Ask the expert: The TV revolution

Roger Parry, chairman of newspaper group Johnston Press plc and magazine publisher Future plc and former chairman of advertising group Clear Channel International, argues that within five years TV as we know it will have undergone a revolution that will not only transform the way we consume most of our media, but also threaten the existence of traditional broadcasters.

Mr Parry says TV will be replaced by The Box, which, bringing together satellite and cable, terrestrial digital, internet and 3G phone technologies, will free us to watch and listen to what we want, when we want and wherever we want it. Consumers will seize back control from broadcasters in other words. (You can read his FT comment piece here .)

The implications of this technological revolution for traditional revenue models are immense, he argues. Rather than relationships with channels, advertisers will establish relationships directly with individuals, based on viewing and listening habits. This, Mr Parry believes, will leave traditional broadcasters with little or no value.

Do you believe this technological revolution is inevitable, and even if it is, does it really spell the end for traditional broadcasters? Roger Parry answers your questions.

The most thought-provoking online contributions may be published in the Financial Times newspaper, so please supply your full name and location.

Background

Roger Parry - A ‘Box’ that will transform media

Convergence can only get better

Technology gap narrows as PCs and TVs link

Trials are under way but the stakes are high

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In this transformation, what is the relationship between the traditional telecom service providers and the content providers? They will be integrated or still separated? And will the media industry become concentrated or fragmented in the end?

Li Lin, University of Cambridge

Roger Parry: The current telco providers will sell the broadband service. Some of them may also provide the box. Those that offer the box will buy programmes. I doubt that many will try to vertically integrate as they will need to offer a very wide range of content. Content providers are likely to become bigger so they can take investment risks so current, relatively fragmented, production sector is likely to concentrate.

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Will Mobile TV be a work around for retaining revenues and margins for broadcasters, while fixed TV margins are eroding? or will mobile operator take the revenue opportunity faster?

Herbert Mi, Vienna

RP: Mobile tv will be a convenient way to view content on the move but home consumption will still dominate viewing hours. The mobile operators will remain powerful gatekeepers (they own the networks) so will take a big share of mobile revenues. But operators will encourage mobile services and content providers and will let them keep a good share of revenues as this is all incremental to the operator.

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In order for advertisers to establish relationships with the media end users there would need to become sort of interactive function – so are you saying that broadcasting will become more akin to some websites (like MySpace.com) with targeted user communities? And, if so, how can you control the content so that it’s possible to monetise the content? I think no matter how you look at this technology, the relationship between advertiser and user will require some sort of intermediary to monitor content (moral and legal issues) and create a revenue channel and that role will be filled by the evolution of traditional broadcasting.

James Fuss, Thailand

RP: Content on the box will, ultimately, be controlled by the provider of the box until the point that a user elects to surf the web when the box simply becomes a pc gateway. I agree that there will be an intermediary role - an evolution of traditional broadcaster if you like. But the skills of the management of the box provider will be about content production and marketing more than scheduling and bundling advertising sales. They want to stimulate subscription and maximise viewing hours to create more value for advertisers.

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PVRs such as TIVO and Sky+ have been heralded as the future of the TV but have never sold in the volumes that the proponents had expected in the 1990s. In fact the CE industries DVD-hard disk recorders out sold the PVR by 7:1 in 2005 in the UK. And this is the UK the home market for Sky+, the only European PVR network of any scale. Clearly the CE industry is going to dominate high definition media (1080) in Europe via Blu-Ray or HD-DVD. Is the broadcast industry not only threatened by the internet and mobile, but also by the superior high definition distribution business model of Blu-ray?

Keith Baker, Eindhoven

RP: HD can come over cable/satellite/ broadband. It is a matter of bandwidth and time. Distributing hd product by disc etc is viable. But many of the most demanded HD applications will be live sport and events which will come via the box rather than DVD etc.

I agree for film and drama HD will stimulate disc sales. Perhaps the box will have a disc reader writer built in. It is just another input format after all.

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Although technology may be up to the task, i.e. to instigate and sustain a revolution, what about regulation? Will the present legal framework built around the traditional channel have to be scrapped?

Nuno Torres, Portugal

RP: Regulation grew up when there was state or technologically constrained scarcity of spectrum. Regulation of newspapers and magazines is much much less than TV. As spectrum becomes less scarce regulation will diminish.

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What impacts on TV advertising do you see ? Are we going to get product placement with a ‘click to see advert’ or how about linking to consumer database to enable targeted advertising? As advertising is the major funding of TV this will be a major interest of advertisers.

Martin Hunt

RP: There will be a lot more product placement embedded in programmes and a lot more embedded sponsorship. My instinct is click thru from placement will be very difficult but click thru from box placed advertising will be easy and widespread. What is more is the box can issue coupons etc.

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If the broadcaster dies, who will commission and creates TV content?

Julian Bishop, London

RP: Producers will take a lot more risk themselves so will need access to finance. The box providers may commission some stuff but more likely will just offer a wide menu to be supplied by others at their risk. Box providers will be more like a newsstand than a publisher.

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Is the break up of the big media inevitable?

Mike G, Los Angeles

RP: No. Big media companies will put a lot more effort into production and may invest in Boxes themselves

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How long before Microsoft takes over The Box?

Barry Freedman, London

RP: They must be a very strong contender to make it. Perhaps the x-Box is half way there.

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How can we maintain the safety of the media?

Khayal, Baku, Azerbaijan

RP: By safety I am guessing you mean integrity and accuracy of news. We as consumers will have to be more discerning and get used to the idea of some sources being more trustworthy than others.

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My company is about to launch an ‘open’ 150 ‘Box’ that allows anyone to supply content. Rather than a box supplied by a service provider with many strings.Do you think this model stands a chance, or will ihomes by ‘owned’ by one of Sky, Virgin(ntl:), BT, Orange, etc.

Peter Dawe, Cambridge

RP: I think Box which supplies services on subscription is a superior business model to open access. In my idea the key bit of economics is allowing advertisers access to individual homes. If your box does that then you have a winner.

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The technological revolution is inevitable, but it does not necessarily spell the end of traditional programming. The top three networks suffered in the nineties, not because of technological changes, but because the cable networks programming was more innovative. Cable television programming is still more innovative than that of traditional television; the future of television does not have to belong to internet providers or software companies if traditional broadcasters have anything to say about it. Everyone wants to see television networks by the likes of Google, programming by Apple, commercials by dot coms. Yet these are the same pundits who thought that online advertising and blogs would take over commercials and newspapers, yet both have only served to stand alongside the former. Interactive and In Demand technologies have their purpose, but people still want a regular old television. Consumers would like better imaging technologies, such as plasma, or holographic projection that could place images into thin air or on a flat surface. Consumers want high definition technologies and the ability to record programs. But a box that merges various technologies together just isn’t a television or a computer, but something in between. It’ll never totally replace either.

Christopher Kendalls

RP: The key point about the Box is it will allow advertisers to access homes directly. It does not replace television as such but does replace the TV set as we currently know it and linear TV.

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What does the Box mean for the sale of DVD’s and CD’s. Will the likes of HMV cease to exist?

Martin Clarke

RP: The Box will be a very effective way to deliver the music and video content which is currently delivered on discs. I suspect Boxes will also be DVD players particularly for HD. Retailers like HMV and Barnes & Nobel will have the chance to become content providers and on line retailers but if they do not seize that chance the conventional high street model will not sustain them for too long although the change will be gradual.

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What poses the greatest challenge to the traditional media companies? And what in your view should companies such as ITV should do to survive in this exceedingly competitive and fragmented market?

Yuet Ling Sin Fai Lam, London

RP: The greatest challenge is how to get paid and this is linked to being creative. The one core lesson of media is you have to please consumers and entertain them. You have to keep changing and refreshing. In the ‘old days’ companies like ITV could be lazy, at times, as they had a monopoly of commercial spectrum. As we go forward this natural monopoly will vanish. New competitors will often be more creative, more exciting, more attractive to consumers. Advertisers will follow audiences. No amount of cost cutting can solve the problem. Traditional companies must recruit and retain emerging talent. That way they will make the most watched programmes and will thrive even in a fragmented environment.

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