The $148 billion reason why TV is still so complicated

It’s 2013 and we live in the future. We have little glass slabs in our pockets connecting us with anyone in the world or all the information ever written. Aluminum tubes rocket us above the clouds to other continents within hours. We cook gourmet meals in seconds using the magic of microwaves. We can even buy robotic vacuum cleaners if we don’t worry about scaring the dogs or cats.

But TV is still clunky. Cluttered. And despicably complicated. We may have large, beautiful flat screens, but most require numerous remote controls — one for the screen, one for the cable box that feeds it content, a third for the DVD or Blu-ray sound system, and likely a fourth for a game controller. Because most homes have three TV sets, this means you likely own 9 to12 different remote controls. As if the Gods of media were playing dice with our quantum entertainment universe, while most Americans spend 4 hours and 38 minutes a day zoned out in front of screens, using TV requires many different control systems or on-screen “Smart TV” apps all punched into different states.

If a rocket scientist were teleported into your living room from the 1950s, he’d by like, “WTF?”

The multibillion-dollar prize
The trouble is $148 billion in video dollars is at stake, and numerous players are fighting voraciously to defend or gain share of that huge pie. This week the latest grab was made by Microsoft, launching its Xbox One, a gizmo that plays TV shows or video disks or Internet or games effortlessly via voice commands, knitting all your home entertainment systems together. Beyond selling this gadget, Microsoft — like Apple and Netflix and Vudu (a Mediassociates client) and others — is angling for more of the $74 billion spent on U.S. television advertising each year and the additional, coincidental $74 billion spent by U.S. consumers on cable subscription fees (from 83 million tethered U.S. households shelling out $900 a year each).

The thinking is this: Consumers are waking up to the fact they’ve been overpaying for TV content, and oversaturated with the television commercials that support it. So eventually, that tsunami of money is going to flow somewhere else.

Yes, you now get too much TV content. The average U.S. person gets 130 cable or broadcast channels on their TV system, but tunes in to only 18 per year. (This is due to the intriguing habit that most people don’t “channel surf” by clicking up or down the dial anymore; instead, you punch in 1033 for CNN because you already know it’s there.) You also get too many ads. As much as 40% of any given TV hour is now paid promotions — up from just 18% in the 1960s — which means you are theoretically exposed to 6,000 TV commercials every day. This overload is neither good for marketers, who must compete among all that clutter to break through, or viewers, who look away to second screens or magazines when commercials now come on out of disgust.

Faced with such bloat, consumers are responding by changing their habits. TV use is slipping each year as more consumers, especially younger ones, give up on this clutter and stream video directly from the Internet. Nielsen reports the TV-viewing population in the United States has declined each of the past six quarters; some 60% of TV viewers age 18-24 watch video content online, and more than 1 in 4 of them do so for more than 5 hours a week. While this younger demo still watches more than 3 hours of traditional TV daily, this trend terrifies the incumbent networks, because consumers have a way of locking in to media habits in their youth and carrying those same habits as they age.

‘And then the wall will crumble’
Just as consumers are radically shifting behavior, technology is going through a period of rapid video and gadget experimentation, similar to what the railroad industry went through playing with different gauge distances before it settled on one coherent standard. You can watch video on iPhones or Droids. There are 108 million game consoles in U.S. homes now, and most can stream video from the Internet. Over The Top (OTT) services such as Hulu and Netflix try to lure you with subscriptions, sales or rentals. Smart TVs, such as Panasonic and Samsung, offer tablet-like apps on screen for various video connectivity. Old cable offers movie rentals on channel 1. And dedicated third-party devices like the Apple TV or Roku also invite video streaming. Behind it all, the big networks such as ABC and CBS force the cable middlemen, now called “multichannel video programming distributors” or MVPDs, to sell bloated packages of content. You can’t just get ESPN without subscribing to a bunch of other channels in the package, too.

Industry analyst Alan Wolk recently wrote a brilliant piece dissecting who makes what money from TV, and how the result is a traffic jam of content crashing into consumers’ living rooms. Wolk suggests the only way this mass of ugly technology will change is for some upstart revolutionary to lob a brilliant new system into the mix, one so radically different that it will break the lock of bloated packaging and conflicting systems. “At some point,” he writes, “someone will launch a virtual MVPD (e.g. cable-like system) … with a beautiful interface and all the bells and whistles of advanced TV systems … popular enough that it will be in the best interest of ESPN to allow this new MVPD to break up their bundle. And then the wall will crumble.”

Steve Jobs did this a decade ago by getting the music industry to walk away from CDs to sell songs on iTunes for $1, and consumers loved it. Someday, your simpler TV/Internet/video system will come, led by such a revolutionary. Until then, have fun playing with your complicated 9 to 12 remotes, smart TV apps, and numerous subscription fees.

Because you love the big screen so much, everyone is going to fight to clutter it up, leaving you to scratch the remotes tooth and nail.

Image: Future Atlas

2 thoughts on “The $148 billion reason why TV is still so complicated

  1. An online service that allowed you to pay for what you wanted to watch – whatever you wanted to watch – would be ideal. The fractured nature of content distribution is the problem, I think. If I could go online and buy “Team X vs Team Y college football game” for a few bucks and just watch it, I would. No one wants to be forced to watch whatever’s available when there’s something they do want to see. The moment some sort of a la carte service appears and has it all in one place, cable as a content provider is toast. It will then just be an ISP – until Google lays the fiber smack down on that as well.

    If I were Comcast, Time Warner Cable, Charter, and whoever else, I’d be shitting solid gold bricks. Which is good, because that’s all that I’ll have once someone figures it all out.

  2. Do you think we are over paying for TV? Remove commercials it would cost about $4-5 hr. I base this on the cost to see a movie. At 4hrs per day a person of watching TV it is cheap on a time/cost basis. But maybe if content was better and less abundant it would be better content?

    But I truly agree the complexity is amazing and needs fixing.

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