Digital Entertainment Evolution - TiVo Gets It.

Tivo + YouTube About half a year ago, In October 2007, I wrote a Whitepaper titled “The Evolution of Digital Entertainment”, which I published in excerpts in this blog. In part two, After Dot-Com: The Digital Entertainment Evolution - Ringtones and American Idol, I wrote:

Historical patterns of passive engagement in relaxation type activities such as television viewing are slowly being replaced with a more “lean-forward” interactive involvement, particularly within younger market segments. Even today younger users are not content to just “sit back” and passively watch programming created and scheduled by traditional broadcasters and distributors, but instead create, manipulate and watch the content they are interested in at a time and a location which provides them with the most convenience.

And in part four, Winners and Losers, I pressed on:

Successful companies will:

understand the potential of virtually unlimited content – both professional and user-generated – and use it to their advantage;

utilize innovative technologies that are completely aligned with either content, markets, or both;

understand changes in market demographics and user requirements;

bring all these aspects together to a strategic business, centered on content capitalization instead of merely either technology, or content, or demographics.

I actually pointed to TiVo as a good example for an early struggle in the digital entertainment industry, and said that

TiVo’s survival depends on moving the company away from a pure subscription-based technology play to a new advertising and partnership based business model, bridging a leading technical expertise with markets and contents to create real value.

(looking at the recent ruling by the U.S. Court Of Appeals for the Federal Circuit in Washington, DC in favor against EchoStar’s appeal, I was definitely wrong about TiVo’s IPR weakness and stand corrected.)

Understand Changes In Market Demographics And User Requirements

It’s good to see that my statements weren’t that far off, looking at the latest press announcement of TiVo that it will bring YouTube content onto the TV screen, utilizing the feverishly awaited YouTube API and YouTube Everywhere. Some people are arguing that YouTube on TV stinks, because we will all have HD TVs soon and YouTube has a low video resolution and sound quality.

I argue two points: A) soon we are going to see high quality content on YouTube, that doesn’t necessarily mean higher bandwidth or bit rates - I’ll write more about that on Monday after I met with a CTO of a large media company. B) Apart from some Internet memes, YouTubers that are watched on a regular basis are already having high quality content and are just waiting for YouTube to change something so that this content can also be consumed in high quality. If we all have HD TVs in the future, we will also have high quality YouTube in the future.

Of course TiVo has a couple of other options, too. For the beginning, YouTube videos will probably not preferably play full screen, but in a section of the TV screen augmented by advertisement, other shows, similar postings, and real-time comments (!). This would also tie into Google’s community and social networking ambitions, enabling the TV to be become more of a social toolbox than a couch-potato doze box. The upsell opportunity and leverage of TiVo’s existing Stop||Watch™ service is awesome, and together with Google’s advertisement model the viewer behavior on TV can be tightly controlled and measured - which is also an incentive for Google to start sharing its goodies…

In the end, TiVo will have to start the fight against console gaming vendors, TV vendors that incorporate software stacks in their devices, and Telecoms that provide their own set-top boxes, devices, and services. A first mover advantage is always welcome, but let’s please make sure that TiVo is not again too early on the market and gets leapfrogged…

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