Compared to the music and news industries, the television business has so far managed to avoid being upended by the disruptive forces of the Internet. That's about to change.
Despite the industry's furious efforts to starve or shut down its online rivals, the Internet is starting to carve out a respectable slice of TV's future. The good news is that while the coming transistion is likely to be rough on many established networks and providers, it's going to be great for consumers and developers. Here's how.
Netflix Bounces Back, Surpasses HBO
Case in point: Netflix. The video subscription service has bounced back from its 2011 faux pas to not only regain members, but surpass HBO in U.S. subscribers for the first time ever. As Quartz's Zach Seward points out, Netflix now commands more daily attention than any cable channel in the United States.
Netflix's dominance over HBO in particular makes for some pretty symbolic future-of-TV discussion fodder. It is, after all, HBO that refuses to offer its programming as a stand alone subscription service, despite growing demand for such a option. It is precisely its old media business relationships and norms that are holding HBO back from letting non-cable subscribers use its HBO Go app, a fact that seems worth recalling at this particular moment in history. It's no wonder that the company's CEO is publicly rethinking that strategy and admitting to reporters that cable-free access to HBO Go may be an inevitability.
It's also interesting to note, as Seward does, that HBO started out much like Netflix did, by first making out-of-theater movies available to subscribers, and then moving into original programming.
The Internet Masters What Matters: Programming
For the last few years, it was the hardware, distribution and overall experience of watching TV that started to change at the hands of the Internet and mobile tech. Now, crucially, we're getting down to what matters most: the stuff that actually draws viewers.
The trend toward original, Internet-only, TV-style programming is something we tech blogs have watched and opined about for the better part of a year. In the first half of 2013, the theoretical promise of original Internet TV has morphed into a confirmation that it is, in fact, something normal, non-techie people care about.
Netflix's Lilyhammer may not have changed the landscape, but it was an important precursor to House of Cards, which appears to be doing exactly that. Meanwhile, Hulu, Amazon and YouTube continue to make their own investments in original programming to compete with cable and network TV.
The success of House of Cards has led to a great deal of discussion about the rise of data-driven TV programming and what it means for TV's future. Unlike the people who have traditionally made TV programming decisions, Netflix is sitting on a mountain of data about its users. That includes 30 million plays and 4 million ratings per day, in addition to details about when people watch, from which devices, which parts they rewind and more.
By looking at this trove of data, Netflix was able to place a pretty safe bet on the notion that a remake of this particular BBC show starring Kevin Spacey and directed by David Fincher would do well.
Netflix isn't the only company tapping its users to help with video programming decisions. This weekend, Amazon asked viewers to rate the pilot episodes of 14 different Web series, which apparently resulted in quite a few views for the original programs. The company hasn't launched a stand-alone Netflix competitor, but Amazon Prime appears poised to evolve into such an offering. There's even an Amazon TV set top box rumor, hot off of the presses.
Aereo: Please Excuse This Interruption
Next month, people living in and around Boston will be able to join New York's early adopters in subscribing to Aereo, an innovative and controversial Internet TV service. Since its launch, Aereo has under assault by much of the TV industry, which claims its antenna-renting and re-broadcasting model of mobile and Web TV amounts to copyright infringement. That may or may not be true, but it's certainly threatening their business model, which is why they wasted no time in trying to sue Aereo out of existence.
So far, Aereo has prevailed. That is, early court rulings have sided with the startup's claims of fair use and thus declined to shut it down before the lawsuit goes to trial, which will undoubtedly be an interesting affair to follow.
If Aereo survives this litigious onslaught, it's poised to be one of the most disruptive forces the industry has seen in awhile. And while that would be bad news for network executives, it's actually pretty great for consumers, who will be able to tune into broadcast TV online without dealing with rabbit ears or a cable provider. It would also be a huge win for the Internet in the battle for TV's future.
The Original Web Programming Revolution Continues
The next big test for Internet-only TV will be the return of cult classic Arrested Development, a new season of which will land on Netflix next month, eight years after Fox dropped the original. If the show's enduring popularity and House of Cards' recent success are any indication, May will be a good month for Netflix.
We won't actually know how well Arrested Development does, though. That's because like House of Cards and everything else on Netflix, it isn't tracked by the same TV ratings system that has measured TV viewership in the U.S. for six decades. The only numbers we get from Netflix are the ones it chooses to share. The company isn't typically generous with that data, which is somewhat ironic considering how much its users willingly hand over.
That all might be about to change, as Nielsen gets ready to update its TV audience measuring methodology to include Internet sources. It's not clear whether the long-overdue update will track views on Netflix when it gets rolled out this fall, but the normalization of TV measurement should help paint a clearer picture of what's getting watched, regardless of the distribution channel.
If nothing else, the Nielsen update further illustrates the extent to which TV is changing in the age of streaming services and mobile devices.