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Eric Zimmett's Tech Talk: Get Ready for TV 2.0

on April 15, 2012 6:00 AM

Streaming television services like Netflix and Hulu Plus are gaining momentum, moving along the adoption curve – working their way through the early majority – still years ahead of technological laggards.

A Nielson study revealed that about one-third of Americans have streamed a TV show or movie through a paid subscription service like Netflix or Hulu Plus. And a majority of Netflix users have the service connected to their TVs.

Streaming TV is the biggest threat to the pay-TV model since TiVo, poised to make prime-time television irrelevant and turn the pay-TV model upside down.

Two years ago this month, I cut cable and moved into the streaming TV world, which at first was a bit rocky, but is now a more intuitive TV experience than ever.

With Netflix and Hulu Plus, when I want to watch a particular show, I watch the show. Whether it's 7 p.m., 9:36 p.m. or 2 a.m. The Colbert Report; Saturday Night Live; Lie to Me; 30 Rock; Weeds; American Pickers; MasterChef; Mad Men; The Office; SportsCenter and ESPN on Xbox 360; or even NBC News, CBS, ABC on Roku Newscaster.

As well as older TV shows like Arrested Development, a new favorite of mine even though the show concluded in 2006. I had never seen it. But with streaming TV, I started with Season 1, episode 1 to the last. Netflix announced in November that it is resurrecting Arrested Development in an exclusive deal featuring new episodes of the critically acclaimed series, which was canceled by Fox.

Streaming, on-demand content increases the shelf-life of television, therefore increasing the benefit to the show and its advertisers. What this means: more viewers for the content and the advertising. An almost unlimited shelf-life. Streaming TV puts the entire television experience – movies, news, sports, TV shows – on the user's schedule, not the network’s. It’s like everything has been TiVo’d for you.

TiVo released data that revealed only 38 percent of viewing by its users was live TV. The rest was recorded video and online streaming content like Netflix, which is now available through the TiVo Premiere box. It won’t be long before streaming content overtakes recorded content, like the two have done to live TV.

Most Netflix and Hulu Plus users are between the ages of 18-34 – dubbed Generation C – according to the Nielson study released in February. The second largest group is users between 35 and 49, then 50 to 64, which mirrors the adoption curve developed by Joe M. Bohlen, George M. Beal and Everett M. Rogers at Iowa State University in the 1950s. The curve illustrates the adoption of new products and innovations through five stages: Innovators, Early Adopters, Early Majority, Late Majority, Laggards.

Netflix has more than 20,000 titles available to stream instantly and is working to increase its number of television shows, an area in which Hulu excels. Hulu is jointly owned by Comcast’s NBC Universal, The Walt Disney Co., News Corp. and global private equity investment first Providence Equity Partners.

Netflix has inked exclusive content deals including Lilyhammer, which debuted Feb. 6, featuring Soparanos star Steven Van Zandt, horror series Hemlock Grove, scheduled for early 2013, Orange is the New Black, a comedy project from Weeds creator Jenji Kohan, as well as House of Cards starring Kevin Spacey. To acquire House of Cards, Netflix outbid HBO for the series.

And now dozens of devices are available to stream content, including Blu-ray players, video-game systems like Xbox 360, Playstation 3 and Wii, Boxee Box, Apple TV, Google TV, TiVo Premiere and Roku. Read my review of the Roku streaming player here. In most cases, users buy the streaming boxes, versus renting a box from cable or satellite TV companies.

Subscription streaming services like Netflix, Hulu Plus or Amazon Instant Video provide unlimited streaming content for a fixed monthly price. Some cable companies have now started to offer their own streaming content as a companion to subscription offerings, like Time Warner On-Demand, Comcast On-Demand alongside a subscription to their services or premium cable like HBO GO and Showtime On-Demand. Strictly video-on-demand (VOD) services like Vudu are essentially today’s Pay-Per-View, with each movie available to rent or purchase.

This doesn’t mean an end to live TV content, however. Live TV will be delivered through the Internet and available on-demand after it airs.

Comcast, the largest cable operator, announced in May it would begin testing IPTV or Internet Protocol TV. The same content, only delivered through the Internet.

Comcast began testing IPTV at the Massachusetts Institute of Technology (MIT), and in February introduced XFINITY Streampix, a Netflix-like video service offered as a companion to XFINITY TV.

IPTV can be used for live video, streaming and delayed programming like a DVR. The same technology used by Netflix, Hulu Plus, Roku, live-streaming services like U-Stream and Live Stream.

What IPTV will one day mean for advertisers: data. Think Google Analytics for TV.

The writing is on the wall.

Netflix and its competitors will force cable, satellite and premium cable companies to overhaul the formula and their pricing structure, turning the entire landscape upside down. Lower prices, more content, delivered IPTV-style.

It’s a monumental time for TV. If cable and satellite TV are scared now, this could very well be the calm before the storm. They’ll be forced to change or fall into obscurity. Like a stagnant MySpace, ignorant to the startup that would become Facebook.

Streaming content has transformed the way I watch TV and will soon change TV forever.

The cable and satellite networks can fight all they want. TV 2.0 is coming. Their efforts are only delaying the inevitable.

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