The Great Living-Room War: Live TV vs. Internet TV

Fire TV, Android TV, and Apple TV: They've each got apps and hype. What they don't have much of, however, is what you might call "TV."
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This is the Golden Age of Television—not only as the blooming of lush and addictive entertainment, but also as an arms race for the best living-room technology.

Just days after Amazon announced its new Fire TV box, the Verge snagged exclusive images of Google's new Android TV product. Both services let couch-potatoes pull up apps like Netflix, Hulu Plus, or Amazon Prime Video on their TV screens, basically turning the idiot box into a big, smart iPad. Weeks ago, the Wall Street Journal announced that Apple, which has sold about 25 million Apple TV "hockey pucks," is talking to Comcast about building a new streaming-TV service.

Fire TV, Android TV, and Apple TV all have the word TV in them, so you might easily confuse them for old-fashioned TV. But they're not old-fashioned TV, at all. 

TV, as we know it, is cable packages and live channels. But the new players are building an Internet-video experience around apps with very little access to live television. It's not TV. It's Internet TV. Even as these tech upstarts are battling each other for living-room dominance, they're also battling the legacy of traditional television and the sturdy cable bundle. Here's the tale of the tape:

  • Legacy TV has channels, which you can tune into or record, to watch shows when they first air. Internet TV has mostly apps you open and play on-demand, after the shows have aired on traditional television, plus some original programming.
     
  • On Legacy TV, the interface most people use is byzantine.  On Internet TV, the interface is becoming more beautiful every year.
     
  • To buy Legacy TV, you go through local cable providers who have local quasi-monopolies like Comcast and Time Warner Cable. To access Internet TV, you buy the hardware and apps from national tech companies (after you get Internet from a local cable provider or telco).
     
  • Legacy TV is expensive: The cable bundle is one big mega-subscription that costs about $80 a month, on average. Internet TV can be cheaper: Apps like Netflix, Hulu Plus, and Amazon Prime Video sum up to about half the monthly cost of the full cable bundle.

Legacy TV and Internet TV aren't fighting a zero-sum war, but rather coming together slowly like a weird, drawn-out merger, so that in a few years, the distinction between apps and channels might be invisible.

Legacy TV wants to be more like Internet TV. That's why cable companies are putting Netflix buttons on their remotes, reimagining the channel guide as something more like the Fire TV interface, and allowing you to stream live TV to your phone and tablet after you buy a cable subscription.

And Internet TV wants to be more like Legacy TV. They want their own shows, and now they're buying them: Netflix, Hulu, Amazon, and Yahoo all have exclusive ownership of dramas and comedies you can stream. They want to strike deals with the media companies who own your favorite TV shows and sports, so that they can be seen as a viable replacement for (not just complement to) live television. So Internet TV and Legacy TV aren't merely raising our expectations for quality programming and seamlessly tech. They're also making the other side relentlessly better.

For now, the fact that the Internet TV world is growing (25 million Apple TVs sold, 27 million Netflix subscribers, 20+ million Amazon Prime Video customers...) but the Legacy TV business isn't in collapse. It's still wildly profitable and holding on desperately to its 100 million paying households. 

Netflix famously said it wanted to become HBO faster than HBO could become Netflix. It's a useful frame to see the larger battle for your living room: Can Internet TV prove it's a viable alternative to traditional television faster than Legacy TV can prove it's an affordable improvement over app-only television? Or will each side eventually realize that it needs the other to thrive?

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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