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Saturday, 18 March 2006

Comments

Chris Duncan

Chris Duncan
ceedunk@gmail.com

Dennis, I think we bring up a lot of similar points. These are the two comments that I made to Cuban. Personally, I think that networks are embracing alternative digital distribution. Which is leading us away from the traditional channel system and closer to shows as brands that target smaller audiences.

Posted Mar 18, 2006, 4:22 PM ET by Chris Duncan
The pipe is not the problem, because people will wait for something free. If we're talking about a online distribution model, just look at piracy. People have ALWAYS been forced to wait for their content in that setting. When dial-up was prominent, pirating groups made sure that the downloads were in chunks of 1.44 MB to accomdate floppy disks and ensure that broken downloads would not ruin a transfer completely. With the rise of our current broadband system, they usually come in 15MB chunks that are extracted and come together as one CD image. Still, a connection that can't accomdate streaming (that's what we're talking about here, isnt' it?) is not necessarily a negative. People in their teens and 20s now have absolutely no problem with time-shifting. It's about delivering content for younger people, not necessarily porting television to their computers. Plus, current broadband connections are being seriously underestimated. People are willing to order a movie from Netflix and get it the next day... and that's amazing. But downloading it over night is bad somehow? Let's just put it into raw numbers here. If you can get 50KB/s (which is more than enough to have a family/roommates comfortably surfing), then you can do a 2 gig download in 11 hours. That can easily be supported by torrents and they are far from perfect. A marketing research survey I did with NYU Stern students found that nearly 75% of respondents had watched a movie for the first time on a computer. While that discounts the fact that converging home entertainment environment will allow for streaming of video from your computer to TV, it still emphasizes the changing habits of our younger generations. IPTV won't replace traditional television in terms of lowest common denominator entertainment, but I think we can expect them to take a significant hit from niche-targetted and interactive content. I think that the argument Mark makes carries weight when referring to "channels" moving to IPTV. However, I think that we can also expect that consumers will be more receptive to shows as brands and an individual entity. Basically, my point is that serialized content on its own would have little trouble being successful if it could capture its niche audience.

Posted Mar 18, 2006, 10:51 PM ET by Chris Duncan

I agree that what I described is much more compatible with a younger demographic. Also, consumers are probably not willing to trade their time in exchange for content. But that's one point that I was trying accentuate with my example. I don't think queueing content to view at a later date is a negative, necessarily. You're not utilizing your bandwidth while you're at work or asleep for anything important. I think it's true that if people are willing pay, they want downloads to work fast. But we also have to consider the different ways to pay. We know that nobody really wants to pay with their time. People are willing to pay by watching ads, though. But that goes back to an argument that you've made in the past that I agree with. Since people want media cross-platform and on-demand, there are obviously going to be different products you're selling them. You can sell them IPTV, low res streaming TV with an ad on a web page, portable high-def content, or whatever. My point is that the market is fragmented and you can now accomodate these different segments with different offers.

Right now, you see incongruency with current forms of digital distribution compared to what experts expect in the future. Most companies do what MTV has done and use their online content as a supplement to their regular programming (MTV Overdrive). Others are actually put their original content online (CBS with the tournament, ABC/Comedy Central on ITunes, Comedy Central with The Office webisodes). But my argument wasn't against what you said about IPTV, it's about TV being delivered in the same way for a long time to come. What's stopping companies from making the content available as SVCD CD images right now? It plays on 99.9% of DVD players and most people wouldn't notice any difference between that and a DVD. You can fit an entire 2 hour movie onto a CD in KVCD format and you really can't complain about the quality of that. That would download in few hours on any non dial-up connection. Combine that with a stream and you have portability without sacrificing quality.

Aside from the example of college students, citizens of other countries are doing their best to circumvent artificial windows. A study done by Envisional said that 18% of TV downloads come from the UK and 16% come from Australia... with the US accounting for only 7%. It's clear that there's a market for non-streaming IPTV, if you can call it that.

I just have the same problems with "big media" that you do. Their desire to control their content through windows and distribution is generally a bad business practice. You can't support production costs of a telelvision show by just selling it on ITunes and you probably never will be able to do that. But the market of foreign viewers (torrent downloaders) that currently outnumber US downloaders 93% to 7% (same Envisional study) respectively shouldn't be overlooked.

My argument is that people are trying to look past what's happening right now. There has to be some middle step between TV now and IPTV. I have a hard time believing that a lack of consumer knowledge will lead to a direct transition to IPTV. With more options emerging on a daily basis, I think we can expect that the long tail and its fragmented preferences will have its say in digital distribution.

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