Cable cord cutting debate rages on
There’s a great debate raging on blogs and other sites, over whether Internet video is prompting a lot of folks to cancel their pay TV service — cable, satellite or IPTV. If you’ve got a few minutes, there’s an excellent synopsis of both sides of the argument in this exchange between HDNet’s Mark Cuban and Boxee’s Avner Ronen. Boxee is company that offers freeware to enable consumers to view, share and recommend many different types of Internet content, but is currently only available for Mac users.
The essence of the debate is simply this: Given the way Hulu, YouTube and other sites are making so much content available on the Internet for free, people are no longer willing to pay for TV services that package content and deliver it to the TV. Consumers want to be able to choose what they watch and when they watch it, and the Internet allows them to do that, especially now that services such as Boxee or AppleTV or others allow that viewing to take place on TV sets and not just on computer screens.
On the surface, this is a ‘duh.’ Of course consumers want choice and control and an Internet delivery model makes that infinitely easier. Heck, even old farts like me watch TV online when they are North Carolina grads (Go Heels!) living in the upper Midwest and suffering through a TV diet of Bit Ten and Notre Dame games.
But the proof that a grand shift is happening remains anecdotal - either you are someone or you know people who have cut the cable cord in favor of AppleTV or something similar. To date, there are simply no numbers to back this up. everyone that has taken a close look at the 2008 numbers agrees there is no evidence that any appreciable number of people is abandoning paid TV service for Internet-based video.
That doesn’t mean a whole generation of tweens, teens and twenty-somethings aren’t watching the majority of their TV online - their parents may still be paying for cable or satellite service, which keeps the subscription numbers where they are. Or, as the transition to digital broadcast occurs, a certain number of folks who’ve gotten their TV over the air may have decided to finally pay for it, balancing out those who are leaving.
My personal opinion is that the video market is in great flux on many fronts and this is only one of them. There’s tremendous pressure on advertising revenues when so many of us use DVRs to skip the ads. Online ad sales are a tiny fraction of what’s spent on traditional TV and cable ads, so there’s a business model at risk.
Then there are the bandwidth issues, which Cuban raises. U.S. homes will need substantially more bandwidth than many get now to support multiple HD video streams into every home, and every home is going to need more internal bandwidth as well. Since the companies providing that bandwidth are the companies also selling paid TV services, another business model issue looms large.
It seems to me a hybrid approach is likely to dominate in the near future, until some of these business issues are resolved. The digital transition may make a combination of broadcast and Internet TV palatable for many households, services such as boxee or ZillionTV will certainly give us all more choices, but many of us will find old habits hard to abandon entirely. And as cablecos and telcos work to bring more interactivity and video on demand to their services, they might compete more effectively with the Internet models.
April 2nd, 2009 at 12:30 pm
The cable companies are already attacking internet-based TV with usage sensitive pricing plans. Time Warner Cable announced on 4/1/09 that they would begin implementation of a tiered pricing system. Time Warner Cable, customers will be charged from $29.95 to $54.90 a month, based on data consumption and desired connection speed. Customers will be charged $1 for each gigabyte (GB) over their plan’s cap. Time Warner Cable offers four cap levels of 5, 10, 20, and 40 GB. A download of a high-definition movie typically eats up about 8 GB. A recent report from Sanford C. Bernstein suggests that a family on the 40 GB plan that streams 7.25 hours of online video a week (a fraction of the 60 hours Americans spend watching TV in a week) could end up spending $200 per month on broadband usage fees.
April 2nd, 2009 at 12:30 pm
I recently canceled my premium stations (HBO and Shotime) because they were $20 a month each and I only watched one or two things on them. Long ago they stopped getting reasonabley new movies on there.
I would watch Realtime with Bill Maher religiously. But I figured, hey some bonehead on the internet said you can watch it on line for free. Only found it on you tube in 5 minute increments. It’s really annoying.
Before you get people with an attention span and want to watch TV in a comfortable setting on the $2000 TV they bought, you have got to have it look and act like traditional TV.
It it there yet? HELL NO.
April 2nd, 2009 at 3:30 pm
On the surface it might look like the internet is taking away TV subscribers, but in truth that might not be the case. The computer and internet is still not that easy as having a TV. I can not get my father or other older adults to even buy a computer. Cable companies have a fiber backbone network that allows HD services plus on demand video services with easy commands. No virus worries, or trying to find the right web page, or even needing the right software to watch the video. I think it has open more chances for competition, but user friendly and convenience is a very big thing in the consumer market. Myself I able to do both, but still prefer the cable TV. It is located in every room, easy to us, and I love the DVR.
April 6th, 2009 at 5:19 pm
I beleive the majority of people do- always have- preferred to choose what what they want and pay for what they get- and no more. People wanted more variety. Cable initially was given utility status- the free right of way over property not owned in return for exclusive areas. They still have the exclusive areas and abused their users- forced packages- take 40 or 50 channels you don’t want in order to get the five or 6 that you wanted! C band satellite at first offered free channels and infinite choice- but then had to have a revenue base -so decoders were utilized. With the decoders came packages–what happened to choice. In addition by “paying” the public thought they were getting away from most commercials. Cable also never understood reliability- and since they were your only choice– like it or leave it– some choice! Then satellite packages became more structured and then commercials — and they were supposed to be competition- an alternative- in costs to cable. No outside plant- no poles- no maintenanance- no trucks. Their only costs were satelitte terminal in Wyoming and satellite space rental. Rates should have been lower and initially were- then soon became equal to the cable provider. Satellite raised rates because cable did. Cable raised rates because satellite did– etc etc. But they got greedy too. More packages- take 100 channels to get the 5 or 6 that you want–or worse! IP offers choice and video on demand- with a lot of problems. Wideband internet link needed. How to connect computer with large TV set. Now with digital channels cable could offer choice in channels- they offer video on demand so its not a technology problem– just s greed problem!
Cable does have an excuse in that the network has to be improved- however they are a utility(rate of return) satellite- Dish and Direct are the greediest of all. Now with digital they could easily authorize only the channels requested. Their greed will determine the future of IPTV. The wireline phone companies are starting to offer IPTV–at the same rate- package take it or leave it mentality as their cable “competition”. They do have one advantage. Phone companies understand- are based on- reliability and quality. There is an alternative that could kill all the cable TV/phone/internet business and trim the sails of the greedy satelitte vendors at the same time. Power companies could - thay have the tools- they know reliability. They have everything but vision.
For the present and all the above reasons- i’m cancelling cable and using IPTV- with choice- and for free!
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