The future of tv, as Roku Founder and CEO Anthony Wood sees it, is not as futuristic as you’d think, where we’ll be able to watch each and every movie ever created, in any language, day or night. Wood says the future is getting close. I caught up with Wood earlier this year at the More than-the-Best (OTT) Conference, OTTCON 2012, where he delivered a keynote, “Future of Tv: Why OTT is a Game Changer.” Properly regarded as a pioneer and innovator in the Tv and digital media business, Wood has had an influential hand in shaping the future of tv, as inventor of the digital video recorder (DVR) and the well-liked Roku streaming player. He discussed the different themes in what’s going to come about to OTT over the subsequent couple of years, and noted the skepticism about the OTT sector when the OTTCON started 3 years ago.
Video Distribution Models are Changing
Wood says the sector is maturing and distribution models are altering. As soon as a upon a time there had been 3 networks, but OTT has changed all that.
Over the best is actually about distribution. It utilised to be tv was distributed more than networks, ABC, CBS, NBC, and then there was cable and VCRs, and satellite, now tv is moving to the subsequent phase, which is distribution more than the Net, says Wood. And it really is producing a lot of possibilities and risks for some of the incumbents, and a lot of possibilities to develop new brands, like Netflix and Roku.
He makes use of a 1999 commercial by Qwest Communications, Qwest – Every single Film, to illustrate his point.
Description: A tired man goes into a low cost motel in the middle of nowhere and asks about amenities. When he asks about entertainment, the girl responds “all rooms have each movie ever produced in any language anytime, day or night.” This Qwest ad aired in 1999 and 2000 and was ahead of internet site such as YouTube or cable services such as OnDemand were offered. It was shot at Roy’s Motel and Cafe, a historic Route 66 landmark in Amboy, California, in 1999.
As Content Increases, Usage Grows
Roku has sold more than 3 million boxes to date. Wood says sales of Roku boxes tripled in the last year as the demand for Netflix elevated, and as conventional models of distribution like Blockbuster died and speedily faded away. He expects his organization to sell 19 million Roku devices over the subsequent 3 to 4 years. Wood also predicted the end of Blu-Ray in 4 years at the recent “Tv of Tomorrow Show” in San Francisco last month, as the market and consumer trend is shifting to streaming devices and intelligent TVs.
But like all tv, the most critical point is the content material, the tv show. If there is not a lot of excellent Tv, men and women will not watch it.
Content material is accessible on Roku via it’s channel store. Netflix was the first channel obtainable on Roku, and now the list has grown to more than 500 channels with new ones going live each and every day.
As we’ve added far more content material, the usage on our platform has grown as properly. So, what employed to be about 6 hours a week on average men and women utilised Roku has been expanding regularly to 12 hours a week, and that is going to maintain growing until we get to 35 hours a week, which is the average amount of Television people watch in the United States.
Wood described the emerging content material packages offered to shoppers via OTT platforms. A single category of content, OTT Bundles, are available from new brands like Netflix, Amazon and Hulu, who have taken existing and back cataloged content and bundling it into new low price packages over the World wide web. There also new companies he calls, New Brands, like Glenn Beck Tv, YouTube and Revision3, that are developing content material just for OTT distribution where they do not have to go via a cable organization. (Note: Revision3 was lately acquired by Discovery Communications and may create an even newer category of content material bundles across all screens.)
There’s a third group of content material that is just starting to come onto devices like Roku, and that is the incumbents like ESPN, Disney and HBO. As an example, the whole HBO catalog is available on Roku through authentication, or via a “Television Everywhere” subscription. Disney has not too long ago signed a ten-year agreement with Comcast to bring ESPN to all it is platforms, but, when can we get ESPN with no all the extras for $ 9.99/month? Wood, says, “Probably, never ever.” Firms will attempt packages, prices will come down, but, every thing is based on bundling, and will not be changing anytime soon.
OTT Platforms are Shifting
So, how are most people acquiring their OTT content?
Wood says that game consoles and PCs lead in streaming hours and that content material owners attempt to be platform-agnostic to reach buyers. That is since there are so could game console out there. But the future trend is that game consoles will decline, and low-cost Smart TVs and streaming players will be on the rise. As more and much more of the general population gets into streaming, they’re searching for simpler devices.
Wood notes that we’ll continue to see rapid consolidation within the space as it continues to get more difficult to maintain all the R&D that goes into the streaming platform computer software. Almost everything under the hood is always in development, and will result in a shake out in the platforms. He predicts that there will be only a handful of players within 3 to 4 years.
Who Will be the 1st Virtual MSO?
Will it be Xfinity? Verizon FIOS? Direct Tv? Intel? Wood says that there is some hesitancy in the sector to be the initial, but we’ll probably see a single emerge later this year.
I believe another big question individuals have is, when will I be in a position to get that package of content and not have a subscription to my neighborhood cable service? A thing the market calls, Virtual MSO, and that’s a great query” says Wood. “No a single has mentioned they’re launching that kind of service, but my guess is, I think perhaps sometime this year that could come about.
The Virtual MSO (Many Technique Operator) model, or on the internet cable company, and is based on the bundling of Television channels and delivering them to consumer over the Internet with no any geographic restrictions that confine standard cable operators. While there is been some skepticism in the media about the emergence of a Virtual MSO, Boxee CEO Avner Ronen, shared Wood’s his prediction that a Virtual MSO shall rise later this year.
The Future of Tv is a Squiggly Mess
In the final slide of his keynote presentation, Wood uses a straightforward graphic to describe the present, future and end state of tv, which he defines the current state as a squiggled mess. He says the future of tv is coming quicker than you feel.
Wood pointed out that a lot of industries have been revolutionized by the Net, for instance, music, books and e-Commerce. But video took a little bit longer because bandwidth requirements are greater.
But now we’re at that point exactly where video distribution over the World wide web is a true possibility, and it is taking place mainstream,” says Wood. “So, now we’re in this squiggly mess portion where there’s a lot of stuff taking place, a lot of distinct things being tested, but more than the next four years there’s going to be some big milestones. I feel Netflix will pass 50 million clients. We’ll see pretty soon, the launch of the first virtual MSO, over-the-best cable package. Most TVs will begin acquiring their content delivered more than streaming over the Web rather of a cable or satellite box. All these items are going to occur over the next 4 years and what comes out of this is the new planet, where all Television is delivered over the World wide web and every single Tv show ever created is offered on demand, and customers have an outstanding quantity of choice and options with their Television viewing.
Why OTT is a Game Changer
Wood says that most of the industry incumbents are embracing the change and seeing far more worth in acquiring their content material on much more devices and far more places inside and outdoors the home. They’ve observed what’s happened in other industries and they do not that to take place to them.
The industry as a entire is quite engaged and I really don’t see any key obstacles. I think this is happening now.
Wood says, “Roku is about being an open platform,” and that future development of will be focused on additional enhancing the user interface and developing upgradable devices like the new Roku streaming stick unveiled earlier year, which is a small USB flash drive-sized Roku streaming player that simply plugs into a Television equipped with a Mobile High-Definition Link-enabled HDMI port to transform it into a Sensible Television. The business has not been caught in the most recent Web IPO craze and continues to expand into new markets, launching earlier this year in the U.K. and Ireland and in Canada and signing a deal with DISH Network to bring more than 50 international programming channels to the platform. The 150-employee firm did about $ 100 million in sales last year, up from $ 46 million in 2011. But has yet to turn a profit, due to enormous investments in item development and advertising and marketing. But Wood says the business will most likely be profitable in 2013.