Trying and trying again.

The Coming War: Apple (and Boxee?) vs. NBC/Comcast

From last night’s interview with Steve Jobs at d8:

Steve: The problem with innovation in the TV industry is the go to market strategy. The TV industry has a subsidized model that gives everyone a set top box for free. So no one wants to buy a box. Ask TiVo, ask Roku, ask us… ask Google in a few months.

7:56PM Steve: So all you can do is ADD a box to the TV. You just end up with a table full of remotes, a cluster of boxes… and that’s what we have today. The only way that’s going to change is if you tear up the set top box, give it a new UI, and get it in front of consumers in a way they’re going to want it. The TV is going to lose in our eyes until there is a better go to market strategy… otherwise you’re just making another TiVo.

I read this to mean the ultimate battle for TV will be fought over spectrum allocation. Because of the way our IP regime lock up streams for broadcasters, they’ve had little incentive to innovate.  As a consequence, content and advertising delivery innovation “over the top” has wildly outpaced such innovation within the broadcast stream.  Apple clearly sees a massive monetization opportunity in content (and ad) delivery to lean-back devices, but sees the two-box solution as untenable.  To win the war for video delivery, they need bandwidth.  To get bandwidth, they need to convince the FCC to allocate spectrum away from broadcasters and toward broadband.

In the meantime, Apple (more specifically, Steve Jobs, as Disney’s largest shareholder) appears uniquely positioned to push content providers to offer their shows online in parallel with broadcast—they’ve got the motive, the means and “give” (via their monetization platform).  In that sense, their incentives are aligned with Boxee, but it’s gonna be an uphill battle to open up those content streams beyond the iTunes store.  If I’m Boxee (or USV, or anyone interested in perpetuating innovation in online content delivery platforms), I’m thinking about putting a lobbyist on retainer to make sure that any play by Apple for online delivery of broadcast streams is either open or license structured (that is, if NBC decides to deliver a live or “effectively live” stream online, they’d be required to allow anyone with an FCC-licensed platform to deliver it—basically, analogize online delivery platforms to the airwaves).

I concede that this idea is only about 10% baked.  What I’m thinking about here is the danger of platform-restricted content.  The whole point of the internet is to democratize the delivery of information (see: the net neutrality debate).  I consider video content “information” in the same sense as text.  Therefore, I see anti-competitive danger in restricting its delivery to a specific platform, be it Boxee or the next Apple TV product.

To spur innovation in content delivery platforms, we need to allow some form of open access by those platforms to content providers.  Otherwise, we’ll end up with the same innovation problems we’ve seen with the duopoly structure of cable.  Does anyone think Time Warner’s interface is optimal?  Does anyone doubt they would be pushed to do better if they didn’t have a regulatory monopoly/duopoly on their delivery channel?  I recognize that such a grant was required to incentivize the deployment of the network infrastructure in the first place, but if (when?) the delivery of what we now call “broadcast content” moves to broadband (as defined by spectrum allocation), we need to ensure that we don’t copy a regulatory scheme based on recouping buildout costs onto a network without those costs.

I want to see an ecosystem of competition in video content delivery.  As video content product becomes more fragmented, the need for innovation in discovery and delivery platforms scales exponentially. For consumers to get the platforms we deserve, we need to ensure that Boxee (or any other startup) has the same ability to access and deliver content as Apple or Google.  I’m not saying we shouldn’t allow NBC to develop its own content delivery platform, but as a consumer I prefer that that the delivery platform be decoupled from the production platform, with the latter subject to open access regulation.  Forcing delivery platforms to compete on the basis of design (rather than content) is optimal for consumers.

Of course, if I’m NBC/ABC/CBS/Fox, I’m fighting tooth and nail for things to come out the other way…