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The principle behind Chromecast is probably the magic formula that is needed to finally revolutionise television watching. Google’s latest product was launched yesterday. As we predicted the TV revolution didn’t come from the traditional broadcasters or their suppliers. Everything developed by them has been aimed more at protecting their traditional business than at looking for completely new opportunities—truly new TV innovations will most certainly come from the direction that the broader market has taken since the arrival of the smartphones and the tablets.
Chromecast—a simple stick that connects to the TV’s HDMI port—allows the streaming of content that sits on PCs, laptops, smartphones and tablets to be played over the TV. The device is available via Amazon, and so far there are no user reports available, so we need to get user feedback. But, based on our past experience with Google products and services, we are confident that this device will work in a very simple and user-friendly way. Furthermore, the device costs only US$35 so there is virtually no barrier to buy and try the product.
What this will trigger is simply mindboggling. Thousands of new apps will now be created that will tap into this new development and I can’t begin to imagine what new innovations this will bring with it.
To bypass the powerful archaic broadcast lobby, including the pay TV and Hollywood barons, the device will only deliver online content to the TV. So there is very little these barons can do, legally or via regulation, to stop Chromecast. The reality, however, will be that the sheer market power of this device is going to deliver a terrible blow to those hanging on to their old broadcasting models, with exclusive rights, premium services, walled gardens, proprietary devices and so on. While theoretically the broadcasters are not affected by the new device the reality will be that more and more TV viewing time will be taken away from traditional broadcasting content. To ensure that their content will also be viewed by the people who start to use the new service the broadcasters will virtually be forced to make their contact available on that service as well. They can no longer hide behind any of the proprietary technology solutions they use to protect their current content business.
Another interesting development is that the smartphone/tablet/laptop will become the remote control and soon there will be apps that will also address the problem of the mass of remote controls that now monopolise the top of many coffee tables around the world.
If this device delivers what it promises it will indeed totally revolutionise the broadcasting market. It will also put further pressure on high-speed broadband developments as the use of these services is also going to put pressure on broadband capacity, quality, reliability and speed—yet another development that clearly points towards an FttH future.
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Don’t underestimate the power of the content owners. Note the statement in this NYT article,
“Mr. Pichai said that media companies had the ability to block their content from Chromecast, which major broadcast networks did with Google TV.”
http://bits.blogs.nytimes.com/2013/07/24/with-new-device-google-tries-again-on-internet-tv/?_r=0
Very good point Frank!
However, if Chromecast is successful it will attract enough ‘other’ content to slowly ir will start making a difference. Once that happens and Chromecast gets traction that’s when things will start to change. It wont be as quick as what happened with smartphones but say in 3-5 years time it will have turned a large part of the TV market upside down,
The challenge is that the "other" content is long tail content. For your vision to come to fruition in North America we would need the sports, cable, and broadcast networks to buy into the Chromecast model. Note that the MSO's don't want their own business model undercut, so they will be encouraging the content providers to restrict premium OTT video content (either in terms of titles or release time) only to paying cable subscribers, not to the Internet community at large. There are few content aggregators that would risk seriously spurning their largest customers, the MSOs.
If the device is as cheap and flexible as it sounds, then it can establish a good foothold just through the existing market of people who like to view Internet content on the big screen. I don't know how widespread the practice is, but in my social circles (which aren't hard-core techies), we like to share our favourite YouTube findings in the comfort of the lounge room, so I'm probably in the target market. That might be a big enough market in and of itself to make the device a success, and if the device gets market penetration all on its own, then independent content providers might start seeing it as an alternative channel for their work. So while it's safe to say that the incumbent content cartel will oppose it, they may not have as much clout as they think they do: the existing content may suffice. Your "long tail" remark is valid, but if the price-point is right, it won't matter.
It surely will be a slow process. In itself it is unstoppable the only thing the industry can do is delay this and that will only further undermine their business model. There might also be some who are more forward looking and decide to join the new trend rather than to fight th trend. Breaking ranks will also undermine the old model. At the last football championship I didn’t have to use my pay TV I could use the Internet version, once alternatives are becoming available things will change. What the existing industry should start preparing for is to built alternative business models that allow them to stay in control of the mainstream entertainment they currently provide. Why would for example the sporting codes ‘forever’ use them to deliver their content. The digital economy is all about taking cost out the economy and the middleman are a key target in that.
the device sold out within 3h of release. this is a pretty strong indication of desire. It also pointed directly at the value of netflix: the sellout was that it bundled netflix with the initial purchase of the $35 dongle.
the device can replicate the content of a chrome browser tab in the TV. If the hypothetical user has a VPN link into the USA, and can present their PC as a device legally homed inside the domestic US IPR market for some content
then they can watch that context
modulo the delay of their VPN, irrespective of the IPR limits which mean it should have been screened by an Australian affiliate in Australia with Australian ads, and at a time of choosing of the Australian FTA. Or foxtel. Because frankly, its not just FTA, its any channel of any kind, predicated on national IPR limits and contracts.
I am not saying “I support this” -I am trying to explain that the consequences for a model which presumes the FTA channels are funded on an implied social contract between us, the consumers, and the advertisers, is broken. It was pretty broken when PVRs came on the market (well even VHS tape weakened it, but PVRs totally destroyed it, with 30 second instant skip) but this is the nail in the coffin. NO amount of Neilson polling is going to account for the customers view in the USA behind a USA IP address, of the content, with US ads which they have no interest in watching beyond the academic.
Thanks for that this clarifies the development further. Re ‘social contract’. The question going forwards will be do we still need a social contract for entertainment (commercial TV)? The public networks - which are in particular strong in Australia and many parts of Europe flourish in a digital environment most of them are leading the way and I believe they will have a very strong future in a digital environment as well, so that social contract will and can continue. Commercial entertainment should be able to stand on its own and the MSOs should find new models to move that forwards.