The Inevitable Advent of All-Menu TV

Aug 30, 2004  •  Post A Comment

In the early 1990s one of the true visionaries of television, John Hendricks, founder of the Discovery Networks, invited me to a demonstration of a new technology he believed would revolutionize the world. It was called Your Choice TV.

It was an optional screen with a scrolling index of programming, from documentaries to network shows, delivered over cable television. The viewer simply pointed a cursor at the program and it would air almost instantly. In that era they talked of it as a “killer app” for the new generation of interactive TV. Today we call it video-on-demand.

“The only thing we know for sure,” Mr. Hendricks told me, “is that people love choice.”

At that time, the video recorder was already widespread. Mr. Hendricks made his case to the networks that viewing shows out of pattern was already going on. His system was just a better way to organize it. He saw it as a new revenue source for broadcasters since he planned to pay a license fee based on a sharing of revenues.

I thought I had seen the future. I had, but it wasn’t quite the future I thought it would be. In fact, within about four years Your Choice TV died in the cradle, smothered by the lack of digital-ready cable systems to carry it and the narrow-mindedness of network executives. Most refused to allow their shows to be included at any price.

After all, the network suits argued, how could they ever allow such a thing? Shows watched at odd times made it nearly impossible to measure the audience for advertisers. And the viewer might not sit through commercials.

Sound familiar? Of course what happened instead was that TiVo and other digital video recorders came along later. And then video-on-demand became more available as cable systems were rebuilt for the digital age. All of the things Mr. Hendricks foresaw began to come true, but this time there were no royalties for the program distributors. The beauty of the DVR for consumers was that it grabbed what it wanted without paying anybody license fees, even as machine vendors and multiple system operators collected sales and subscriber fees.

So far, this revolution has involved a small percentage of TV homes, but it is growing rapidly. It appears to be finding acceptance even faster than the VCR, which, introduced in the late 1970s, took about seven years to reach half the TV homes in America.

At the current pace, the DVR and VOD technology will be in the majority of U.S. TV homes within the next five years. The research shows that once people get these tools, they love them and use them. And it changes the whole way they watch TV. Instead of coming home and surfing the channels, they first check the list of what shows they have saved. That way, they know there is always something they want to watch.

The next key element in this new way to view TV will be the addition of a DVD burner. That will allow a consumer to surf through all the selections and organize selected content onto a hard disk that can be saved and exchanged. It raises serious copyright issues and could cut into the lucrative sales of TV show DVDs, which have exploded in the past three years.

Much of TV continues to be an ostrich with its head buried in the sand, hoping the whole thing will go away. Instead, the revolution has begun. And we are just beginning to understand the implications. If you think cable TV has diluted the audience, just wait until there are literally millions of choices every time the consumer turns on the set. Should that viewer watch live TV, recorded TV, VOD or the Internet, or play a DVD or a video game?

In the future the viewer will live in a world where there are nearly unlimited choices: All-Menu TV. Each time he wants to watch, he can select from thousands of current shows, archived programs or VOD.

If you think it is difficult to launch a new show now, imagine what it will be like when viewers have tuned out most promotions and are spending all their time watching programs that aired sometime in the past.

Advertisers are certainly the most sensitive to what is happening. As they pay more for less at each upfront in recent years, their anxiety has been growing as each new technology makes it easier to skip commercials.

The result has been a rash of innovations, from increased event marketing (sponsored concerts, auto races and more) to a whole new approach to what used to be called product placement. It has now been redubbed product integration. Now advertisers discuss not just their ad budget but also their “integration budget.” Instead of just an occasional product placement, they look for much bigger opportunities, from the omnipresent Coca-Cola products on the set of “American Idol” to makeover shows on cable sponsored by big-box stores, in which contestants use products from those stores.

In this new universe the key marketing element may well be the one- or two-line description of a program that shows up on an electronic screen guide or in a show directory. Often today, those little descriptions only list cast, which is a wasted opportunity. In the future they will need to sell the concept, the genre, the reason the show is special, all in a handful of words that will be read in fleeting seconds.

The rate of change is only going to accelerate. The history of modern consumer electronics shows that once a product penetrates about half of all households, it reaches critical mass. What follows is even more rapid widespread acceptance, up to the 70th or 80th percentile of saturation in TV homes.

To try to stop this coming change is to volunteer to be roadkill in the electronic future. As the late Donald Nelson, a legendary independent producer in the post-World War II era, once put it: “Today changes must come fast; and we must adjust our mental habits, so that we can accept comfortably the idea of stopping one thing and beginning another overnight. We must discard the idea that past routine, past ways of doing things, are probably the best ways. On the contrary, we must assume that there is probably a better way to do almost everything.”