Talk of the Apple TV is rooted largely in the belief that if anyone can supplant the TV with someone better and well, just more frickin' awesome, it will be those carrying The Legacy of Steve.
But the reality is that the medium's tiresome longevity (as some would have it) has more to do with the economics of the way TV is funded than and the sociological role it plays than with new technologies.
Among the jobs it does, TV brought fantasies to life for all to see, it encouraged the sharing of common experiences and emotions in world increasingly disconnected by geographic or family ties, it informed us about cultures once thought remote and alien, it keeps us informed about world events which would once have seemed too far away to bother about, and, perhaps most important of all, it offers escapism.
Many who tout the superiority of the mobile or the laptop cite the decline of the PC as the model on which TV's decline will be based. But the intellectual graveyard past which they tiptoe is that TV predates the personal computer by almost 50 years. And it's still with us. As the following article explains, the PC was not largely supplanted by a competitive product but by one that performed a few crucial tasks better.
There is lots of stuff that mobile computing does better than TVs. Those essential emotional 'jobs' however, of allowing us to share together the joys and sorrows of live events, and to escape, again together, are going to be difficult to accomplish. Which is not to say it wont happen someday. It's just going to have to be as dramatic and amazing as the experiences currently being shared. JL
Ben Thompson comments in Stratechery:
TV is as firmly entrenched as an incumbent can be.
Competing with this model has, and will continue to, fail. There is no go-to-market strategy that is feasible.
- The idea that you can cut the cord and simply watch the shows you currently want to watch (unbundling) is a fantasy; the economics that make those shows possible depend on the current pay-TV model
- Great content has few substitutes, high barriers of entry, and depends on networks as de facto venture capitalists willing to take risks on new shows
In fact, the only way things will change is through true disruption.
Disruption is a funny word; in most of the tech press, it has come to mean little more than “competitive,” and functionally superior products are often labeled as “disruptive.”
This is precisely backwards; a disruptive product is inferior to the incumbent, and usually relies on a completely different business model (usually a lower margin one). A disruptive product is almost always cheaper, and in fact usually doesn’t seem competitive at all, at least in the beginning.1
Competitive (or “sustaining”) products simply try to provide the same function but better. TIVO is a classic example in this space; TIVO’s competitive proposition is that it is a better set top box than the one you get from your cable company:
The TIVO does a lot more, and does it better, but the differentiation is at the margins. It is a sustaining product, and has serious limitations: getting cable cards is a pain, and the upfront cost is significant relative to STBFYCC. I have no doubt Apple, say, could create a set top box even better than a TIVO; I also have no doubt that it would suffer the same fate.
- Both the set top box from your cable company (STBFYCC) and the TIVO change channels
- Both the STBFYCC and the TIVO display a channel guide
- Both the STBFYCC and the TIVO pause live TV
- Both the STBFYCC and the TIVO record shows to watch later
- Both the STBFYCC and the TIVO can be programmed to record a specific show
So, if a better set-top box is doomed, what might disrupt TV?
The theory of disruption rests on the idea of “jobs to be done.”2 TIVO does the same job as a set top box; but – and this is the crucial point – the set top box is only a means to an end. What is the job we hire TV to do?
It turns out there are quite a few. Some of the jobs TV has traditionally done include:
For decades TV was better at each of these jobs than anything else in consumers’ lives. It was in this period of superiority that the present economic system of pay-TV was developed, and, in a world where so many jobs were done by one device, any price was a great deal.
- Keep us informed
- Educate
- Give a live view of sporting events
- Enlighten and story-tell
- Provide escapism
It’s in jobs-to-be-done, however, where the unbundling that matters is happening. “Keep us informed” is the obvious one: the idea of relying on TV news is so archaic to most of you that I know I raised your hackles by even putting it in that list. Same thing with “educate” – one can learn far more from the web than even the best TV.
In other words, two of the jobs TV has traditionally done are now done far better, and far more cheaply, by personal devices like computers, tablets, and phones. That is disruption.
Yet, we pay more than ever for TV; the vast majority of the population gives enough of their attention to some combination of sports, story-telling and escapism to sustain the current model.
It’s attention that is key; our attention is a zero sum resource – every minute I spend playing a game, for example, is a minute I don’t spend watching TV. And, if any company “cracks” TV, it’s not that they’ve figured out how to do TV better, but that they’ve figured out how to win a greater and greater share of consumer’s attention by doing the same jobs that TV does, but better.
TV is so entrenched because it’s actually cheap for what you get, it benefits from tremendous network effects, and it’s a default choice for most people. In fact, its entrenchment is not unlike the entrenchment of the PC, which ruled the roost for 25 years: cheap for what you get, tremendous network effects, and Windows was the default choice.
Ultimately, what disrupted the PC was not a competitive product; even today Windows still has >90% share of PCs. However, Windows commands an ever dwindling share of the time spent on all devices; phones and tablets have taken away attention because they do many of the jobs we previously hired PCs to do – read, draw, music, video, games – better.
The disruption of TV will follow a similar path: a different category will provide better live sports, better story-telling, or better escapism. Said category will steal attention, and when TV no longer commands enough attention of enough people, the entire edifice will collapse. Suddenly.
I’d bet on escapism being the next job we give to something else, for a few reasons:
Imagine a $993 “console” with an optional $49 controller and an App Store.4 That’s a lot of potential escapism, and a lot of user attention. It’s a lot of margin too, at least at high volumes. I think it’s a space where a company that thinks different could have a “a significant contribution” and “crack” TV by not, in fact, being a TV at all.
- The economics of live sports are completely intertwined with the pay-TV model; this will be the last pillar to crumble
- Networks still play a crucial role in providing “venture-funding” for great story-telling. Netflix is the great hope here
- Escapism is in some sense indiscriminate; it doesn’t matter how our mind escapes, as long as it does. Yet it’s also highly personal; the more tailored the escape, the more fulfilling. This is why there are hundreds of TV channels. However, there will never be as many TV channels as there are apps.
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