March 2009About twenty years ago people noticed computers and TV were on acollision course and started to speculate about what they'd producewhen they converged. We now know the answer: computers. It's clearnow that even by using the word "convergence" we were giving TV toomuch credit. This won't be convergence so much as replacement.People may still watch things they call "TV shows," but they'llwatch them mostly on computers.What decided the contest for computers? Four forces, three of whichone could have predicted, and one that would have been harder to.One predictable cause of victory is that the Internet is an openplatform. Anyone can build whatever they want on it, and the marketpicks the winners. So innovation happens at hacker speeds insteadof big company speeds.The second is Moore's Law, which has worked its usual magic onInternet bandwidth. [1]The third reason computers won is piracy. Users prefer it not just because it's free, but because it'smore convenient. Bittorrent and YouTube have already trained a newgeneration of viewers that the place to watch shows is on a computerscreen.[2]The somewhat more surprising force was one specific type of innovation:social applications. The average teenage kid has a pretty muchinfinite capacity for talking to their friends. But they can'tphysically be with them all the time. When I was in high schoolthe solution was the telephone. Now it's social networks, multiplayergames, and various messaging applications. The way you reach themall is through a computer.[3]Which means every teenage kid (a)wants a computer with an Internet connection, (b) has an incentiveto figure out how to use it, and (c) spends countless hours in frontof it.This was the most powerful force of all. This was what made everyonewant computers. Nerds got computers because they liked them. Thengamers got them to play games on. But it was connecting to otherpeople that got everyone else: that's what made even grandmas and14 year old girls want computers.After decades of running an IV drip right into their audience,people in the entertainment business had understandably come tothink of them as rather passive. They thought they'd be able todictate the way shows reached audiences. But they underestimatedthe force of their desire to connect with one another.Facebook killed TV. That is wildly oversimplified, of course, butprobably as close to the truth as you can get in three words.The TV networks already seem, grudgingly, to see where things aregoing, and have responded by putting their stuff, grudgingly, online.But they're still dragging their heels. They still seem to wishpeople would watch shows on TV instead, just as newspapers that puttheir stories online still seem to wish people would wait till thenext morning and read them printed on paper. They should both justface the fact that the Internet is the primary medium.They'd be in a better position if they'd done that earlier. Whena new medium arises that's powerful enough to make incumbentsnervous, then it's probably powerful enough to win, and the bestthing they can do is jump in immediately.Whether they like it or not, big changes are coming, because theInternet dissolves the two cornerstones of broadcast media:synchronicity and locality. On the Internet, you don't have tosend everyone the same signal, and you don't have to send it tothem from a local source. People will watch what they want whenthey want it, and group themselves according to whatever sharedinterest they feel most strongly. Maybe their strongest sharedinterest will be their physical location, but I'm guessing not.Which means local TV is probably dead. It was an artifact oflimitations imposed by old technology. If someone were creatingan Internet-based TV company from scratch now, they might have someplan for shows aimed at specific regions, but it wouldn't be a toppriority.Synchronicity and locality are tied together. TV network affiliatescare what's on at 10 because that delivers viewers for local newsat 11. This connection adds more brittleness than strength, however:people don't watch what's on at 10 because they want to watch thenews afterward.TV networks will fight these trends, because they don't havesufficient flexibility to adapt to them. They're hemmed in by localaffiliates in much the same way car companies are hemmed in bydealers and unions. Inevitably, the people running the networkswill take the easy route and try to keep the old model running fora couple more years, just as the record labels have done.A recent article in the Wall Street Journal described how TV networkswere trying to add more live shows, partly as a way to make viewerswatch TV synchronously instead of watching recorded shows when itsuited them. Instead of delivering what viewers want, they'retrying to force them to change their habits to suit the networks'obsolete business model. That never works unless you have a monopolyor cartel to enforce it, and even then it only works temporarily.The other reason networks like live shows is that they're cheaperto produce. There they have the right idea, but they haven'tfollowed it to its conclusion. Live content can be way cheaperthan networks realize, and the way to take advantage of dramaticdecreases in cost is to increase volume. The networks are preventedfrom seeing this whole line of reasoning because they still thinkof themselves as being in the broadcast business—as sending onesignal to everyone.[4]Now would be a good time to start any company that competes withTV networks. That's what a lot of Internet startups are, thoughthey may not have had this as an explicit goal. People only haveso many leisure hours a day, and TV is premised on such long sessions(unlike Google, which prides itself on sending users on their wayquickly) that anything that takes up their time is competing withit. But in addition to such indirect competitors, I think TVcompanies will increasingly face direct ones.Even in cable TV, the long tail was lopped off prematurely by thethreshold you had to get over to start a new channel. It will belonger on the Internet, and there will be more mobility within it.In this new world, the existing players will only have the advantagesany big company has in its market.That will change the balance of power between the networks and thepeople who produce shows. The networks used to be gatekeepers.They distributed your work, and sold advertising on it. Now thepeople who produce a show can distribute it themselves. The mainvalue networks supply now is ad sales. Which will tend to put themin the position of service providers rather than publishers.Shows will change even more. On the Internet there's no reason tokeep their current format, or even the fact that they have a singleformat. Indeed, the more interesting sort of convergence that'scoming is between shows and games. But on the question of whatsort of entertainment gets distributed on the Internet in 20 years,I wouldn't dare to make any predictions, except that things willchange a lot. We'll get whatever the most imaginative people cancook up. That's why the Internet won.Notes[1]Thanks to Trevor Blackwell for this point. He adds: "Iremember the eyes of phone companies gleaming in the early 90s whenthey talked about convergence. They thought most programming wouldbe on demand, and they would implement it and make a lot of money.It didn't work out. They assumed that their local network infrastructurewould be critical to do video on-demand, because you couldn'tpossibly stream it from a few data centers over the internet. Atthe time (1992) the entire cross-country Internet bandwidth wasn'tenough for one video stream. But wide-area bandwidth increased morethan they expected and they were beaten by iTunes and Hulu."[2]Copyright owners tend to focus on the aspect they see ofpiracy, which is the lost revenue. They therefore think what drivesusers to do it is the desire to get something for free. But iTunesshows that people will pay for stuff online, if you make it easy.A significant component of piracy is simply that it offers a betteruser experience.[3]Or a phone that is actually a computer. I'm not making anypredictions about the size of the device that will replace TV, justthat it will have a browser and get data via the Internet.[4]Emmett Shear writes: "I'd argue the long tail for sports maybe even larger than the long tail for other kinds of content. Anyonecan broadcast a high school football game that will be interestingto 10,000 people or so, even if the quality of production is notso good."Thanks to Sam Altman, Trevor Blackwell, Nancy Cook, Michael Seibel,Emmett Shear, and Fred Wilson for reading drafts of this.
