Interactive TV Award - Blog zum Interactive TV Award der Deutschen Telekom

Switched on / Life dictates the rhythm of technology. Our guest author Bertram Gugel sees this in audience migration - away from the TV and toward online videos. His view on our competition motto “Television in tune with our lives” is shaped by the many years he has spent studying the development of television - documented in his blog “Digital Film”. Since 2009, Bertram Gugel has been working for IPTV Design at Deutsche Telekom.

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On August 1, 1981 MTV launched with the music video Video Killed the Radio Star <. Since then, MTV has experienced a roller-coaster ride. The rise of MTV up to 2000 has been followed by its fall in recent years. It´s easy to see the change just by looking at today´s MTV program schedule - you need to spend ages searching for music videos. The latest low-point was marked by Vevo and Universal Music´s decision to pull music video content from MTV.com. Music television has shifted from the TV to the Internet thanks to Vevo and YouTube - where MTV is no longer first choice.

As such, MTV now stands as an example of a trend which we will notice more and more over the coming years: TV (bundled content) will decrease in importance and videos (individual content) will increase in importance. I´ll try and illustrate a few reasons for this trend and highlight the implications of it.

TV is becoming less important

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If you look at the TV market, two big developments are on the horizon:

• The device market will become faster moving. Usually it is assumed that consumers will only buy a new television once every seven years; however, in recent years, this period between purchases has reducedsignificantly. The market has recently undergone a fundamental shift: five years ago 95% of televisions sold were of the cathode ray tube (CRT) type. Today, they make up just 5%, with flat-screen TVs accounting for the remaining 95% (although this figure doesn´t entirely reflect the situation in developing countries).
• TVs with integrated Internet access. While 3D is being hyped, Internet TVs are the real game-changer. Netflix is already availablehref=”http://www.gugelproductions.de/blog/2010/die-naechste-generation-des-paytvs.html”>on 50 million consumer electronic devices in the USA. This year alone,href=”http://informitv.com/news/2010/07/29/internet-enabledtelevisionswill/”>28 million new TVs will be sold with Internet access (in Germany 2 million).

If you combine these two trends, you can draw parallels to the cell phone market. In this case too, the Internet became attractive thanks to new devices, which had a huge impact on overall cell phone use. Suddenly, making calls was no longer the most important feature - it just became one among many. At the same time, among other things, using the cell phone to watch videos has experienced rapid growth. A similar fate awaits the TV:

1. TV manufacturers will try to differentiate themselves more and more by means of content in the form of applications, moving image content and games.
2. Internet on the television will hurt the way in which television is consumed. The audience will watch less television and instead use alternative applications and content more.

Besides the new form of competition caused by the Internet being on the same screen, television itself will be subject to a massive amount of unbundling caused by the Internet. TV is a bundle of programs where the TV dictates to the consumer what they can watch and when. An increasing number of users are breaking this logic by specifically selecting individual items of TV content and watching it via the Internet. 33% of Americans (59m people) already watch TV series via the Internet. On the whole, video consumption is shifting away from user generated content to TV content.

This is a trend that RTL and ProSieben intend to seize on and push through their (a European Hulu?) announced joint venture. Providers such as Netflix and Hulu as well as up-coming start-ups will also seize this over-the-top-opportunity and become new multi-channel video programming distributors with a global reach and deep pockets, without needing to offer a connection or have a TV channel.

Video is becoming more important

While television as an institution is decreasing in importance, television content in the form of videos will significantly increase in importance. Demand for this content is growing all the time - last year alone, the time spent watching content online doubled.

In addition to the demand being generated by consumers, demand is also being generated by platform operators and consumer electronics manufacturers. Both need (good) content to differentiate themselves. The more videos on demand there are on the relevant devices and platforms, and the easier it is to consume them, the more attractive they will become for consumers. Just what kind of potential this development has is shown by Seagate, which will no longer offer blank hard drives in future - instead, it will supply them pre-loaded with films.

Opportunities

In my opinion, three opportunities present themselves from the declining importance of TV and the growing importance of videos.

First: Services can fill the TV, as an additional platform, with individual applications. Casual games, info services and TV widgets are just three possible types of application which may make the big screen in the

lounge competitive.

Second: Online video platforms such as Brightcove, Ooyala and thePlatform will benefit from this

development as making videos on demand available on different platforms, services and devices will be managed.

Third: Content producers will benefit from increased demand for their content. Even if television is expected to become less important, it will be in better overall shape than before. The challenge is to be present on all platforms and devices, and profit in monetary terms through skilful negotiation.

About the author

Bertram Gugel is Junior Manager IPTV Design at Deutsche Telekom. In his previous role of product manager at Axel Springer Digital TV, he rolled-out a new video management system for the group. Since 2005 he´s been writing about the convergence of TV and the Internet, the different video offerings on the Internet as well as trends and developments in this field in his blog “Digital Film”. As a consultant, he has developed distribution strategies and feature sets for numerous Internet video firms. Bertram Gugel studied Communication and Media Science at the University of Leipzig.