Changing video content has benefits/risks

The question of how content gets distributed is getting more complex because the number of “channels,” even in traditional television, is increasing with the multiplication of cable channels and their increasing acceptance by consumers. The cable channels are all boosting programming efforts as television viewers flee traditional network shows for something that’s better suited to their specific interests.

This shift in direction is both a benefit and a risk to the future of content. On one hand, there is no question that the highest profits are obtained by the greatest concentration of consumers in the smallest possible number of shows. On the other hand, the modern world offers enough alternatives to television, including online video, DVDs, etc, that it’s unlikely consumers could be trapped into too focused a set of TV offerings.

Content diversity builds content opportunity overall, even though it reduces per-player profit. What will be interesting to see, as cable networks expand and traditional networks struggle, is whether any content producers see pure online delivery becoming a viable option. There are risks and benefits there as well.

The obvious benefit is that online delivery eliminates a big chunk of the retail distribution chain and its costs, so the content producer keeps more money. The risk is that consumers still want to “watch TV” much more than “stream Internet video,” and the time may not be right to focus completely on online delivery. The Time-Warner concept of allowing for Internet viewing of what you’ve subscribed to in a traditional TV service may well be the most logical choice.

It seems very likely that we are going to see something like a “gated garden” with content, a program that creates a notion that once you acquire content rights, you can exercise them in a number of ways depending on what’s convenient. Even Disney is looking at this sort of thing. Such a shift would have very profound impact on the industry in general, and obviously most impact on online video.