Property rights for your living room

The new Apple TV has created a cottage industry of pundits debating the future ownership of your living room. This topic of to whom your living room belongs has been around since the 90’s when Microsoft sought to plant a flag on your TV set and claim it in the name of Gates with a cable box software platform. A few billion dollars later they came away with not a single deed, not even to your couch.

Talk of ownership flared up again in the last decade as various game consoles and boxes paraded in front of consumers. There were wars waged over DVD formats, encoding formats and DRM. Then came hulu and Apple TV and roku and who knows what else I missed.

It’s all bound to go badly. Here’s why this property will remain off limits:

  • The ownership is not for the space but for the time and attention of the audience. The time spent consuming televised content is what’s at stake.
  • That time is increasingly being fragmented. It was first broken into tiny pieces by cable channels that divided audiences into niches.
  • Erosion of cohesive audiences continued with DVD rentals and Netflix. Home theaters ate into both broadcast and outside-the-home entertainment
  • Attention was attacked with PVRs like Tivo.
  • Demographics were exploded with game consoles with age groups separating into different modes of consumption.
  • Migration of other portable devices like laptops, smartphones and iPads into the couch room are now further degrading the value of the “living room” as a significant target for advertisers.
  • Internationally there never was a unified living room. Consumption patterns and even broadcast business models vary widely.

Ultimately there’s really nothing in “the living room” worth fighting for. The disruptive play here is the crumbling of monolithic audiences that used to define “prime time”. It’s not a new box to take over from another box.

The technologies that are coming to invade the living room have already broken it into parcels that lack cohesion.

Just like the division of land among numerous generations of heirs creates land only useful for residential development, it’s time to abandon dreams of owning the farm. That farm has long ago stopped being fertile.

  • piero

    Germany was divided, then along came Bismarck

  • poru

    Excellent piece. Vultures fighting over a few rancid bones. I haven't had a TV in 20 years and don't understand how people have the time in the day to watch crap shows filled with adverts. (Actually it's the other way around: adverts packaging crap shows.) The very few good shows I find interesting I watch on DVD or buy on iTunes.

    I'm admittedly a fringe example but a friend of mine in NY with the 50" plasma set is now more likely to relax on his couch with his iPad than plan an evening around the TV. Part of the problem is the (literal) "500 channels and nothing on" dilemma, and it's almost impossible to filter the signal from the noise.

    I'm astonished when I stay in a London hotel and watch the telly; the UK television scene now is dire. I remember living in England in 1972 and there were all of 3 channels and I swear there was better choice back then.

    Having said that I was in Japan last month and the television there has got to be the worst in the world. Maybe it's all lost in translation 😉

    (Apologies for the rant.)

    • Roman

      Not a rant at all — I wholeheartedly agree! And I also don't own a TV… Considering getting a screen to put on a wall with Apple TV, now that we're getting somewhere…

    • yowsers

      You're not alone. I go months without turning on the TV. The cable bill is wasted money.

      I do want a good TV for when I see movies and shows, though. My usage has become downloads via iTunes and Netflix, with the occasional DVD tossed in. Based on my usage pattern, I figure the Apple TV will pay for itself in 6 weeks. It will be roughly $1000/yr saved after that.

  • JonathanU

    I completely agree. I don't own a TV. Any shows I want to watch I just stream over the net to my laptop usng various semi-legal websites like sidereel/megavideo. I think I read somewhere that 6% of the entire bandwith of the Internet is used for watching shows on megavideo! I would love to see the usage stats of show sales and now rentals on iTunes vs that of megavideo et al.

    In my mind, the sale of content has always been a losing proposition as the majority of people can quite easily get it for free. The real money is found in designing sophisticated, attractive devices which allow for the consumption of this media, however it is sourced…

  • Roman

    This is a big subject. From a segmentation perspective, broadcast networks were just buying eyeballs. Cable companies, as you point out, fragmented audiences — as too did the Internet recently — to define segments for more efficient advertising. However, in the process they created such a zoo of of options (see Paradox of Choice) that a reverse function was needed. There's been a run to aggregation with satellite dishes, premium channels, pay-per-view, TiVo, Apple TV, Google TV and a zillion other devices and methods.

    From a content perspective, all this while content creators needed to adjust to the particular intermediaries du jour. Ultimately, we are paying for content either with a flat fee (movies), a subscription (Netflix), advertising, or a combination of these. Aggregators of content would argue that they are also creating value by selecting only the best / most appropriate choice of content for viewers, akin to newspaper and magazine publishers, or record labels, but this value is hard to measure and is hidden when bundled with dumb distribution that is currently being disrupted by new technology.

    If I were to guess, of three major media types — print, music, and TV/movies — the latter industry will be the last to crumble as we know it to day, at least in the US. It too, however, shall not escape the structural transformation of its value chain.

  • GoodyBird

    Sharp piece.

    Lets try and redefine the target, ease of transition between monitors,
    not controlling the leaving room.

    Once you have a smart* device, you have less attention for dumber devices.
    A person with a laptop would have less attention to a TV,
    and a person with a smartphone or a smartpad would have less attention
    to his laptop.
    TV partner best with dumb devices,
    and in that sense TV is for dummies.

    as for the content transition, I see two competing approaches,
    the first one is trying to standardize a wireless pairing protocol between a device and a monitor, and the second is incorporating projectors inside devices.

    in the meanwhile the smarties would continue to shove boxes toward the dummies with little success.

    *Smart, meaning that it was design in a smarter way.

  • Joe Moran

    While I have a 50" plasma set in my home, it's almost exclusively used for movies or Netflix streaming via our Wii. There are very few actual TV shows that we watch, mainly programming on Discover channel and Food Network, as well as some children's shows on Disney. If it wasn't for the fact that most of the kids' shows and Food Network are not at all available on any streaming or purchase site, I'd kill my cable bill and just pay for the Internet and VOIP access, saving almost $1,000 a year in service bills. I don't know how much of that $1,000 I'd be spending on TV rentals, but it couldn't be more than a few hundred a year.

  • Interesting take from Gartenberg on Engadget

    Whilst this doesn't really disagree with the conclusion of your post, it's still interesting. He is basically suggesting that, unlike GoogleTV, Apple are avoiding taking on the Cable Companies directly by positioning the AppleTV as destined for "input two" on our TV sets.

    Money quote:
    <cite> There's nothing wrong with Google's approach, except it's hard. Really hard. It's like trying to take the Russian front hard. In winter. No one's succeeded in the past nor are they likely to in the future — and certainly not with any weapon that requires an IR blaster. The cable companies have a very firm lock on the cable box. They don't want to open it. They don't want to share it. They want to keep it to themselves. The last thing they're going to do is allow themselves to be commoditized by Google or anyone else. </cite>

    Given this blog's title and expertise in asymmetric competition, I'd love to hear your thoughts.

    • It's futile to attack entrenched incumbents in a direct or symmetric way. They have all the tools and weapons and motivation to defeat you. Heroism counts for nothing.

      It's like the charge of the Light Brigade. A French General observing it had the right attitude:

      "C'est magnifique, mais ce n'est pas la guerre."

      • Nalini Kumar Muppala

        Would Apple offering a subscription model for streaming be symmetric competition to Netflix? Could Apple differentiate enough by offering the ability to buy and stream instantly such titles (like the DVD only titles in Netflix) unavailable for streaming under the subscription plan? It seems that Apple would not want to compete with Netflix on content availability. I wonder if that would reignite Apple TV sales. What are your thoughts?

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  • David Chu

    Here's a link to the latest Google TV demo at IFA. Demo starts around 32:00.

    Looks like too much of a hassle for regular consumers. I think a lot of it's functions are things that people are more comfortable using their computers to do. Wouldn't be much of an issue if the software was included for free, but I'm sure that manufacturers will demand a premium for the option.

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