Let’s set the scene: It’s April 2004 at the NAB (National Association of Broadcasters) annual breakfast keynote with then FCC chairman Michael Powell in a dialogue with old guard broadcast icon Sam Donaldson. The press is seated in the front of the room, so we had a birds-eye view of what was to come - and for the stoic crowd of mostly broadcast executives and engineers, the message wasn’t pretty.

Steve Sechrist
Senior Analyst and Editor
Projection Monthly

In an unrestrained talk, Powell set out to warn the broadcast industry that in the face of emerging technologies, they could become "obsolete." Clearly out classed and befuddled, Donaldson, like the industry, could only look on bemused.

"Broadcasting is the original mass media. On the other end, there’s a rise of a digital generation that has access to highly individualized and customized news and information," Powell said.

"Where does broadcasting go as a business? Adapt, evolve or die." And it was the "Evolve or Die" that most of the press picked up on. The phrase immediately became both a mantra to the digital content providers and a prophecy for traditional broadcasting.

Fast forward two years and nine months, it’s CES 2007, and two leading icons of Powell’s "digital generation" - Sony and Microsoft - announced plans to enter the fledgling IPTV delivery network with a direct challenge to all conventional forms of broadcast television.

Sony introduced the Bravia Internet Video Link system that allows (number one brand) Bravia LCD TV owners, access to free Internet streaming music and video content without a subscription fee - directly on their living room set. Microsoft announced the integration of its Xbox 360 console with Internet Protocol Television software, empowering millions of gamers with IPTV content - again directly on the primary TV.

Not only does the Internet look to challenge the status quo in the not so distant mid-term, but "smart software", coupled with intelligent network delivery systems, can shift the very underpinnings of the industry, rendering the term "broadcast" (one to many) obsolete (just as Powell predicted).

To underscore the point, Bill Gates has officially set the time limit for the IPTV revolution at 5 years (not the beginning, mind you, but the end). In a speech at the World Economic Forum last week, Gates told business leaders and politicians: "I’m stunned how people aren’t seeing that with TV, in five years from now, people will laugh at what we’ve had." Gates continued: "Certain things like elections or the Olympics really point out how TV is terrible. You have to wait for the guy to talk about the thing you care about, or you miss the event and want to go back and see it." He concluded saying: "Internet presentation of these things is vastly superior."

This is particularly so in the area of highly targeted advertising, where IP delivery offers the prospect of "surgical strike ads," with accuracy akin to the "smart-bombs" used by the military that minimize the collateral damage (in this case, misplaced ads falling on deaf ears).

Curiously, this was also echoed at the Forum, in a talk by YouTube co-founder Chad Hurley. Hurley emphasized that the impact of IPTV on advertising would be "profound," with the future promising far more targeted ads tailored to each viewer’s profile. " In the coming months" Hurley said, "we’re going to do experiments to see how people interact with these ads to build an effective model that works for advertisers and works for users."

Need more proof? Look no further than Google’s market cap, ($151B today, and over 2 times the value of Disney, Sam Donaldson’s old boss), or the fact that ad dollar-rich Google recently stated they will join YouTube in sharing revenue with its millions of users who post video on-line. Talk about innovation. The whole business model is off the chart for most traditional broadcasters.

Suffice it to say that Powell got it right in his warning to the broadcast industry almost three years ago, and if Gates is right, the revolution has been in full swing since that time with just a few short years left on the clock for traditional broadcasters. Does this mean local broadcast is going away? Probably not, given US government bandwidth subsidies, but we are already seeing the diminished influence of the industry as it seeks to find meaning in the digital domain of information content delivery.

Perhaps a tip from Powell would serve the industry well here; he concluded his talk back in 2004 with this comment: "This isn’t about being anti-broadcaster or pro-broadcaster. We’re pro-the public," and initiatives like IPTV are serving the public in new and innovative ways that last century’s broadcasters are just beginning to figure out. Let’s hope broadcasters can do so before the public realizes they are subsidizing this dinosaur and begin to ask, why?