TV's Web revolution sizzles at CES 2011: Can your cable company survive?

CES 2011 in Las Vegas is showcasing gadgetry to make TV truly mobile. Can the old guard media companies survive the revolution? Surprisingly, signs are that they will.

By , Staff writer

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    A tablet computer by Motion Computing is displayed during a media preview event at CES 2011 in Las Vegas, Nevada, Jan. 4.
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Every January, technology enthusiasts pore over the hottest news from the International Consumer Electronics Show for hints of the big trends in personal tech.

This year is no exception. The drumbeat from the annual post-holiday gadget frenzy in Las Vegas is the rise of the Internet-enabled television set and the proliferation of iPad-inspired, tablet-style mobile viewing devices that allow consumers to watch TV wherever, whenever.

“The overall trajectory of what is happening when it comes to viewing television content is TVs with online access, iPads, and mobile phones – anything having to do with Internet access,” says Paul Levinson, professor of communications and media studies at Fordham University in New York and author of “New New Media.”

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While the appetite for viewing TV programs on the Internet is growing by “leaps and bounds,” he says, viewership of traditional television has leveled off or declined. Indeed, viewership of TV content on the Web doubled in the past year, according to a 2010 survey by the Boston research firm Altman Vilandrie & Company and the San Francisco-based market research firm Peanut Labs.

Lurking just behind all those shiny new toys, is the $64,000 question that has hit every established media company facing an upstart technology over the past 60 years: where do they fit in with the emergent tech?

What happens to the old guard?

Cable and satellite companies have a big stake in keeping people tethered to their monthly subscriptions, and even broadcast television has yet to figure out just how to make the ad-based free content model pay off on the Web.

So as this latest technological revolution proceeds, what happens to the old guard of cable, satellite and broadcast TV?

Not exactly what you might expect based on previous technological shifts, says David Bartlett, senior vice president at Levick Strategic Communications in Washington.

“Cable and satellite and broadcast companies are all rapidly adapting to this inexorably changing new world,” he says. This is a surprise, he says, because “in the past those kinds of big institutions have tended not to be so nimble.” Rather, he says, they have tended not to react “quickly and cleverly to rapidly changing technological circumstances.”

He points out that it took radio a long time to figure out the impact of television and it took the big TV broadcasters a long time to adapt to the cable and VHS revolution. And of course, the music industry has been decimated. Rather than adapting, it tried to swim against the tide.

The 'TV everywhere' bandwagon

This generation of tech entrepreneurs, however, has learned from the music industry’s experience in particular and is more platform-agnostic, with an eye to adapting early and aggressively, says Altman Vilandrie & Company director Jonathan Hurd.

Nearly all the major players, from cable and satellite to telephone companies either have implemented some form of “TV everywhere” – the ability to view content when, where, and however a consumer chooses – or plan to do so.

On a recent visit to his brother-in-law’s home in New Jersey, for instance, Mr. Hurd says, he watched a Patriots game on his iPad while he was playing pool in the family room. Every element of that scenario was different from even a year ago, he points out.

“I couldn’t have watched that particular game because it wasn’t on the air in New Jersey, and even if it were, I would have had to go to the room where the TV was to watch it,” he says.

The key to his access, though, was the subscription he has through his cable company, which gives him universal access to his content.

“These [cable] companies understand they have a consumer base that is used to paying subscriptions,” he says. But, he adds, they also know that group isn’t sitting still.

Race to create flexible delivery systems

This is what Tom Lookabaugh, chief technology officer of San Diego chipmaker Entropic, calls “the sweet spot,” a moment in history where what he calls “the Wild West of arbitrary innovators” are pushing the envelope on what content is available to consumers. This list runs the gamut from Netflix “watch instantly” to Amazon’s video on demand and Hulu plus. But, he points out, at the moment these distribution channels offer uneven quality.

“These have glitches occasionally and you have to restart and rebuffer and it gets to be annoying if it’s the centerpiece of your living room or bedroom entertainment viewing,” he says. This is a transition period, he adds. This is where third party providers such as the cable and satellite companies can step in and say, “we will bundle it and make it easy to pay for things you want, drop what you don’t want and on top of that keep you safe from content you didn’t really want,” he says, all with the reliable quality available from cable connections.

All these companies with an established consumer relationship are racing against time to create the kinds of flexible delivery systems consumers clearly want before consumers start cutting the cord.

The companies are betting that in the end they can create the kinds of flexible, accessible programming packages that will both give consumers wide choice and at the same time generate the substantial revenues necessary to support the high-gloss entertainment consumers continue to demand, says Hurd.

In the end, he adds, it’s all about the content, and whoever can deliver that most effectively will be the winner.

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