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"The third screen" in the trinity of personal multimedia is on your mobile device--the first screen is the TV and the second screen is the PC. But in terms of innovation, the first screen is third. An explosion in mobile innovations has put "the Internet in your pants" (as John Gruber puts it), but most people leave the subscription TV content they pay big bucks for where they find it: in a dingy, rented set-top box. While there has been a ton of innovation designed to bring Internet video to the TV, there are relatively few options if you want to do Neat Stuff with your pay TV content. It's not a lack of demand that keeps these products off the shelves--as Steve Jobs (whose Apple TV brings iTunes content to the TV but does not even try to interoperate with cable) explained, "The TV industry has a subsidized model that gives everyone a set-top box...and that pretty much undermines innovation in the sector...."
This doesn't have to last. If the FCC moves ahead with its AllVid plan by the end of December, in just a few years (500 years in consumer electronic time) it will be as easy for entrepreneurs to build devices that work with subscription TV content as it is for them to build broadband devices today. In the meantime there's CableCARD: an imperfect technology for sure, but one that Moxi, TiVo, and Windows Media Center use today. The FCC is voting on changes to fix up the CableCARD system on Thursday; let's hope they do what's needed to build a system that gives people confidence that they can build and buy devices without having the rug pulled out from under them.
But don't count out the big content industry--they never tire in their quest to make water less wet. They still have a fighting chance of screwing up our chances of a competitive, interoperable market in video devices, by burdening manufacturers with the obligation to make their products less useful by requiring that they respect "Don't copy me, bro" flags. Over our objection, they recently won from the FCC the ability to set this flag on movies they claim would never have been offered via pay TV in the first place--movies that were at or near the end of their theatrical run, but haven't hit DVD yet. They claimed that this "new business model" justified allowing them to break millions of TVs. Since then, Rupert Murdoch has called the idea of releasing movies via video-on-demand at the same as theatrical release "a big mistake," seemingly putting the damper on any future "business models" that the studios may wish to pursue. But new business model or no, the content industry is determined to put the digital genie back in the bottle. Last week, the MPAA told the FCC that it ought to be able to set the "copy never" flag on "subscription video on demand" programming--that is, the currently existing service where you pay a monthly fee to get unlimited access to certain on-demand offerings. Before, the MPAA at least had a colorable (if ultimately false) argument that it only wanted to use these flags on programming that never would have been made available in the first place. Now it argues that there is "no policy reason" not to allow it to set the TV-breaking flag for content people already have access to.
The first screen doesn't have to be in third place when it comes to innovation. But two conditions need to be met. First, the FCC needs to take decisive action to promote video device competition--it needs to act aggressively on AllVid. Second, policymakers need to resist overreaching content industry claims. There are ways for the content industry to make money other than by trying to rebuild the for-real scarcity of the physical world in the digital realm. The MPAA won't be happy with anything less than complete control over the design of next-generation of video devices, and we can't let that backward-looking vision hold us back.