Television in the age of bittorrent

Television faces a distribution dilemma. After having had technologies like Tivo chip away at the notion that tv programs should be watched on the network’s schedule, the networks are now facing a major disruption to their business model because of sharing technologies like bittorrent. Using a bittorrent client, internet users from around the globe can find and download their favorite programs, soon after they’ve aired, and watch them on their computers or home entertainment systems, at their convenience, and ad-free.

Based on available data, the download audience for a program like Lost is currently 2-3% of its television audience for a given episode. This is small, but over time, as broadband penetration grows and as the tools for downloading become more sophisticated, it will represent a significant threat to the advertising revenue model of traditional television (I’m resisting the urge to call traditional television ‘television 1.0,’ but maybe it’s appropriate). Rather than signaling the impending demise of television as we know it, I think there’s a huge opportunity for networks to tap into this new global distribution network and actually gain audience share and revenue in the process. All that’s required is for the networks to license the rights to distribute digitized versions of their programs internationally, on a country by country basis that parallels the way they currently license content.

Here’s how this might work: a few hours before the next episode of Lost (as an example) is due to premier in the USA, the ABC distributes a digitized version of the episode to it’s ‘torrent affiliates’ around the globe. The digitized version is ad-free, and is accompanied by a timed transcript of the program for non-english speaking countries. Torrent affiliates take the episode, watermark it, insert advertisements for local goods and services, and add subtitles if the local language is not english. They then make this new version of the episode available for free public download over bittorrent. In the USA, the ABC airs the program as normal, then releases it’s own local bittorrent of the episode, complete with ads.

This scenario almost entirely removes the impetus for individuals to take the time to record, edit, transcode and upload programs which have just appeared on free-to-air television. There would be almost no point in doing so, because torrents of the program will already be available for download by the time a program has finished airing, and better still, they will be available in multiple languages, and they’ll be continuously seeded by the torrent distributors. People who currently download Lost via bittorrent will download the new versions provided by the torrent affiliates, because they will be of higher quality, and they will be available before anything else; I don’t think the fact that they will contain advertisements will be a significant inhibitor. The downloaded media file is essentially no different to an episode that has aired on free-to-air television and been recorded by PVR.

The beauty of this scenario is that the television networks don’t need to do much to harness this new revenue channel; the torrent license and distribution network is just like the one they currently maintain with international affiliate networks who purchase the rights to screen programs. In fact, international networks who currently purchase foreign content would be natural torrent affiliates. They have the experience and likely the infrastructure to be able to update and distribute the digitized television programs, and more importantly they already have a relationship with the advertisers whose ads will be inserted into the finished product. Advertisers, in turn, will love the torrent distribution angle for television programs because for the first time they will be able to get an exact metric for the number of eyeballs that have seen their ads rather than just a statistical sampling.

I suspect there is also a huge opportunity for international television networks to gain a wider audience than they have now. Australian Idol and Australian Celebrity Survivor, for example, are both relatively popular torrent downloads; some of these downloads are from Australian viewers who missed the episodes when they screened; the others however are international viewers. The Australian networks that produce them could easily harness this international interest and increase their revenue. This would be true for all international television content production. How big, for example, is the market for Japanese television outside of Japan? Under the bittorrent distribution model, the market can decide. This is the long tail (or perhaps just the fat belly) in action. And there’s no reason why this new distribution network needs to interfere significantly with the existing content distribution deals which are in place. The two can continue to operate in parallel until the old one runs its course, or until a new and better model comes along that supplants them both.

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