From: Alan Mendelson
MoneyLA@aol.com
We are only a few years away to find the reach and penetration of high-speed Internet access to be on par with Cable TV. And when that happens, perhaps in only five years, broadcast and Cable TV news will also be on par with Internet-TV News.
In that time, families will have a “video wall” with a handheld remote with which to choose TV, Cable, Satellite TV or Internet video.
And when that happens, companies will not pay hundreds of millions of dollars to buy a TV broadcast station (and along with it the limitations of government regulation) but they will be able to start up an Internet-TV station for the cost of a server — about $2,000. And unlike broadcast TV and Cable TV, Internet TV will have no geographical boundaries.
Alan Mendelson
KCAL-TV Money Reporter and www.moredeals.com
This is a subject I’ve thought about a lot. So, I responded:
I read, with great interest, Alan Mendelson’s letter concerning the future of Internet video. If it were only that simple.
Alan mentions the startup cost of $2,000 for a server. That’s a server without bandwidth. Unlike broadcasting, where one single transmission reaches out to anyone, current Internet technology requires a discreet, individual signal to each user.
That’s also a server without any viewers. Broadcast stations provide something an Internet start-up can’t (and here’s their real value) – a well known address. Don’t underestimate the value of prime real estate. It’s no surprise that when the same program is seen on both broadcast and cable channels, broadcast gets the higher audience share.
Even when Internet television finds an audience, it takes a lot of bandwidth to serve an audience. As far as I can tell, it’s a lot more expensive to transmit that many bits than with our current system of broadcasting.
I’m not saying that what Alan predicts won’t happen. It just won’t happen in the way he anticipates.
Internet television will be watched as the Internet is watched – very close to the screen. It will be watched as we browse and check email and do all those other things we do with computers… and will do with computers.
For the most part, Internet video programming will not be watched full screen. Certainly not for news and information programming. There is no need for it. Watching news, or even sports, in a small window on a computer desktop is perfectly satisfying and reduces the bandwidth cost greatly.
Already, here in Connecticut, University of Connecticut women’s basketball is streamed on a subscription basis by our local Public Television station. Major League Baseball does it too. In neither case is the service designed to be full screen viewing. In neither case would this be economically possible without a significant subscription fee, for what is a small amount of programming.
The good news for most of us is, Internet or broadcast, our skills will still be needed. The bad news is, increased dilution of the audience will lower margins and probably lower salaries.
My small town, a suburb in a medium sized market, might be served by a one man TV station, where a single person does every function from reporting to shooting to editing to anchoring to sales.
Will the cable companies, who provide a huge chunk of the broadband Internet access now available, try to control this use of bandwidth? They have a vested interest in seeing that they are the source of subscription programming, not a flat rate pipeline by which others profit… at their peril.
Whether change will be good or bad remains to be seen. What is unavoidable is, there will be change.
I’ve written before about Roku the Internet powered box that’s connected to my TV. I have had mixed emotions about it. Tonight, however, I’m thrilled. We’re watching the Phillies play the Braves on the big set in the family room. The picture is pretty good.