Sometimes things have to break and be put back together before they work correctly.
That happened when everyone and his sock puppet brother started marketing Internet-based apps. Amazon.com (Nasdaq: AMZN) had shown that the Internet was a fountain of wealth, so every company with something to sell got into the game.
Unfortunately, having something to sell and marketing it correctly were two different things, and the result was a dot-com implosion that left the Internet-based marketing model in tiny little pieces from New York to Silicon Valley.
It's likely something similar is happening today with over-the-top content and traditional video entertainment providers vying for consumer attention--only this time the results promise to be a little better than what happened with dot-coms, because commonsense and cooperation appear to be the prevailing trends.
Sure, the incursions of Netflix (Nasdaq: NFLX), Hulu and Amazon Prime seemed, at first, to threaten those who make their money charging for linear television. Then the models started to mesh: Netflix began to look like HBO and HBO, with its HBO Go app, began to look like Netflix, and service providers were left to wonder why the two couldn't coexist.
The Internet--or at least broadband-based applications--changed the way the video entertainment business behaves and, at the outset, many believed it changed it in a way that would remove service providers from the equation.
Analysts, pointing to cable TV subscriber erosion--but ignoring gains by IPTV providers--screamed that pay TV was doomed. Cord cutters and cord nevers, like barbarians, were tearing down the walls of the gardens in which pay TV content was nurtured.
The problem with the Internet, though, is that it's a best-effort medium, acceptable in computer-based iteration, less acceptable as a conveyor belt for voice or video applications. People watching TV won't accept a best-effort performance for very long. And, despite what the computer people think, most people don't want their TVs to become computers--and vice versa.
Today's IPTV space is morphing to take advantage of what some considered a threat. Service providers have managed networks where they can control the quality of the service. If content owners--even those going over-the-top--want to best serve their audiences, they would do well to collaborate rather than compete with the people who have managed networks.
There were multiple reasons why the first iteration of dot-com commerce shattered so completely. The hucksters who jumped online didn't provide reliability either in the products they proffered or the service they offered.
While this is not to suggest that today's OTT providers are hucksters or that their products are lacking. Who can say that after a Netflix production wins an Emmy? It is to suggest that their route to the end user must be something more than the best the open Internet can provide.
For the service provider, sitting there with an established, managed network and years of experience, that means an opportunity to collaborate rather than compete.--Jim