TV goes mobile

It was clear enough after last month’s unveiling of the Kindle Fire HDX that some sort of set-top box or TV dongle was coming soon from Amazon. Among its features, the new tablet is capable of functioning as a TV remote control and even flinging video wirelessly to a compatible TV or web-connected device. But at the moment there are only a few such devices available, including certain Samsung connected TVs and PlayStation consoles.

According to the report this week in Wall Street Journal, however, that broader hole will be plugged soon enough. Citing “people briefed on the company’s plans,” the Journal said Amazon is looking to roll out a Roku-like set-top box in time for the holidays. Code-named “Cinnamon” the box would have a full complement of TV and game apps, but would also be tightly integrated with the HDX and with Amazon Prime.

According to the initial reports on the new Kindle’s tablet-to-TV feature, the HDX won’t actually mirror content directly on the TV, as with Apple’s AirPlay. Rather, content will be streamed from the cloud, which makes it sound more like Google’s Chromecast, which is based on the DIAL protocol developed by YouTube. However it’s done, though, the feature underscores the extent to which mobile, as opposed to over-the-top, is becoming the real driver of innovation — and potential disruption — in the TV space.

The poster child for mobile-driven disruption is Aereo. The service was designed to stream broadcast TV signals to mobile devices. But the legal case it rests on, if ultimately upheld by the courts, has the potential to disrupt the entire retransmission consent regime that has become critical to the broadcast networks’ business model.

Even within the living room, however, mobile has the potential to disrupt the established TV order in ways that over-the-top never has. Unlike OTT, which essentially just replaces one static source of content with another, mobile devices that can fling content to the TV, whether via DIAL, AirPlay or Microsoft’s SmartGlass, can embed the process of content discovery and acquisition within a much richer social and personalized context.

Your tablet and mobile phone know a lot more about you than a remote control or fixed set-top box ever can. While it’s still very early days, eventually the ability to associate individual content choices with your social graph, your location history, your other other media activities and, in the case of Amazon especially, your purchase history, will create a trove of data riches that no mere TV network or cable provider can offer to marketers.

Even mobile devices that cannot fling content to the TV, if equipped with an automatic content recognition app (ACR), can still associate content choices made through a set-top box with everything your mobile device knows about you, creating a richer data trove than the set-top box alone can generate.

The existing TV ecosystem rests on two revenue pillars: advertising and distribution (i.e. carriage and retransmission) fees. Cracking the incumbents hold on the system will requiring disrupting or undermining one or both of those revenue streams.

Over-the-top video delivery, by itself, doesn’t really do either. It simply replaces one source of distribution fees with another, and substitutes one advertising outlet for another without changing the basic metrics on which those ads are sold.

Even without getting direct access to content rights, however, mobile devices and services eventually will fundamentally change how TV advertising is bought and sold, by linking what you’re watching to who you are, who you know and what else you do. Since the incumbent networks and content producers will have access to only one slice of that data pie, their pricing power over advertising time will diminish.

That’s how you disrupt an entrenched business.