Wednesday, October 19, 2005

What Does the Video iPod Mean For VOD?

Wednesday, October 19, 2005
What Does the Video iPod Mean For VOD?
By Cory Treffiletti

The video iPod is a MUCH bigger deal than most of us realize.

The iPod is a cultural phenomenon. It's had at least as wide-reaching an impact as Napster did when it initially launched, if not more so. The iPod took the digital audio format and made it accessible for everyone, bringing it into the mainstream and out of the den or the computer room. The device has become omnipresent, with its little white wires reaching into the ears of almost everyone I see, transporting everyone into his or her own little world, complete with a personal soundtrack.

The video iPod has the potential to go even further, for two primary reasons. The first is that the device provides an even more engaging element than audio by bringing video into the mix. Users of the original iPod are still aware of the world around them. While listening to music, they can still observe their surroundings. But the video iPod brings users' focus to a small screen flashing in front of their eyes, taking their attention away from the world around them. This could have a negative impact on the social structure, but it's certainly one that we can expect to see as people take content with them and watch it at their leisure.

The second impact, and one that I find even more important, is the increased role that iTunes will take in providing users with single- serving content when and wherever they want it. For all the impact that the iPod has had, iTunes is 10 times stronger. iTunes became the first widely used interface for purchasing music legally online, and it has already integrated itself into the habits of many consumers. iTunes morphed to include podcasts when user demand began to increase, and now more people are listening to podcasts than are subscribing to digital satellite radio. Now iTunes is morphing again and making it easy for consumers to purchase a show the day after it airs, viewing it on their computer or their iPod. This will inevitably catch on, and has extremely wide-reaching implications.

Being able to purchase a show almost immediately will have an impact on the two largest drivers of revenue for TV shows, syndication and DVD sales. Syndication has always been how a show makes most of its money in the long run, but if a user can own the episode right away, what is the allure of syndication? Similarly, DVD sales have recently proven very fruitful for TV series, but as more shows become available through the iTunes interface, what role will DVD sales play in 5 years? Will DVDs of TV shows be outpaced by the immediacy of online delivery?

Our society is based on immediate gratification, and digital media proves and exploits this fact. As the screens get bigger on mobile devices and the experience becomes richer, we will continue to see the consumer own the interaction with content. Time-shifting will become more prevalent, as will location-shifting. Traditional broadcast is doomed to be replaced by video on demand in a format that very few people anticipated. When we think VOD, we automatically think of a TV, but it's not bound to the parameters of a TV. VOD can be mobile and available on any device that is video-enabled.

Think about the implications of this! The video iPod is big, but the impact of legally delivering television programming immediately to your computer is bigger. Some of the players may fight this, but we've seen time and time again that consumers' desires are what drive the market. Only time will tell if the market for delivering this content in this format will be accepted and encouraged by the consumer. But don't plan on examining this trend for a while. With the speed of technology adoption and development by companies like Apple, the window is closing very quickly.

It's only a matter of time.

Cory Treffiletti is SVP, Engagement Architect at Carat Fusion.

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