KIT digital's Global Lead Analyst, Alan Wolk, offers a sharp-witted view of the state of the television industry, circa Summer 2012

1. WHAT NOW?
10 Things You Need To Know About The Future Of Television

2. AS TV AND THE INTERNET HURTLE TOWARDS CONVERGENCE,
THERE ARE MORE QUESTIONS THAN ANSWERS, MORE
UNCERTAINTY THEN STABILITY
AT KIT DIGITAL, WE LIVE TO DEBATE THE FUTURE OF TELEVISION, AND
FROM TIME TO TIME WE ASK ONE OF OUR PEOPLE TO SHAKE UP OUR
THINKING WITH SOME FRESH PERSPECTIVES IDEAS.
WHAT FOLLOWS IS OUR GLOBAL LEAD ANALYST
ALAN WOLK'S TAKE ON THE FUTURE OF TELEVISION

3. AS TV AND THE INTERNET HURTLE TOWARDS CONVERGENCE,
THERE ARE MORE QUESTIONS THAN ANSWERS, MORE
UNCERTAINTY THEN STABILITY
AT KIT DIGITAL, WE LIVE TO DEBATE THE FUTURE OF TELEVISION, AND
FROM TIME TO TIME WE ASK ONE OF OUR PEOPLE TO SHAKE UP OUR
THINKING WITH SOME FRESH PERSPECTIVES IDEAS.
WHAT FOLLOWS IS OUR GLOBAL LEAD ANALYST
ALAN WOLK'S TAKE ON THE FUTURE OF TELEVISION
LET THE DEBATE BEGIN!

4. BUT FIRST,
A QUICK DEFINITION:
MVPD

5. BUT FIRST, Once telcos and satellite companies got into the mix, the
A QUICK DEFINITION: term “cable company” didn’t really fit anymore
MVPD

6. BUT FIRST, Once telcos and satellite companies got into the mix, the
A QUICK DEFINITION: term “cable company” didn’t really fit anymore
MVPD So now we call the companies that provide pay-TV service
MVPDs, which stands for

7. BUT FIRST, Once telcos and satellite companies got into the mix, the
A QUICK DEFINITION: term “cable company” didn’t really fit anymore
MVPD So now we call the companies that provide pay-TV service
MVPDs, which stands for
Multichannel Video Programming Distributors

8. AND NOW
10 THINGS YOU NEED TO KNOW
ABOUT THE FUTURE OF TELEVISION

9. Q:
WHAT’S THE MAIN THING STOPPING
VIEWERS FROM CUTTING THE CORD?

10. A:
BANDWIDTH CAPS

11. A:
BANDWIDTH CAPS
Even if you’re cutting the cord, YOU STILL NEED AN
INTERNET CONNECTION

12. A:
BANDWIDTH CAPS
Even if you’re cutting the cord, YOU STILL NEED AN
INTERNET CONNECTION
Most people buy internet and TV together as part of a
bundle that offers unlimited bandwidth and deep discounts

13. A:
BANDWIDTH CAPS
Even if you’re cutting the cord, YOU STILL NEED AN
INTERNET CONNECTION
Most people buy internet and TV together as part of a
bundle that offers unlimited bandwidth and deep discounts
Cut the cord, and you’re looking at bandwidth caps for
internet use, along with higher prices for a reliable high-
speed internet connection

14. A:
BANDWIDTH CAPS
Even if you’re cutting the cord, YOU STILL NEED AN
INTERNET CONNECTION
Most people buy internet and TV together as part of a
bundle that offers unlimited bandwidth and deep discounts
Cut the cord, and you’re looking at bandwidth caps for
internet use, along with higher prices for a reliable high-
speed internet connection
Since video eats up a lot of bandwidth, cutting the cord can
prove more expensive than keeping it intact

15. BUT The US Department of Justice recently
announced that it was investigating
whether bandwidth caps constituted
“restraint of trade”
There are strong arguments on either side, so
expect this one to reach the Supreme Court

16. Q:
WHEN WILL HBO START SELLING
HBOGO AS A STANDALONE SOLUTION?

17. A: NOT ANYTIME SOON

18. A: NOT ANYTIME SOON
There are several reasons HBO is unlikely to take this step,
no matter how much the internet speculates:

19. A: NOT ANYTIME SOON
There are several reasons HBO is unlikely to take this step,
no matter how much the internet speculates:
HBO IS NOT SET UP TO ACCEPT PAYMENTS. They get their
money from the MVPDs who do the collecting for them

20. A: NOT ANYTIME SOON
There are several reasons HBO is unlikely to take this step,
no matter how much the internet speculates:
HBO IS NOT SET UP TO ACCEPT PAYMENTS. They get their
money from the MVPDs who do the collecting for them
HBO MAKES A LOT OF MONEY FOR MVPDS. AND VICE VERSA
3 months free is a lure for new customers. HBO’s easily
bundled into premium packages. Why give up a good thing?

21. A: NOT ANYTIME SOON
There are several reasons HBO is unlikely to take this step,
no matter how much the internet speculates:
HBO IS NOT SET UP TO ACCEPT PAYMENTS. They get their
money from the MVPDs who do the collecting for them
HBO MAKES A LOT OF MONEY FOR MVPDS. AND VICE VERSA
3 months free is a lure for new customers. HBO’s easily
bundled into premium packages. Why give up a good thing?
HBO GO IS A TROJAN HORSE. If the MVPDs get too tough
on fee negotiation, HBO can point out that they’ve got a
great alternative that’s all ready to go

22. Q:
WHAT’S HOLDING UP TV EVERYWHERE?

23. A: LAWYERS

24. A: LAWYERS
The big road bump right now is around RIGHTS ISSUES and
whether the broadcast channels or the MVPDs are
responsible for AUTHENTICATING VIEWERS

25. A: LAWYERS
The big road bump right now is around RIGHTS ISSUES and
whether the broadcast channels or the MVPDs are
responsible for AUTHENTICATING VIEWERS
In addition to the legal wrangling, WIFI STILL ISN’T
EVERYWHERE and that holds up real demand.

26. A: LAWYERS
The big road bump right now is around RIGHTS ISSUES and
whether the broadcast channels or the MVPDs are
responsible for AUTHENTICATING VIEWERS
In addition to the legal wrangling, WIFI STILL ISN’T
EVERYWHERE and that holds up real demand.
The ability to sit on your couch and watch the Mets game
on your iPad isn’t quite the game changer that watching
the Mets game on your iPad in the back seat of a taxi
would be

27. Q:
WHAT’S THE BEST OPTION FOR A SMART TV?

28. A: WAITING

29. A: WAITING
SMART TVS ARE LIKELY TO GO THE WAY OF THE DVD PLAYER

30. A: WAITING
SMART TVS ARE LIKELY TO GO THE WAY OF THE DVD PLAYER
The manufacturers can’t agree on a single standard,
technology keeps advancing, and consumers are not used
to buying TVs with the same frequency as other
electronics.

31. A: WAITING
SMART TVS ARE LIKELY TO GO THE WAY OF THE DVD PLAYER
The manufacturers can’t agree on a single standard,
technology keeps advancing, and consumers are not used
to buying TVs with the same frequency as other
electronics.
While creating Smart TV apps makes sense right now, look
for them to be replaced by SMARTER (AND SMALLER) SET
TOP BOXES that allow MVPDs to push out the latest
updates as well as APPS ON 2ND SCREEN DEVICES that do
the work of a set top box

32. Q:
WHAT’S KEEPING THE BIG HOLLYWOOD
STUDIOS UP AT NIGHT?

33. A: WHAT ISN’T?

34. A: WHAT ISN’T?
Two big ones:

35. A: WHAT ISN’T?
Two big ones:
THE RAPID DROP IN DVD SALES. UltraViolet has recovered
somewhat from its less-than-stellar debut, but given how
comfortable consumers are with streaming video, there’s
no indication that UltraViolet can save the DVD

36. A: WHAT ISN’T?
Two big ones:
THE RAPID DROP IN DVD SALES. UltraViolet has recovered
somewhat from its less-than-stellar debut, but given how
comfortable consumers are with streaming video, there’s
no indication that UltraViolet can save the DVD
THE PUSH TO SHRINK THE WINDOW BETWEEN THEATRICAL
AND PAY VOD RELEASE. MVPDs see big profits from early
VOD releases, but cinema chains are freaked out by the
prospect. Studios know the VOD market is growing and
will slowly but surely start to shorten their windows

37. Q:
WHEN WILL CONSUMERS BE ABLE TO CLICK
AND BUY SOMETHING THEY SEE ON TV?

38. A: THEY WON’T

39. A: THEY WON’T
Though the “Jennifer Aniston’s Sweater” paradigm has
long been a fantasy of advertisers, THERE ARE VERY FEW
PRODUCTS THAT CAN BE ORDERED WITH JUST ONE CLICK.

40. A: THEY WON’T
Though the “Jennifer Aniston’s Sweater” paradigm has
long been a fantasy of advertisers, THERE ARE VERY FEW
PRODUCTS THAT CAN BE ORDERED WITH JUST ONE CLICK.
Factor in decisions like size/color/model/quantity/shipping
mode and you’ve annoyed the viewer by taking them away
from the show they want to watch.

41. A: THEY WON’T
Though the “Jennifer Aniston’s Sweater” paradigm has
long been a fantasy of advertisers, THERE ARE VERY FEW
PRODUCTS THAT CAN BE ORDERED WITH JUST ONE CLICK.
Factor in decisions like size/color/model/quantity/shipping
mode and you’ve annoyed the viewer by taking them away
from the show they want to watch.
THE SOLUTION: Consumers will be able to purchase items
after the show from their 2nd screen device

42. A: THEY WON’T
Though the “Jennifer Aniston’s Sweater” paradigm has
long been a fantasy of advertisers, THERE ARE VERY FEW
PRODUCTS THAT CAN BE ORDERED WITH JUST ONE CLICK.
Factor in decisions like size/color/model/quantity/shipping
mode and you’ve annoyed the viewer by taking them away
from the show they want to watch.
THE SOLUTION: Consumers will be able to purchase items
after the show from their 2nd screen device
BIG WINNER: Product placement, as 2nd screen devices
provide more opportunities to turn placements into sales

43. Q:
WHAT MAKES 2ND SCREEN APPS
THE BEST THING EVER FOR MVPDS?

44. A: DATA

45. A: DATA
Viewers will all have INDIVIDUAL 2ND SCREEN ACCOUNTS,
which will provide MVPDs with detailed data about who is
watching, what they’re watching, where and when

46. A: DATA
Viewers will all have INDIVIDUAL 2ND SCREEN ACCOUNTS,
which will provide MVPDs with detailed data about who is
watching, what they’re watching, where and when
This data can be used to negotiate better deals with the
networks whose content they broadcast

47. A: DATA
Viewers will all have INDIVIDUAL 2ND SCREEN ACCOUNTS,
which will provide MVPDs with detailed data about who is
watching, what they’re watching, where and when
This data can be used to negotiate better deals with the
networks whose content they broadcast
MVPDs can use the data to approach advertisers directly
and negotiate a Groupon-like deal for their subscribers

48. A: DATA
Viewers will all have INDIVIDUAL 2ND SCREEN ACCOUNTS,
which will provide MVPDs with detailed data about who is
watching, what they’re watching, where and when
This data can be used to negotiate better deals with the
networks whose content they broadcast
MVPDs can use the data to approach advertisers directly
and negotiate a Groupon-like deal for their subscribers
Better data also means a better user experience as
discovery engines can be fine-tuned and commercials
better targeted

49. Q:
WHAT’S THE ACHILLES HEEL
OF MOST SOCIAL TV APPS?

50. A: INCOMPLETE DATA

51. A: INCOMPLETE DATA
Social TV apps only collect data on viewers who are using
their app or whose tweets they’ve collected

52. A: INCOMPLETE DATA
Social TV apps only collect data on viewers who are using
their app or whose tweets they’ve collected
Thus, the data they collect is incomplete and often
inaccurate: without hashtag filtering, tweets about a rough
day at “the office” get credited to the eponymous sitcom

53. A: INCOMPLETE DATA
Social TV apps only collect data on viewers who are using
their app or whose tweets they’ve collected
Thus, the data they collect is incomplete and often
inaccurate: without hashtag filtering, tweets about a rough
day at “the office” get credited to the eponymous sitcom
That may not matter, because THE END GAME OF MOST
SOCIAL TV APPS IS ACQUISITION. Their functionality will be
bought by and rolled into much larger, “Swiss Army knife”
type apps that offer more refined data

54. A: INCOMPLETE DATA
Social TV apps only collect data on viewers who are using
their app or whose tweets they’ve collected
Thus, the data they collect is incomplete and often
inaccurate: without hashtag filtering, tweets about a rough
day at “the office” get credited to the eponymous sitcom
That may not matter, because THE END GAME OF MOST
SOCIAL TV APPS IS ACQUISITION. Their functionality will be
bought by and rolled into much larger, “Swiss Army knife”
type apps that offer more refined data
Along with the ability to change the channel

55. Q:
WHO IS GOING TO DETHRONE NETFLIX?

56. A: SOMEONE WHO GETS THE VALUE
OF A GREAT USER INTERFACE

57. A: SOMEONE WHO GETS THE VALUE
OF A GREAT USER INTERFACE
MOST USERS ARE INHERENTLY TECHNOPHOBES. So the
simpler you can make anything for them, the better

58. A: SOMEONE WHO GETS THE VALUE
OF A GREAT USER INTERFACE
MOST USERS ARE INHERENTLY TECHNOPHOBES. So the
simpler you can make anything for them, the better
Netflix may not have the best selection of movies, or the
best prices, but it’s got the best user interface. That gives it
a huge advantage over its rivals, none of whom seem overly
concerned with what their sites look like

59. A: SOMEONE WHO GETS THE VALUE
OF A GREAT USER INTERFACE
MOST USERS ARE INHERENTLY TECHNOPHOBES. So the
simpler you can make anything for them, the better
Netflix may not have the best selection of movies, or the
best prices, but it’s got the best user interface. That gives it
a huge advantage over its rivals, none of whom seem overly
concerned with what their sites look like
Any future rival will need to create a better user experience.
That means intuitive search, no extra passwords and a
taxonomy that doesn’t read like a secret code

60. Q:
WILL MVPDS BEGIN PROVIDING
DIRECT ACCESS TO OTT CHANNELS?

61. A: ONLY IF THEY WANT TO REMAIN
COMPETITIVE

62. A: ONLY IF THEY WANT TO REMAIN
COMPETITIVE
While Roku, AppleTV and other OTT devices are simple
enough to use, TiVo was almost put out of business by cable
company DVR/STB combos, despite their inferior interface

63. A: ONLY IF THEY WANT TO REMAIN
COMPETITIVE
While Roku, AppleTV and other OTT devices are simple
enough to use, TiVo was almost put out of business by cable
company DVR/STB combos, despite their inferior interface
SIMPLICITY is one of the most appealing features of any
type of technology.

64. A: ONLY IF THEY WANT TO REMAIN
COMPETITIVE
While Roku, AppleTV and other OTT devices are simple
enough to use, TiVo was almost put out of business by cable
company DVR/STB combos, despite their inferior interface
SIMPLICITY is one of the most appealing features of any
type of technology.
OTT-enabled set top boxes put the onus of updating and
maintaining on the MVPDs. Add in the demand for OTT
channels, and the decision is a no-brainer

65. Thank You
FOR MORE INFORMATION, EMAIL ALAN[DOT]WOLK[AT]KIT-DIGITAL.COM