Which Four Brands Have a Real Shot at Revolutionizing TV?
So Intel is trying to break into television. Or at least it was. Now it appears that the chipmaker best known for being “inside” our PCs is looking to sell off OnCue, an advanced set-top box/connected pay-TV service the company has been developing for over a year. Some say Intel is frustrated over negotiations with content providers. Others claim that the marketing costs are too high. Or maybe Intel has just come to its senses. Because let’s get this straight. The next TV revolution was never going to be brought to the masses by Intel.
“Wait,” some may say, “the revolution is already here! Just look at all the smart TVs, Roku boxes, Apple TVs, game consoles, and the rest.” Sure. eMarketer looked at them and concluded that only about a third of US households today even have an internet-enabled TV (and far fewer are actually using them). Business Insider calls the market “nascent and messy.” Remember how we consumed digital music before the iPod and iTunes? That’s about where the connected-TV revolution is now.
So let’s look at who realistically has a shot at making it happen.
How about leading television manufacturers like Samsung and Sony? They actually get first dibs at controlling the viewing experience from the moment the screen lights up. Or, maybe the major pay-TV providers like Comcast or Time Warner? They control the primary video feed into the home. And, as bandwidth providers, they also benefit directly when consumers watch over-the-top (OTT) video from the internet.
No and no, again.
First, let’s marvel at how these incumbents have monumentally squandered their pole-position in the race to revolutionize TV.
When you, the average consumer, turn on your set today, the experience is practically the same as it was in 1950. You are dropped into the middle of whatever happens to be showing, right at that moment, on the last channel that you happened to be watching (or recording). It’s downright barbaric. Do you know how many keys you have to press on your remote before you’re watching something that you actually want to see? Don’t bother counting. The answer is: too many.
Okay, so what should happen?
When I power up the TV of my dreams, sometime between 10:38 and 11:13 pm on any given weeknight, the newest “Daily Show” episode starts playing right away from the beginning (a modern toaster has the logic to figure that out). And I don’t care if the show is coming from my cable subscription, my broadband subscription, or my DVR. What matters is that I’m getting what I want, when I want it, at good quality and a fair price, with the fewest (preferably zero) commercial interruptions.
The key to this experience is an intelligent video feed; a personalized playlist of must-see-TV-for-me, seamlessly braided from old and new sources — OTT and broadcast/pay-TV — and based on my viewing habits and preferences, as well as those of my friends and influencers. The feed autoplays in linear fashion like traditional television, while also allowing for browsing, searching, and customizing. And the programming is presented with all the control and interactivity that we’ve come to expect from modern digital platforms — commenting, sharing, etc.
Maybe when that “Daily Show” episode ends, I want to catch up on a handful of short videos being shared around the interwebs. I might lean back and let the feed autoplay through. Or, maybe I’d rather scan at high speed, slowing down to sample highlights as I go.
How about a movie? If I want to watch something specific, chances are it’s available from multiple sources. Do I care if it comes from Netflix, iTunes, HBO, Amazon, or VOD? Not really. What I care about is getting high quality playback at a low price. I might also care when a movie that’s available today for $5.99 will be available next week at no additional cost (because it’s moving from an on-demand window to a premium service that I already pay for).
My dream TV helps me understand and manage multiple subscription services. If I’m paying for ones that I don’t use much over time, it tells me and makes it easy to make changes.
Unfortunately, the future of television is held hostage by the past.
When TV was first introduced and programming was scarce, families sometimes gathered around their sets to watch a test pattern (a curious, static graphic aired by stations in the days before infomercials, when there was nothing else on). Even modern viewers spend incalculable time surfing through ever-expanding options – channels, programming grids, DVR lists, apps – anything to avoid actually turning the set off.
This stunning success is a phenomenal innovation killer. Why would the industry ever worry about fixing something so emphatically not broken?
Even with the bar set so low, where it’s enough to incrementally improve on the 1950s-era arbitrary mid-program start experience, the incumbent players have had neither the motivation or the confidence to do better.
And now it’s too late.
Finally, the traditional model is starting to sag, 113,000 pay-TV cords cut in the last quarter, and the incumbents are way out of position; incapable of driving mass consumer adoption of a new platform they control.
The reason comes down to brand trust… or lack thereof.
In 1977, sales of personal computers were heating up thanks to landmark products from Apple, Commodore, and Tandy. But, the revolution didn’t pick up steam until the Summer of 1981. That’s when one company stormed the scene brandishing its superlative name: IBM. It’s no coincidence that shortly thereafter the cover of Time Magazine featured the personal computer as 1982’s “Machine of the Year.”
In 1998, the first e-book readers were released. Anyone remember Gemstar’s Rocket eBook? Late 20th-century book lovers can probably be forgiven for not trusting Gemstar to deliver the ultimate digital reader experience. Even a leading electronics maker like Sony couldn’t get a market foothold. Once again, cracking the mass-market code required more than a quality product. It took a brand widely trusted by readers for value, variety, technology, and customer service — Amazon, with the Kindle.
How about tablets? Tech graveyards are littered with failed attempts dating back to the late 1980s. In January 2010, for his keynote address at the annual Consumer Electronics Show in Las Vegas, Microsoft’s Steve Ballmer demoed a Windows tablet. Just weeks later, Steve Jobs introduced Apple’s iPad. That the former is mostly forgotten while the latter became the fastest-selling consumer electronics product in history is not simply a consequence of the iPad’s technical superiority. While Microsoft enjoyed loyalty among IT professionals, only one company in the world had a brand deeply trusted by mainstream consumers to deliver empowering technology that “just works.” Apple proceeded to carve out a whole new class of consumer device practically overnight.
In each of these cases, in addition to a well-positioned brand, the product introductions were strongly supported by an established ecosystem. In the case of the PC, it was IBM’s vast sales force and network of suppliers and service professionals who already catered to the PC’s corporate customers. Amazon and Apple both had thriving e-commerce businesses underpinning the content and software experiences for their new devices, as well as built-in distribution channels.
In retrospect, these successes almost seem like destiny… as do the failures of the also-rans.
“Victorious warriors win first and then go to war” — Sun Tzu
Turning back to television, which brands are ready to succeed en masse with a next-generation platform? By my count, just four:
Obviously. In fact, it could be argued that given the trends around video consumption on the iPad, iPhone, and Apple TV, the foundation of television’s future is already here. With each new content deal and product upgrade, Apple raises the heat on the legacy television model ever so slightly. One suspects that by the time the major players realize how hot it’s getting, they may already be cooked.
Their brand, customer base, success with Kindle, focus on video, and monster data-gnashing recommendation engine puts Amazon in a sweet spot. And given their penchant for slim profit margins, they may practically give Kindle TVs away. It’s easy to imagine Jeff Bezos pretty happy about a proprietary 50-inch e-vending machine bolted to everybody’s living-room wall.
It might be a bit of a stretch given their lack of a track-record with hardware and software ecosystems, but the same could be said of Amazon pre-Kindle. Plus, the Netflix brand resonates strongly with consumers in terms of innovation, quality, and ease-of-use around streaming TV shows and movies. Add to that a massive customer-base, ability to close content deals, and a killer recommendation engine that’s uniquely tuned to video, and you have a serious contender.
Yes, Microsoft is a bit of a dark horse. Given recent stumbles in the lead-up to the impending Xbox One launch, eeking out even a modest win will likely elicit sighs of relief from the top brass. But, Xbox is a solid consumer brand. After the iPad set the record for fastest-selling consumer electronics device, it was soon dethroned by Xbox Kinect, which sold 8 million units in its first 60 days. Xbox has a sizable and enthusiastic customer base that already uses the product for video and music more than games. The folks at Microsoft have pulled together a beautiful user experience and slick technology that recognizes faces, voices, and gestures, and goes a good way toward unifying traditional and OTT programming. They’ve even closed sweeping content deals with Fox, FiOS, the NFL, and a slew of other majors. Imagine if Microsoft mass markets a $59 disc-less Xbox dedicated to video, music, and communication, all wrapped up in the Kinect form factor that sits neatly on top of the set. Despite their struggles, Microsoft is definitely still in the hunt.
And that’s it.
No Google. When it comes to hardware, even with Chromecast and Nexus, they’re a geek brand for early adopters. Google-owned Motorola is for mobile and YouTube is for teens. Google has a lot to bring to the platform, but until they get a bunch of Google-powered clones into market, they won’t be the platform.
Sony, Vizio, Samsung and the like may market “smart” TVs, but in consumers’ minds, I believe their brands are inextricably linked with great screens that are best left dumb. Samsung recently dug their hole a little deeper when they launched a smart watch that’s been widely derided as “not ready for prime time.” I guess it was more important to have something, anything, in-market than to improve their brand position. That’s okay. It probably won’t take Samsung much more than a year to release a good-enough product after someone else blazes the trail.
All that said, there’s a lot of innovative work being done in many places to invent television’s future; and it’s definitely not for nought. In 1973, a small computer was released with a keyboard, display, built-in networking, and even a mouse. When you turned it on, you’d see a graphical user interface with a desktop and point-and-click menus. It arrived four years before the Apple II, eight years before the IBM PC, and eleven years before the Macintosh. Obviously, Xerox’s Alto did not come to dominate, or even dent, the computer market. The Xerox brand, culture, and ecosystem just weren’t a good match for that particular challenge. And it didn’t help that the price tag was probably around $40,000. But the Alto and its kin are widely regarded as the inspiration and template for the modern personal computer. And today it still lives on in the millions of devices that have inherited its ideas.
So, even though theirs won’t be the first name on the box that delivers our next-generation television experience, brands that aren’t Apple, Amazon, Netflix or Xbox still have a lot of opportunity. The traditional television model is very efficient and well-entrenched. It’s not going away anytime soon. And who knows, by license, acquisition, or inspiration, the work done at those other companies may one day find its way into the product that actually does ignite the market.
Perhaps instead of being just another forgotten attempt, Intel’s OnCue could end up being the Alto of TV.
David B. Williams is a 20-year veteran of the digital media frontier, building influential businesses and producing innovative products and content. As principal at Volectro, he helps top brands develop strategies and build video-centric mobile apps to own their distribution and ride the next wave of media engagement. He also co-founded and provided key leadership at the company that became Take180 and was sold to Disney in 2008.Tags: Amazon, Apple, google, guest column, Microsoft, Netflix, samsung, voices, Xbox, xbox one, youtube