Roger McNamee, IP TV and The Importance of Getting Along

At the recent Digital Hollywood session on media platform economics, moderator Steve Bradbury asked the panel and the attendees what IPTV subscriber numbers would look like in 2009. I was easily the most pessimistic - even with a couple million subscribers today, I thought the number was going to be well south of the 17 million projection.

Why?

I point to the dismal adoption rate of VOIP, and the basic costs of programing (registration required), especially with pro sports - a unique business that has its own problems at the moment. The good news for IPTV is that video screens are about to get really, really cheap...which could augur a tipping point (subscription required) for entirely new places to put displays. 

That reminded me to re-read Roger McNamee's extensive blogs on the subject. After reading through his thoughts on industry constraints and Akimbo, Brightcove and Grokster, I had the following reaction.

First, sports has been a critical component in pretty much every successful TV franchise. I'm concerned that sports programing doesn't cache well on IP, since fans tend to like their sports live. Moreover, usage rights are going to be tied up in national and local sports networks like ESPN and Fox Sports in the short term, to a few local sports franchises in the medium term, and with the leagues themselves in the long term. This hodgepodge is going to make it really hard for IPTV providers to provide a simple licensing proposition for local programing - something the satellite providers only solved after years of work securing rights with local broadcast affiliates and launching more satellites. And without a simple licensing proposition that works nationwide, innovators like Brightcove are going to have a hard time aggregating enough sports content of any length to influence this critical segment.

I'm also concerned that for the studios, the jury is still out on when technologies like video on demand, digital video recorders and high-definition television will become significant moneymakers. So long as those questions remain unanswered, studios are going to be less willing to invest significant resources in IPTV platform support. To their credit, studios have been getting smarter about the tradeoffs. As Steve pointed out in the panel, today's studio is mostly managed by TV executives, not film. (That's not a knock on film people, but an acknowledgement that understanding the balance between programing and advertising revenues is more important than ever.) But they're still a million miles away from grokking P2P enough to build it into the DNA of distribution. Perhaps the carriers will get frustrated and conclude that the only solution is to negotiate studio exclusives the Japanese way and try to purchase an influential studio. (Just kidding.)

Studios are much like luxury brands - counterfeiting is destroying their businesses. They've upgraded their management and actually understand the oft-repeated analogy of the current situation to VHS. Yet the technology guys still come in, sometimes copping a hell of an attitude, and why not?  "They're changing the world!"

(sigh)

I think there's been a lot of finger pointing on both sides. IMHO, the best way for the carriers and technology guys to move forward is to learn from missteps from Google (and before that, Microsoft, and before that, AOL) and change their approach. Put your charismatic leaders on a leash (I keed, I keed), be a bit more humble, and make it easier for the studios to understand how your technology is going to impact their business. Be willing to be creative in how your technology is used. For example, I'd urge the Akimbo guys to consider adding commercial video services (i.e., distribution to retail locations and professional offices) to their residential offering. 

It's a simple task to make things complex, but a complex task to make things simple.

Link: Roger McNamee's Video on the Internet series, parts -I-, -II-, -III-, -IV- and -V-