A New York Times article (registration required) details a new service from Tivo, the makers of the wildly popular DVR (digital video recorder) that records programming on a hard drive so you can watch it later.
Tivo will add a new feature to its products that will allow the recorders to download and store TV programs that come straight off the Internet--completely bypassing traditional broadcast, cable TV, and satellite providers. Because the Tivo recorder can store programs for later viewing, the company anticipates that users with DSL or cable modem broadband services will download programs overnight and watch them later.
In the future, when we all have very fast fiber connections, we won't do that very much, because it will be easier and more convenient just to watch a program in real time. But DSL and cable modems don't have the bandwidth to do that.
Tivo has identified a sweet spot that is likely to be very lucrative for the company for a number of years but also marks the beginning of the end of traditional television. The Tivo recorder is matched perfectly with the limitations of current broadband offerings, and gives consumers more choice--which is what we all want.
As Tivo builds a marketplace, content producers (of TV-based programming) will fill it, and as the product offerings develop, consumers will be able to think about just dropping cable TV or satellite services.
How will it work? Here's a business: license the reruns of "I Love Lucy" for Internet distribution, buy a fat Internet pipe, format them for Tivo, and then sit back and collect, oh, say, fifteen cents every time someone wants to watch an episode.
This is going to be fun, and some non-traditional "media" companies that aren't located in Hollywood are likely to make a lot of money. As factory jobs move offshore, whole new industries are being created.
What about the global economy, you say? Suppose you took those "I Love Lucy" reruns and dubbed them into Chinese, Spanish, and French? Buy server space in those countries and start selling. Payments will all be automated, via Paypal or some sort of Tivo mechanism, so the biggest chore of the day would be log on to your bank account every morning and see that another half million people worldwide watched your programming last night. At fifteen cents a pop, that's $150,000/day to run a server and an Internet feed.