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The Lesson that Tech Won’t Learn

July 30, 2013

In the early ’90’s, I joined a part of my company that was doing the first digital video work in the world, which pioneered the video and imaging revolution that we all enjoy today via our phones and computers.  I was truly “there” in terms of seeing the technology evolve.  We thought we’d be changing the world overnight, and in some ways we did.  But we often look back at the work we did and make one general comment: we needed the content providers to deliver on our technology, and when they didn’t we were forced to rethink our plans for the evolution of the market.

Today, even the smartest companies are still discovering the same thing.  Witness Chromecast:

What Silicon Valley perpetually forgets is that every TV is fundamentally a dongle to begin with. It stands between between us and the broadcasts we want to watch. For the most popular drama or sport – the most popular two categories of telly “stuff” – some kind of access device is required. In the earliest days some TVs were even bundled with a service, as were the first telephones.

The real industry power lies with the owners of the rights to Breaking Bad or Premier League footie, a global phenomenon that absorbs every country in the planet. We’re probably in a golden age of TV and even NetFlix has “pivoted” to creating its own original material and releasing it exclusively. Content remains king, the demand that pulls technology industries along behind it. So let’s be more precise and think of a TV as “an access dongle”, the termination point of broadcast technology.

Essentially, Google is providing a device that plugs into a television that lets you watch reruns on YouTube, or just connect your phone.  That’s great, if you haven’t seen the same video 100 times yet.  But if one wants decent content, one still needs the content provider to support the format.  Look farther down in the article, for a separate solution.

Now contrast what BSkyB has done – for it too has a new dongle. The company is all about making money from the rights to programmes and other material, and it doesn’t really care how you consume its stuff as long as you’re paying. The combination of a satellite dish and conditional access box can be pretty expensive, and while it’s been hugely successful for Sky, the broadcaster acknowledges that many people don’t want to make such a hefty investment or commitment.

So to fend off so-called over-the-top players (which piggyback Sky’s internet broadband to offer their own TV entertainment) it’s become one itself: the NOW TV dongle can be used with day passes to BSkyB material. The gadget costs just less than a tenner and it’s similar to Apple TV or Roku in terms of specifications: Wi-Fi, HDMI and A/V ports and a bundled remote. All will offer over-the-top services such as Netflix or iPlayer. No doubt mobile apps for the NOW TV box will follow. The key difference isn’t one of price – it’s that Google is offering you sneezing panda clips and Gangnam Stylereenactments, while Sky is offering The Ashes cricket glory.

It’s not that people don’t get it, it’s that tech doesn’t appear to learn from what it doesn’t get.  To some extent, the relationship between Hollywood and tech has been strained from day one.  Tech is about horizontal access to content.  Hollywood is about monetizing content.  It’s only in the game area where they meet, and even then it’s usually still a confusing mess.

So for now, it’s still a world where content providers rule, and the players who have the relationships that support content rather than give it away are the ones who are still winning, at least on the TV front.  I wonder how much longer that this is relevant?

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