Source : Globe & Mail

Television as we know it is dead. And we can blame technology for it, says IBM Corp.

In a report released Thursday called The End of TV as We Know It: A Future Industry Perspective, IBM predicts that by 2012, competition from technologies such as on-demand TV and other industry players, the Internet multimedia delivery and fragmented audiences are going to drastically alter traditional TV.

Peering into its crystal ball, IBM says that audiences are becoming increasingly fragmented, their attention spans split among multiple media choices, channels and platforms.

Put this phenomenon together with the growing availability of on-demand TV, self-programming and search features, as well as increased competition, the television industry is "facing unparalleled complexity" that will alter traditional business models.

Television "will be transformed with clear winners and losers as we expect central programming and scheduling to become largely irrelevant to a key group of viewers who will opt to create their own TV content," IBM's Saul Berman said in a statement.

Mr. Berman predicts that the current network oligopoly will diminish, and there will be a significant decline in the share of revenue generated from broadcast advertising, tyo be replaced by more specifically targeted content and niche advertising.

The resulting landscape will be so alien that to survive in it, the TV industry will have to open content and standards-based delivery platforms to generate revenue, giving viewers access to protected media content with individualized pricing schemes.

The industry needs to address the existence of different types of viewers.

IBM calls one segment the "Massive Passives." The largest viewing group, these people want TV viewing to continue as it always has. But the arrival of new segments, such as the "Gadgetiers" and "Kool Kids," who demand a more interactive media experience, will ultimately force major changes in the industry. These latter groups will determine when, how and what they watch, upsetting long-standing business models.

The effect of their presence, IBM says, will be to lead the industry to "platform-agnostic" content — meaning a world in which there is less loyalty to the sources of entertainment, such as the networks — individualized pricing of the content and an end to traditional broadcast schedules.

To survive, TV production houses must develop and strategies that serve this fragmented audience while cutting costs to finance new channels on mobile devices, the Internet, on-demand TV and IPTV.

Specifically, TV providers must stop trying to reach the broadest market and tailor their products to the fragmented groups. They must also take risks to create wider consumer choice with windows, bundles, pricing and distribution.

They must experiment with their markets to study real-life consumer preferences. They must make content mobile that can be synchronized on portable devices.

Companies will need standards-based delivery networks to optimize content development and distribution, and to make room for improvements in business flexibility and network cost efficiency. Finally, they might have to assess their assets, and consolidate, partner or outsource non-core business components.

Specifically for Canadian TV producers, IBM says that our advertisers have an advantage over the U.S. ones because the Canadian Radio-television and Telecommunications Commission's requirement to substitute Canadian ads if programming is available simultaneously on both a Canadian and U.S. channel. But if alternate sources of content exist, that advantage will be wiped out, and content distributors will need to find compelling ways to bring the customers and advertisers back to them.

The CRTC's Canadian-content rules will be hard to preserve in a multi-channel system. We might see Canadian-produced content having to compete head-to-head with content produced around the world.

The traditional model of network feeds combined with local content created by network affiliates or local stations, will be threatened, and local news programming will take a ratings hit. Without ad revenue to cover the cost of production and distribution, local TV news could become a thing of the past, especially in smaller viewing markets.

© Globe & Mail