Will broadband kill broadcasting by 2020?

At Merging Media 2012 in Vancouver, our panel moderator Ana Serrano from the Canadian Film Centre challenged a group of us to speculate on what the media and entertainment landscape will look like in 2020. While the best answer may be “who knows,” it can’t hurt to speculate. The landscape is almost certain to be radically different and all of us should be constantly rethinking our strategies if we want to be a part of that future. The following are some rough notes on my vision of 2020. Hopefully these views will not offend anyone. Any sour tone was due to an upset stomach caused either by the flu or thinking too hard about what the future holds.

  1. Broadband will become, not simply the primary, but increasingly the only important distribution system for the consumption of content. Broadband will be portable with Wi-Fi allowing greater convergence and capacity management between wireless and fiber networks.
  2. Audience engagement will be the only measure of success. While that is kind of obvious, it has not always been the case both in markets influenced by public policy and in markets where share is everything. The key word here is “engagement” representing the idea that the interactive nature of broadband networks allows audiences to participate and play a greater part in influencing creative choices. (Note the emphasis on the word audience as opposed to consumer).
  3. Broadband will kill the broadcasting system as we know it. From the perspective of broadcasting the “threat” of over-the-top is very real. Broadband operates under very different rules than broadcasting yet increasingly the high value content delivered is becoming the same. And, broadband already has the capacity to deliver a whole lot more. When everything is over-the-top (OTT) the concept ceases to have any meaning.
  4. Broadcasting over-the-air will disappear first, because the value of repurposing broadcast spectrum for mobile broadband applications will simply be too high to not repurpose. The billion dollar question to begin to address againis whether some of the monies derived from spectrum auctions should be use to drive the digital economy in the broadband adoption and digital production space. (Note all production will be digital and creative will include increasingly larger investments in software research and development).
  5. The future for licensed broadcasters and cable distributors is bleak at best. The concept of a broadcast license will have no value online as OTT, Smart TVs and an open internet will have bypassed the protected system for content. While aggregation and curation, the role of the broadcaster and cable distributor today, will continue to be important Apple, Google and Amazon will be the dominant brands, not Bell Media or Shaw. That is because there are no restrictions of any import on such brands operating as aggregators online. Pundits in 2020 will debate the merits of the tsunami theory for broadcasting which posits that  such a massive wave is a threat even before it hits land and destroys everything in its path.
  6. The Vertical Integration model being pursued today will collapse and carriers will retreat to running broadband networks and offering managed data services at much high rates of return than content can offer. Mergers and acquisitions in the carriage space will follow with carriers that don’t own wireless networks looking like easy prey. Parties like CMPA will advocate a public benefits model for these mergers :-)
  7. Physical media from books, newspapers, and DVDs will disappear, except for collectors, and the concept of ownership of content will be radically altered. Increasingly consumers will rent or lease their libraries rather than own them. Whether stealing your library is a form of ownership will remain a debatable point.
  8. The CMF will not exist in 2020 perhaps killed by BDUs looking to cut costs as consumers cut the cord. Many incentive plans will be threatened in the intervening years as global economies implode.  However, the global significance and value of the content industry (magazines, books, newspapers, magazines, shows and films in the same format) will be critical in terms of jobs and export opportunities. Therefore,royalties on IP and balance of trade and industrial incentives like tax credits, SR and ED rules and grants will be used to stimulate indigenous production. The focus, however, will be industrial not cultural and markets will be global.
  9.  The CBC as a public broadcaster will be dead but the CBC brand and public service mandate will survive in a broadband world and its mandate to promote Canadian voices will be enhanced. A broadband mandate will finally unshackle the Corporation from the costs of operating 20th century transmission networks
  10.  Success in the marketplace for content producers will be linked to their ability to control and exploit rights. In a broadband world the power to exploit such rights by creators will increase relative to the ability creators have in engaging audiences in the development of products. The bigger the online community you can deliver upfront, the greater the opportunity to exploit your rights.
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7 Comments to “Will broadband kill broadcasting by 2020?”

  1. Thought provoking post.

    For #5 you lump broadcasters and cable distributors in together in their “bleak” future. I agree that broadcasting eventually becomes a perilous business but what about the distribution business? The cable and telco infrastructure will shift from being television distributors to primarily broadband suppliers (if they aren’t already). I can only imagine that the real reason Telus is aggressively trying to win TV customers is to attach and retain the broadband business. I’ve seen a compelling argument (Craig Moffet – Bernstein Research) that the transition to an all broadband world (ie. no TV subscription) can actually be managed without resulting in a “bleak” outcome. Essentially, lower margin subscription TV service is swapped for price increases on high margin broadband service.

  2. Marshall McLuhan had tackled this issue back in the early 1960s. Radio didn’t kill off books or newspapers. Television didn’t kill off Radio, Books or newspapers. But each stage of evolution repurposed previous stages.

    And it isn’t clear to me that OTA will be first to go. When you get all your “specialty” content from the internet, you are more ikely to just turn off the cable TV subscription and keep OTA for news and hockey games. (live sports is still best delivered via broadcasting, unless ISP and incumbents agree to enable multicasting).

    So it is possible to see a resurgence of OTA, especially now that it is 1080i or 720p and better quality than what cable offers.

    A big political debate will happen about the CMF. If you can’t get Netflix and others to contribute to it, then perhaps CMF should be funded by taxpayers. Or perhaps the CBC will become the sole source of canadian programming and others will just distribute USA content.

    The problem with vertical integration in Canada is that Bell, Shaw, Rogers will use their controll of the ISP business to delay or slow down the shift to OTT (as they tried with UBB). Other countries may see a faster shift to internet distribution and more importantly, internet revenues (advertising and/or subscription models).

    Right now, when CBC makes a program available on the internet, it is just icing on the cake. They do not get sufficient revenues per eyeball to fund the program’s development/production. As long as programming is proimarily funded by legacy TV advertising, the shift to OTT will be hindered.

    The other possibility is that outfits such as Netflix will blindsight legacy TV. For instance, buy the rights to Arrested Development and produice one full series available only on Netflix. This will cause people to shift more and mreo vewing to Netflix once it starts to get original programming.

    Remember the Hollywood is still ied to the legacy model with the TV network promising exclusive broadcast rights to their affiliates, so it would take strong leadership and vision to take a leap of faith and agree to cut off their main sourse of income and jump over to the wild west of OTT distribution.

    • “keep OTA for news and hockey games. (live sports is still best delivered via broadcasting, unless ISP and incumbents agree to enable multicasting).”

      I can’t see how pro-sports (NHL) will stay on OTA TV. ESPN is widely known to have by far the highest sub fees in the US. TSN and Sportsnet are likely not far behind in Canada. How long can the CBC hold out against the purchasing power afforded by those fees? Distributors must know that live sports are likely to be the last weapon they have against the OTT onslaught. It also explains Rogers insatiable appetite for sports related properties and their move as close to the source as possible (MLSE).

      If pro-athletes didn’t already make too much money, they are only going to get richer.

  3. You have to love the crystal balls. The nice thing is that, for the last 25 years, they have always said the same thing!

  4. Your forgetting the biggest reason why OTA would not go. Its called community TV. A lot of communities are getting rid of real television, but that is all going to change, please read here in London Ontario.

    http://www.londoncommunitynews.com/2012/10/new-london-television-station-depends-on-community-desire/

    Already, I have got a of people in London wanting a change. Broadband, is not the say all. With all the charges, OTA, will be making a comeback real time, esp with 1080i

  5. If you are correct, I am delighted that I’m in range of US over-the-air transmitters of the major networks. It seems as though most Canadians are content to get television (or even radio) news from Toronto, Montreal, or Vancouver even if they don’t live in any of those places. Americans are much more supportive of local broadcasters, so I expect over-the-air will survive in some form in the US indefinitely.

    Point #2 – over-the-air digital television streams at about 19 Mbps. Cable at about half of that, and internet a small fraction of that. There will need to be some quantum leaps in technology over the next 8 years to allow the internet to stream anywhere close to 19 Mbps at a price most people can afford. Otherwise it will be a step back in video/audio quality to the old VHS tape days.

  6. the FCC does not reallocate frequencies where there are licensed users, broadcast will always be with us….and, how do you know that broadcast radio will “dissappear”? Have you heard of the “multi-platform” theory? By the way, streaming internet audio is compressed as much as 6:1 and the 64, 92, 128 kb audio sounds like crap. FM sounds better anyday. We do not have digital ears, the music generally begins analog anyway, except in some rare cases. It will be a long time before the internet can create affordable high speed noncompressed audio streams. Broadcast is a very efficient use of spectrum.

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