Welcome to Episode 111 of The Digital Life, a show about our adventures in the world of design and technology. I’m your host, Jon Follett, and with me is founder and co-host, Dirk Knemeyer.
Hey, Jon, what’s on your mind this week?
I thought this week we could chat a little bit about the juggernaut that is streaming television, the accompanying consumer behavior accompanying that in some instances, which is cord cutting, and then the future of the television medium, which is being shaped by both of those things.
I wanted to start off just by noting that in a few days, actually on the 14th of July, our friends at Netflix will be splitting their stock seven way … It’s a seven-way split, so they’re going from one share … If you own one today, you’ll own seven on the 14th of July. They’re trading close to $700, not quite there, so all of sudden that stock will be supposedly more accessible to your mom-and-pop-type investors. I think that is a notable event in streaming television just because Netflix is one of the most popular, if not the most popular, streaming service and just really shows how both Wall Street and the consumer have really gravitated toward this model as being the way that we’re going to consume television in the future. Dirk, what was your impression of this major happening for our friends at Netflix?
It really caps a remarkable return to grace. I can remember our talking on the show when Quickster came out, and the Netflix stock dropped and plummeted to its nadir. Now it’s ten times what it was just a few years ago now, so it’s been pretty incredible from a business perspective.
In terms of the more macro stuff, cord cutting has been happening for a long time as a new generation emerges. It’s not even cord cutting. It’s sort of cordless, which is to say they never had the cord and wouldn’t dream of getting it. There’s not a lot of virtue in the corded models, and by that I’m including satellite models as well. Maybe cordless isn’t the right term, frankly, anymore. It’s more these large scale subscriptions where you’re getting hundreds or thousands of channels in this giant bushel for a whole bunch of money. Those are just outdated; they’re silly. They don’t match with current technology. They don’t match with current consumer tastes. They don’t match with current viewing habits and ways of consuming content, so yeah, it’s no big surprise. It’s been happening and accelerating for a long time. The big question is, what’s next?
You kept using the word television when you were talking about it. If I were consulting one of my clients on how to breach new markets and how to rethink about how to go to market, I think you need to look at it a couple levels up. I think of it today as video content. The notions that we have of movie, television show, network television show, cable television show, premium television show, all of which are different. YouTube-type videos which we might … This is probably not a relevant term anymore, but sort of in the user-generated content sphere, we’ve just got video. The question is, what are the best services? What are the best methods of getting you to the video that you want to consume? To me, television, that’s all just noise.
At the end of the day, it’s that video is in interesting ways consolidating and fragmenting. It’s consolidating from the standpoint of service offerings, like what’s making cordless a more viable path is a narrowing of potential providers, of whether it be software service providers, like a Netflix or an Amazon, or hardware providers, like an Apple TV or a Roku, which are just coming at it from overlapping but different ways. I don’t know. I think there’s a lot of interesting grist here, but the one thing for sure is the way that we consume our video content is really evolving at the moment, and how we’re consuming it now is going to look very different from how we are buying, paying for it, and consuming it even into the future. We’re right now in an evolutionary and changing moments in that path.
I want to dig in a little bit to that, how we are consuming our video content now, because I think that’s important. I think the behaviors that we’re displaying now are being driven by technology as a facilitator to access this content. Frankly, I, myself, didn’t even really notice how much my viewing habits had changed until I started reviewing them to come on the show.
Now we have the possibility of basically consuming video content basically anywhere there’s a screen, or just about anywhere that there’s a screen. I took a week off to go on vacation, and at the house I rented they had a Vizio television that happened to have an Amazon button built right into it, right? I just clicked on the Amazon button and typed in my user name and password, and boom, I’m into the Amazon Prime streaming service which has all sorts of stuff for my kids to watch, has stuff that I like to watch, et cetera, but it’s just this immediate connectedness to the digital realm that, in the past, I don’t think I ever had that opportunity to just grab ahold of the equivalent of my digital library, to access that no matter where I was. The funny thing was that it was so seamless, I almost just expected it to work and it did.
To follow up on that, I enjoy watching a lot of HBO shows, and I know both you and I are fans of The Wire, which is one of their older but still very popular shows. I was re-watching episodes of that on my laptop through their HBO GO application, and then it saves where I end the episode. Later at night I was like, oh, I’m just going to take a look at this on a mobile phone and finish the episode, and it picks up right where it left off, which is just from a behavior standpoint here I am. I started it in one service and then ended up finishing the episode in a totally different way on a totally different screen, and it’s seamless.
In one sense that’s really awful because now my free time is getting totally consumed by watching video content, which I have to watch out for, but the fact is my relationship with the show is, because it’s so accessible and so easy for me to dive into that world, I feel much closer to the show itself. There are a number of shows I feel this way about, but it’s almost like a deeper level of fandom when you can grab this content and binge watch it whenever you want. Theoretically, I could be standing in line at the post office and be watching an episode of The Wire, which is a frightening and distracting thought, but I do feel like my relationship to the storytelling has changed. Not just because it’s a great story and I’m binge watching it, but more because it’s available to me whenever. Dirk, how are you feeling your relationship to stories that you like to view? Do you feel more deeply engaged in them because of the technology umbilical cord we have now?
More deeply engaged? I’m going to say no. I think the most deeply engaged I’ve ever been in a television show was the first season of 24, which I got on Netflix, and that was delivered by DVDs, which, of course, is now a terribly outdated technology. Interestingly, part of what made the experience so intense was the format, of course, they were using for the show, the content itself was really novel and innovative and designed around high drama and cliffhangers, but additionally it was the fact that I could get to all the content at that time, but crucially the DVD access that I had kept it where I could get some of it but not all of it. I had a couple of DVDs from Netflix, and I wanted to keep watching more before more DVDs would come, so I went to the rental store, brick and mortar, and got the rest to keep plowing through it. That ties into some of the conveniences of modern consumption. This was now almost 15 years ago, if not 15 years ago, but interestingly, there were friction points in the acquisition and consumption process that enhanced my excitement.
To come with a counter, on a trip recently I binge watched the latest season of Game of Thrones. I watched from episode 4 of the season through episode 10, and I wasn’t that engaged. It was kind of on on my laptop, but I was working at the same time. Sometimes I’d hear something that interested me, and I’d go and watch at the same time, but despite Game of Thrones being what I would say is probably … I’m acknowledging the overbearing amounts of violence and badness towards women, which have got me to the point where I don’t really enjoy the show much anymore, but acknowledging those and then putting them on the shelf for a moment, Game of Thrones is objectively a better piece of art than the first season of 24. Despite that, despite the content being of higher quality, the confluence of context of consumption and my own context as the consumer having changed in the subsequent 15 years have made me less, not more, connected to that.
Interesting. I wanted to point out that this year, 2015, has been a really high water mark so far for streaming television or streaming video, as it were, with the HBO Now service available which you can get on Apple TV and completely divorces HBO from the cable providers. You can just get it when you want, and with the launching of innumerable online streaming services from niche television stations — I’m pretty sure that Lifetime Television just launched their streaming service, which should be telling us something when there’s that much of a niche that a TV station now has a streaming service — that streaming is really the wave of the future, or the wave of the present, I guess, because everybody’s doing it.
I guess what has really interested me in this consumption pattern of video is also the way that audiences can more directly engage with the things that they want to watch. Amazon Originals has that model where they show you the pilot, and then lets you comment on it, and the ones that receive the best reviews and the most stars are the ones that get made. I think that’s not only a great way to figure out whether they’re going to have shows that are going to sell, but it also makes it so that the viewer feels like they have a stake in the storytelling that’s coming.
I’m in particular looking forward to seeing the full series of The Man in the High Castle, which is a Philip K. Dick alternate future book imagining if the allies had lost World War II and what would America look like, but the pilot on Amazon … I saw that, and I’m like, “Oh,” you know. It’s the first time I went into Amazon and said, “You must make this television show happen.” I believe it’s Ridley Scott’s production company that’s creating it, but I really enjoy sci-fi, and that show really hit it off for me.
Now I’m not only providing this market data back to Amazon but I’m actively checking the site. I’m like, “Okay, you said you were going to produce it. When are you going to drop these 10 episodes so I can just go into hibernation and watch the whole thing over a weekend and shirk all my parental responsibilities?” Whether that relationship is healthy or not, I don’t know, but I think this just further intensifies the relationship that we have with the storytelling. Have you engaged with that Amazon Pilot model at all, Dirk?
I’ve watched one or two over the years. The last one was probably a year or two ago, but I think what you’re talking about, what thread that moves into for me is earlier in the show I talked about how there is a lot of consolidation on one hand but there’s also fragmentation on the other. The fragmentation is coming from the standpoint of all of these different content creators that don’t share a distribution platform.
One of the virtues of the corded model was, if you were on cable or on satellite … I don’t know how many years back we’d have to go now. I’m going to guess five, plus or minus two, everything was there from a television perspective, literally. If some new thing came on and you read a review about it, that it was really good, you went to this one service. You could get your DVR to suck it up, and you would have it. It would be delivered to you. Now, with this explosion of these competing services that are sort of blends between distribution and content creation, now the horse is completely out of the barn.
I’ve reached the point where I don’t even try to keep up with it all, right? In the past there was this notion that there’s all of this content being created between television and movies. I think this has been a reality more on the movie side for a longer time with the explosion of the independent movie scene, but there’s all of this content out there, and everything that’s good will fall into my channel, will fall into the corded thing and the DVD delivery service or brick and mortar rental store, and I’m going to consume everything I want to. I’ll have knowledge of it, and I’ll see it, and that’s just gone. That is gone so many times over because the number of companies now like Amazon where Amazon controls their channel. They’re making their content, and if there’s good shows on Amazon, correct me if I’m wrong, but you’re not going to find them on Netflix. You’re not going to find them on competing services in the same way.
What that’s created for me is I don’t care about any of it anymore. It’s almost moved in like with books. There’s so many books published that we can’t keep track of them all. The ones that rise to our attention are just the small, tiny minority, and we don’t even have a compulsion or a desire to try and keep up with it all, to have access to everything. For me, all of what’s been happening over the last five-ish years has made that happen from a video perspective. I’m like, fuck all … I’m not even going to try. Somebody’s talking about this great show. Somebody’s talking about that great show. I’m going to say, “Is it on these couple of channels that I can pay attention to — and by channels, I mean distribution channels in the broad sense, not a single channel on a corded provider. If yes, okay, I’ll look into it. If no, I just don’t care anymore because there’s too much. There’s too much choice. There’s too fragmented of delivery.
In a very interesting way, it’s taking the early promise and premise of niche cable channels that really exploded 20-plus years ago, where we went from double digit channels to hundreds of channels … It’s taken that and made it a sort of hard-coded reality where you can’t just go up 300 channels through the same thing and get there. It’s just off in some corner of the Internet or some corner of the content production space, and you may not be able to get at it at all without setting up a new account, without potentially paying money to a new service.
The impact of that on how we perceive video content, particularly packaged video content that would be traditionally delivered as a quote, unquote, television show or a, quote, unquote, movie, it’s like all bets are off. It’s going to continue to really evolve and change how we frame that kind of content. For young people, for people like my children and yours, Jon, but also for people who are a little bit older, teenagers now or perhaps going into young adulthood, this is all they’ve ever known. We’ve got still this model that’s more implicit than explicit of we can watch whatever we want. We’ve got it all. We’ve got our arms around it like it’s never been that way for them.
What are the implications on how this continues to change in the future, and how video content fits into media content in the bigger picture? I think there’s a lot of unanswered questions there, and it’ll be interesting to see where it goes.
Yeah, for sure. Listeners, remember that while you’re listening to the show you can follow along with the things we’re mentioning here in real time. Just head over to thedigitalife.com, that’s just one L in thedigitalife, and go to the page for this episode. We include links to pretty much everything mentioned by everybody, so it’s a rich information resource to take advantage of while you’re listening or afterward if you’re trying to remember something that you liked. If you want to follow us outside of the show, you can follow me on Twitter @jonfollett. That’s j-o-n-f-o-l-l-e-t-t and, of course, the whole show is brought to you by Involution Studios, which you can check out at goinvo.com. That’s g-o-i-n-v-o.com. Dirk?
You can follow me on Twitter @dknemeyer. That’s d-k-n-e-m-e-y-e-r, or email me, email@example.com.
That’s it for Episode 111 of The Digital Life. For Dirk Knemeyer, I’m Jon Follett, and we’ll see you next time.