I've also noticed that our friends at Light Reading TV have several videos with the Ericsson AB (Nasdaq: ERIC) brass, and if there's one consistent message in there, it is that users want to decide what they watch and the device they choose for the viewing experience. Although I don't have access to mSpot or MobiTV subscriber data, my guess is that their subscribers are the very same people whom some refer to as "digital natives."
This brings us to a recently published book, The Big Sort. It's received considerable attention -- some critical, but largely positive -- with many thinking that author Bill Bishop is on to something. Former president Clinton has been citing it in speeches. Bishop's central thesis is that Americans are increasingly gravitating to communities they feel share their beliefs, politics, lifestyle, etc. It's not a stretch to take the "big sort" theory to explain the meteoric popularity of YouTube Inc. (seven hours of video being uploaded per minute) and Internet social networking sites. On the Internet, you do your own thing.
What all of this says to me is that TV, as we know it, is on its way out, or at least down. People, particularly the rising digital native class, have a different attitude when it comes to the consumption of video, as MobiTV and mSpot subscriber numbers suggest. In other words, the living room couch is no longer the only way to watch TV.
Telco TV is in the unenviable position of having to fight battles on two fronts. Hundreds of channels in HD format, VOD, time-shifting, DVR -- all that, as they say, is table stakes. All that may enable telcos to compete with cable and satellite TV, but it's unlikely to put a significant dent in Internet video favored by digital natives. Telco TV has no way to match the reach of the Internet, the creativity it enables, and its ability to cater to all tastes.
But I don't want to sound too pessimistic. Sure, telco TV can make the viewing experience more interesting. Telcos can also do three-screen video distribution -- AT&T Inc. (NYSE: T)'s deal with MobiTV is an example of this. IPTV also presents telcos with e-commerce opportunities and other ways to leverage a triple-, quad-play bundle.
Still, I don't see how telcos are going to be able to co-opt Internet video. It's possible that new business models may emerge for the coexistence and cooperation of telco TV and Internet video. (After all, just a few years ago I wouldn't have imagined AT&T reaching out to use the services of another vendor in this manner -- it was more like reach out and crush someone.) But if that doesn't happen, it's pretty clear how the battle between telco TV and Internet video will play out.
— Sam Masud, Senior Analyst, Heavy Reading