Is the television industry really ready to move towards a connected TV marketplace?

Michael Wolf at GigaOm Pro wrote about whether or not the Smart TV Honeymoon is Already Over with the missteps of Google TV and other OTT devices.  He asks:

Is the television industry really ready to move towards a connected TV marketplace?

Here’s my reply:

No, not yet.  The television network industry doesn’t want a connected TV marketplace but is at least willing to dip their toes in the water so they don’t end up like the newspaper or music business.

But in general, I believe that non-TV network companies like NetFlix or OTT boxes like Roku or Boxee wholely underestimate the complexity, cost, and associated entrenchment to deliver quality content that last mile to the home.  They got cheap rates early on cuz they were the new kids on the block – but their windows are expiring.  That’s why Jeff Bewkes can sit back and say about Netflix, “Nope, I don’t think so.  Not a threat.”  Netflix made their first foray into the big leagues with their $1B programming deal but that’s just the tip of the iceberg.  And that can’t be sustained with their current net $8/mo business model.

My prediction for 2011 is to look for Netflix to start looking more like a cable model:  drive distribution with a low price, then start raising rates and adding pricier tiers for the most popular content to offset their programming costs.  They need to either put the pedal to the metal and take that big leap to cross the chasm soon … or crash and burn without enough momentum.

What do you think?

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