Downloadable television, first made popular by Tivo and its competitors, is compelling stuff. As consumers become accustomed to watching a show whenever they choose, pausing at will and fast tracking through commercials, tuning in to a station at a scheduled broadcast time seems quaint at best. Today, 7% of U.S. households have a digital video recorder, or DVR and most cable companies offer a DVR as an option.
File trading networks, such as bittorent, are also extremely popular (if sometimes illegal) choices for consumers wanting access to time-shifted television content.
While DVRs are great, content producers and distributors are less than thrilled by the loss in revenue from all those skipped commercials. Also, DVR’d shows cannot be easily transferred to mobile devices or otherwise viewed away from their home television. Some consumers want more flexibility and options.
Enter downloadable television, spearheaded by iTunes.
On October 12 2005, Apple introduced iTunes 6.0 which added support for purchasing and viewing of video content from the iTunes Music Store. iTunes initially offered a selection of several thousand music videos and five TV shows, including most notably ABC’s Lost and Desperate Housewives, as well as the collection from past seasons. New shows are available 24 hours after the initial broadcast. Since that time, the collection has expanded with NBC Universal, USA Network, Sci-Fi Channel shows, and Viacom, in addition to further Disney-owned networks’ shows. iTunes also gives the ability to view Apple’s large collection of movie trailers. Format for purchased Videos is 128 kbit/s Protected MPEG-4 video.
By January 2006, iTunes offered over 40 television shows for download, including, most recently, additions from Nickelodeon, Comedy Central and MTV with episodes of such shows as the Daily Show, Spongebob Squarepants, South Park, and Punk’d. Showtime added some content in February.
The networks, though, are hoping that iTunes will not be the only way people watch TV on their computers. CBS, Fox and ABC are all experimenting with their own direct downloads or streaming.
ABC is offering streaming versions of a number of its hit shows to viewers within the U.S. for no charge: Lost, Desperate Housewives, Alias, and Commander in Chief. The shows are viewable in 400×700 Flash format. On the plus side, ABC’s offering is browser and platform agnostic, and are free. On the minus side, and these are big ones, you must be online to view the show. You can’t take these with you on a laptop or other device and watch them while on a plane, or otherwise offline. Also, There are a number of short commercials that cannot be skipped. So in the end, ABC is offering a nice way for me to watch time-shifted shows on my PC-enabled living room television, but not much else. See Mike Davidson for more on this.
CBS is going with downloads, through their CBS On Demand project. Only a single show is currently offered – Survivor – and you must be in the U.S. to use the service. Quality is 640×480 pixels. Shows cost $.99 and must be watched within 24 hours of downloading (again, not a very good option for travelers). You must have a Windows PC to view the shows. They cannot be burned to dvd. Frankly, with all of these limitations I’m surprised they even let you watch the show, period. It’s like they’re begging to fail so that they can say “hey, see, we tried, people don’t want this.” Note that CBS is also experimenting with shows on Google Video.
NBC is offering a number of shows through iTunes, but has no direct to consumer offering. They offer thirteen shows on iTunes, including The Tonight Show, Late Night with Conan O’Brien, Saturday Night Live, The Apprentice, Law and Order, Scrubs and The Office, as well as a number of vintage shows.
Fox is shaking things up a bit. In April they announced a six year deal with their affiliates to allow them to show back catalog shows on the internet. They are also starting to roll out downloads of the show “24″ through their Myspace property, but I am unable to find much information on it yet.
It’s going to be a while before the service models are compelling enough for the world to turn away en masse from today’s TV, but it’s clear we’re at the start of a major disruption that will shake content producers (the networks) and the distributors (cable) to the core.
Nothing is close to challenging iTunes yet for downloadable tv dominance (well, except bittorent and DVRs), and it’s unlikely a single network will be able to do much to overcome them. People want to be able to consume their content in one place, and iTunes does a very good job of allowing that. It’s simple, has some flexibility with regard to moving to a device and the shows do not “expire”. The real competition to iTunes is still to come: Yahoo, Microsoft, Google and Amazon, among others, will have product offering in this space sooner or later. (Note: AOL is already streaming a number of vintage television shows to users).
Business models need to change. Content producers cannot rely on network deals, 30 second advertising and, later, dvd sales, to pull in the revenue. Shows will have to stand on their own, and will probably need to be free for the first few episodes to pull in viewers who may eventually be willing to pay. Frankly, I look forward to the day that a show, ignored by the networks, first decides to launch itself on iTunes and go straight to consumers. The press around it would be overwhelming. The first to do it will have a big advantage.
There is a market for third party service providers, too. Services like Meevee are starting to bridge the gap between providing online television listing information and allowing people to actually view the content on their computers. Cozmo.tv and Brightcove are allowing people to control their Tivo’s through their browser. And how long will it be before MobiTV, which currently streams television to mobile devices, is able contractually to simply flip a switch and offer streaming television direct to a PC? They are already making moves in that direction, and Orb offers a similar, free service.
Note: This article was written with my friend Neil Kjeldsen, a new blogger but longtime writer, and someone who knows the television and film space well. Look for more posts by Neil here on TechCrunch.