All the fuss over a prospective $2 billion buyer for Hulu and a Netflix subscriber revolt over a 60% increase in movie access rates is badly in need of context. New media investor Roger McNamee has been all too willing to provide it lately, predicting that today's paid video schemes -- including Apple's iTunes -- will be upended by direct-to-mobile consumers delivery and the transaction magic of HTML5.
Just as the massive adoption of Apple's iPad and powerful apps has threatened Google's open-source Web stranglehold, the just-emerging HTML5 program language will be a universal "game changer," he says. It will enable content producers and marketers to create a self-sufficient audio and video Web experience that can be transformed into an app that allows for immediate interaction with consumers on any connected device.
That self-contained interactive lifeline will turn individual attention and access into follow-through transactions for content, as well as marketers' pitched products and services. HTML5 "will be disruptive in ways we cannot imagine today" because it will be a way to completely bypass the middlemen and gatekeepers, McNamee says. Once it is being widely adopted for content, ads and even Tweets, it will challenge companies locked in content distribution combat that relies on holding tech liberated consumers hostage.
It begs the question: if HTML5 makes it easier for consumers to get what they want when they want, even if they have to pay for it, couldn't it reduce some of the existing content distribution models -- Hulu or even Netflix -- to rubble? McNamee seems to think so.
The zealous rant of the well-known Elevation Partners co-founding director, as well as part-time rock star of his own Moon Alice group, has been captured in a slide deck of 10 Hypotheses for Technology Investing that is intriguing, if not convincing.
Although McNamee sets the time horizon for this transition as 2012 and beyond, by then Apple's walled content garden will face some marginalization -- just as Google is finding its dominant search indexing compromised by the explosive adoption of connected mobile devices on which consumers conduct a mere 1% as many indexed searches.
Few companies have recreated their business propositions for the pocket-sized connected mobile devices that are creating what McNamee calls a "hypernet" platform and successor to the Internet. That means all bets are off on which companies rule in the future.
The implications are mind-boggling. The formidable likes of Google, Microsoft and Facebook are already vulnerable because they have not quickly or sufficiently extended their business models to mobile, McNamee contends. Even as they wrestle with pricing, the low barriers to entry are rapidly fragmenting the growth prospects for Netflix and Hulu. Plus, there is a surprising new reminder of how sticky things are becoming for cable, telecom and satellite providers in their battle to hold back over-the-top competition.
Judge Richard Leon in the federal court in the District of Columbia is threatening to hold up court approval of an antitrust settlement that allowed Comcast's acquisition of a 51% stake in NBC Universal earlier this year. The judge is challenging the inability of online distributors to seek recourse for program licensing disputes with Comcast that go to arbitration, according to terms established by the cable operator and signed off on by the Justice Department. Such disputes and appeals could start to become a thing of the past as more direct distribution options, such as HTML5, become standard.
McNamee's overriding observation is a fair one: No one is safe from being upended by the next wave of disruptive technology that changes the rules of play as surely as Apple and Google once did. His thesis becomes especially interesting when applied to the gradual integration of the television and the Internet. Flat-panel television screens have the potential to displace cable and satellite vendors with simple functionality, such as program discovery and DVR management, McNamee says.
The real edge belongs to anyone in the controlled distribution of television. TV is the last protected space. The government has ceded control of this medium to several industries, McNamee points out. Amazon and Netflix's recent deals with CBS to pay premiums for the streaming rights to some of its archived programs demonstrate that there are infinite ways to monetize content originally produced for a high-priced, regulated ad-supported platform. As at-home interactivity becomes as much about transacting as access, even television's enduring business model will change.
If McNamee is correct, creative consumers routinely posting to YouTube will be able to cobble together their own Web package of advertising and fees on a single page-turned-app designed for smartphones and tablets instead of to TV and PC screens.
The good news is, whether or not you agree with McNamee, next wave technology such as HTML5 provides an even playing field and powerful opportunity for aspiring content producers as well as established companies to make an interactive go of it. And they'll be significantly redefining and redistributing value in the process.