift that is underway, hidden behind the buzzword of "the cloud."

For those who don't care about the minor details (most people), for practical purposes the cloud is just the Internet. You use the cloud every day by accessing various websites and web-based services and don't even realize it - because the nomenclature is unimportant. The benefit is what matters, and the experience should be seamless. You don't really care about the exact broadcast technology that allows your favorite TV program to appear on your TV screen, you're just happy that it's there.

The cloud as a delivery platform is changing the consumption dynamics and economics of the entertainment industry. It's as exciting to be a consumer as it is a marketer today!

So Why Does The Cloud Matter?

Consumers' demand for digital content, anywhere, on demand, and on any (or every) device has spawned the need to provide this access in an efficient and reliable manner. Advances in technology and the willingness and cooperation of the entertainment industry to provide a wider range of access have converged at a major milestone in history. Just ask Blockbuster Video. The reality of on-demand access to a wide array of content across all screens and devices is here. Well, mostly here.

Today's generation may not have experienced a TV without a remote control, or a rotary telephone. But the next generation will find accessing content from anywhere other than the cloud to be a foreign or archaic concept. It's that big a deal.

The Future of TV is the Web

One of the downsides of being an early adopter is that you tend to forget that your media and gadget-based experiences are not yet indicative of the average consumer.

Like all early adopters, I have seen the future. Netflix, Hulu Plus, YouTube and Vudu are just another set of channels on my Samsung-connected TV. But they are so much more than that, providing seamless experiences across multiple devices from the living room to smartphones, tablets, gaming consoles and beyond. It's only a matter of time before original programming comes to these new digital channels. That said, there are still licensing issues and a brave new world where these new services coexist among traditional networks and MSOs - who happen to flex a lot more muscle and have a lot to lose. One thing's for sure - consumers want on-demand content, all the time, everywhere. The people have spoken.

While the TV and movie industries are still evolving, many of us are already at the point where we can't live without Pandora. In addition to hours of entertainment, the discovery of new music and ease of purchase is fueling the growth of a new entertainment ecosystem. Amazon, Spotify, Google music, Apple's iCloud and others are banking on the ecosystem being big enough to support multiple entrants with varied offerings.  The game is changing quickly. As marketers, it's vital to keep your eyes on the players and understand these new environments. In some cases new media opportunities are born, while in others they are cannibalized.

Device Access - Still Early in the Game

I'm a big fan of streamlined experiences. For the in-home experience, the single device model seems to be the most streamlined, but it is probably the least adopted currently. While some brands like Samsung have developed their own platforms, the GoogleTV model, a proven and familiar operating system adapted for the connected TV, is positioned to be the most logical one over time. Connected TV operating systems will surely beat out third party devices like AppleTV, Boxee, and Roku in the long term. Of course that means a real Apple TV is imminent. However, the popularity of gaming consoles may keep them in the running for some time.

Bigger is Better

Cloud computing requires massive infrastructure. The need for reliability, security and competitive pricing has thus far limited this space to those who can handle serious scale. Amazon, Google, Microsoft, AT&T, and a growing second tier --including Salesforce and the larger ISPs -- are leading the way. An alternate option is developing a private cloud. But ultimately the logistics don't really matter unless your job includes selecting a cloud provider.

The downside however, is obvious. The bigger you are the harder you fall. When Amazon's cloud service crashed earlier this year, thousands of businesses, including FourSquare, Quora, Hootsuite, and most notably Sony's PlayStation Network, with its 75 million gamers, went offline, resulting in a substantial loss of revenue, and disappointing consumer experiences.

While this shift to streaming, cloud-based entertainment is significant, it's no immediate threat to the status quo. The economic model still favors traditional broadcast distribution. TV consumption is actually on the rise. However, as adoption of connected TVs and cloud-based streaming entertainment proliferates, we'll need to figure out where the blurry line gets drawn on the practical definition of TV consumption.