Exploding TV

We hosted one of our regular monthly sandwich lunches in our office yesterday. We pick an industry that we think is ripe for disruption and invite a bunch of smart people who work in that industry to come have sandwiches and talk. There’s no agenda, no moderator, and the food isn’t even that good. But the conversations are always fascinating.

Yesterday we talked about what happens when TV content becomes available and addressable the way web content is today. We talked about Video On Demand (VOD), TV delivered over phone lines (IP TV), Video on the Internet (Streaming), and Downloadable Video (Bit Torrent).

Of the ten or so people that attended, I suspect that each and everyone has a different view of how this will ulimately play out. Some were big fans of VOD and that’s a real market that is developing quickly with the support of Comcast and Time Warner.

Some were big fans of streaming content over the Interent. Apparently advertisers are lining up to sponsor such programming and there is way more demand for streaming ads than supply right now.

There weren’t too many fans of IP TV. The prevailing wisdom is that the content owners won’t piss off the cable MSOs by making their channels available to Verizon and others.

The Bit Torrent crowd grew larger as the lunch went on. I am in this crowd. I believe “digital television” will play out largely like digital music. At first the content owners (like the musicians) will be held back out of loyalties to the cable MSOs (like the record labels). Content owners will not make their content available for download legally. But consumers will want to get their TV truly “on demand” and they will use Bit Torrent or whatever other technology becomes available just like Napster, Morpheus, and Kazaa were used to get music on demand.

I think the advent of the media-centric PC will cause this trend to accelerate. If my family room is driven by a PC with a DVR, set top box, and web browser built into it, connected to cable for both programming and high speed data, and then connected to a nice big flat panel display, the option to watch a show via live TV, VOD, DVR, or Bit Torrent is just a click of the remote. And when its that easy, why will my girl’s choose to watch One Tree Hill via DVR when they can just as easily get it via Bit Torrent?

Then there’s the issue of what you didn’t record. Take the whole Jon Stewart Crossfire thing. I didn’t DVR that show. I don’t Tivo Crossfire. I don’t watch Crossfire. But I love Jon Stewart and when I heard he slammed those guys live, I went to Bit Torrent and downloaded the show and watched it. Apparently a lot of other people watched it that way too.

So I believe we are going the way of downloaded TV over the long run. What should the content owners do about this? I think they should recognize that the ad sponsored content model can work in a downloaded world. They should cut ad avails into their programming, hard wire an IP address into those ad avails to pull an advertisment off of their servers, and then let the programming go wherever it will go. In an always on world, they’ll get the ad impressions they always got, and probably a lot more.

Who is going to build out the infrastructure for this new world of exploding TV? I am not sure, but I do hope they stop by our offices and tell us what they are doing. Because we want to invest in this trend.

AN ASIDE: We also talked about the new U2 iPod ad. That’s an amazing piece of marketing at work.