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It seemed fitting that a standing-room-only crowd packed the aisles, rock-concert style, for a Cyberposium 2002 panel on technology and change in the entertainment and media industry.
Forecasting how high-tech innovations will influence this rapidly evolving, broad-based industry, however, is no easy matter. So moderator Joshua Leibowitz (HBS MBA '97), an assistant principal at McKinsey, immediately narrowed the focus: "What is the future of television?"
The idea that television and the PC will converge in one device is over rated, said James Ackerman, CEO of OpenTV, but they are becoming "cousins" in more and more homes. At British Sky Television, he said, technology already enables features such as real-time updates to sports stats and interactive shopping and gambling. "Television will become a more enhanced entertainment experience," he said, with instant messaging allowing viewers to chat with one another as they watch a program.
"Our view is more networked," said Jeffrey Lindsay (HBS MBA '92), executive director of the TV Solutions group at AOL/Time Warner. "We see a convergence of devices in the home, operating on a common platformyou'll be able to record shows in one room and watch them in another."
With the gradual consumer movement from linear to on-demand programming, the development of storage networks outside the home will become increasingly important, added Lawrence Bradner (HBS MBA '77), a corporate senior vice president and president of SciCare Broadband Services at Scientific-Atlanta Inc.
"If you want to see the future of television, go out and buy a TiVo," agreed Thomas McGrath (HBS MBA '80), executive vice president of the Viacom Entertainment Group. "It's deconstructing the concept of scheduled TV. Over 80 percent of consumers with TiVo never watch a commercial at all. That trend will have dramatic economic consequences for the industry, he added, since networks won't be able to produce new programs without advertising revenue. "Nobody is prepared to say that there's been a sea change," he warned. "We're in the middle of a storm."
The need for new economic models
Elinor Hirschhorn, a former general manager at MTV.com, said that for the 12- to 29-year-old demographic, "it's not about a channelit's about programs." The upcoming generation of consumers creates their own sort of convergence by watching MTV, instant messaging, and listening to music simultaneously.
Technology has advanced so that many of the integrated standards being discussed in the future tense are possible or in place now, said Lindsay, pointing out that Moxi Digital's Moxi Media Center combines satellite television, music, DVD, Internet access, and recording capabilities in one device. He then raised a frequently discussed industry concern: The ease of circulating copyrighted, digitized material opens up challenging issues regarding piracy and digital rights.
Napster has had a devastating effect on the prerecorded music industry, said McGrath. "The movie industry has been saved for the moment because it takes a long time to download a film and the quality isn't very good."
"The economics of this industry are about to implode," said Ackerman, returning to the effects of on-demand, commercial-free television. "The cost of creating new programs isn't coming down. We need to find new economic models for consumers to pay for content."
As viewers are offered more choice in when, how, and what they view on television, brand awareness will become increasingly important, said Hirschhorn. "Consumers will look to what they perceive to be the best brands to help them break through the clutter," she observed.
Opinions on the timeframe required for on-demand television to permeate the market varied. "I'd say it will take three or four years for mass deployment," said Bradner.
"I'd push it back to four or five years," responded Hirschhorn. "There's not a clear business model for this, and the programming needs to be better."
"This is the year the match is struck," predicted Ackerman. "The wildfire builds over the next three years. That's how cable television launched."
"Seven to ten years," said McGrath. "I live in a neighborhood where the cable operator still hasn't figured out how to bill me for HBO." Cost is another factor, he added, noting that the process could be accelerated if companies gave consumers the necessary hardware, or "box," for free, much as they did for cable television.
However technology changes the delivery of content, McGrath reminded the audience that some fundamentals of the industry remain constant. "Well-made programs are still good business," he said. "We have to make things that people will want to watch, so don't discount going into content creation."