A few years ago, while TV networks were happily setting up Hulu as a place for people to watch shows online for free, the cable companies were fretting. If cable customers could watch shows online for free on Hulu, or through cheap subscription services such as Netflix, who was going to pay for cable service? Sure, the cable companies would still get you for Internet access, but they’d lose one part of their “triple play” package — usually the most expensive and lucrative part.
So they dreamed up the idea of “TV Everywhere.” It came mainly from the minds of Comcast and Time Warner Cable, who didn’t like the notion of their cable content getting out into the wilds of the digital world. As a recent cover story on BusinessWeek magazine points out, TV Everywhere is the “Revenge of the Cable Guys” who didn’t want to see their industry downsized in the same way the music industry was hit with file-sharing.
But who are the cable companies getting their revenge on? Is it the array of tech startups that want to help people cut the cord? No, the real revenge is on cable customers who were considering cutting the cord. Rather than allow them to go online to customize their TV viewing and pay only for the content and channels they want, Big Cable wanted to lock them into the old routine of paying for 500 channels while watching about eight of them. TV Everywhere is a solution for Big Cable — not for its customers. Just look at the image that BusinessWeek chose to show cable’s revenge: A customer wrapped up in a cable like a prisoner (see image at left).
While cable companies say they are not seeing widespread reductions in customer subscriptions as a result of people cutting the cord, my Guide to Cutting the Cable TV Cord story at MediaShift has been the 3rd most popular story on the site over the past 12 months (even though it was only published two months ago). I’ve heard from scores of people who have happily cut the cord or are considering doing so.
The cable companies believe that their method of paying for all those channels of content and then collecting huge (and rising) premiums from customers is the only way studios and content creators can be paid to produce high-quality shows. But how long will the old way be the only way? Aren’t those content creation costs a bit inflated when you consider that the tools and distribution are being democratized online? Yes, online video sites have not become huge money makers for independent web productions yet. But that doesn’t mean a shift isn’t coming down the line.
Reasons for Failure
Here’s a rundown of why I think the TV Everywhere concept — and Comcast’s beta of Fancast Xfinity TV — are doomed to failure over the long term.
- Taking away choice.
While Comcast pitches Xfinity as giving users more control over content by being able to watch what they want when they want, the reality is that Comcast is locking people into their menu of offerings for cable TV. And, most importantly, they are giving people the chance to watch content on other platforms — laptops, smartphones, etc. — only if they keep paying their cable bills. There is still no choice for people who want to pay less for just the shows they want. The ultimate in customization comes from the Internet, where you watch what you want and aren’t usually forced into bundles of content and channels.
- Propping up old technology.
The TV Everywhere push has absolutely nothing to do with promotion of new content platforms and everything to do with propping up the old one. The perfect analogy is newspaper publishers (the latest being Cablevision with its acquisition of Newsday) who think they can get people to pay for print newspaper subscriptions in order to get free web access to their content. The customer wants to get access to the content online, so the publisher’s reaction is to say, “OK, you can have that, but you’ll need to pay for this other thing that you no longer want.” You can only prop up the old model for so long before someone figures out a way to make the new one work without it.
- No plan to charge people for online-only access.
The cable companies have no plan to give people the option to access Xfinity or other TV Everywhere services for a fee instead of forcing them to pay for cable TV. That means this is not a strategy for working out an online business model (either through advertising or paid content, or a mix of those or something new). Instead, the cable companies have one aim: Protect the old business model. Again, this is not a strategy born from innovation or smart thinking about new platforms. This is survival mode and all about protecting the old, broken way of doing business.
- Google TV on the horizon.
It’s true that the earlier entrants in web-TV convergence (including WebTV) were failures because the technology wasn’t quite there yet. And when you consider the multiple steps required to get your TV hooked up to the Net properly, it makes sense that most people won’t cut the cord to cable. But more TV sets are being built with easier web integration. And what happens if Google, Intel and Sony band together for Google TV, as rumored in the New York Times recently? And with the Boxee Box due out this year, the web-TV setup without cable gets even easier. That makes low cost alternatives enticing vs. the TV Everywhere promise that you’ll be paying your cable bill forever.
- People don’t trust Big Cable.
In survey after survey, people say they have poor customer service from cable and satellite companies. They would likely jump at the chance to get a service that gives them any kind of friendly help, or can portray itself as even slightly responsive to their needs. You rarely hear people complain about the service they get from Netflix, for instance, so the upstarts have a chance to show they can do better.
- Not delivering on its promise.
Worst of all for TV Everywhere is a failure to deliver on its initial promise. The promise was that you could watch all your cable shows and channels on your laptop and mobile phone. But as PC World’s Mark Sullivan points out in a review, you can’t get all the content you expect. “After all the hype from Comcast about the new service, I’m surprised at how little subscription-only and premium video — especially movies — is actually available on Fancast Xfinity TV,” he wrote. That could change over time, but first impressions can make a difference with word of mouth.
I am convinced that this early trial for Xfinity and TV Everywhere is doomed to failure because they are a way to prop up a legacy media in transition. But there are ways that the cable companies could change course. They could come up with a fair payment for online access for people who don’t want to pay for cable. They could offer more customization for cable, allowing people to buy just the channels they watch.
But, at the moment, the cable companies are content to sit high on the hog, charging huge sums for cable TV services that continue to defy gravity, and the recession, by going up, up, up.
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What do you think about Xfinity and TV Everywhere? Will they keep you happy paying for cable TV? Or have you quit cable and cut the cord? Share your thoughts in the comments below. And don’t forget to vote in our poll about your satisfaction with your cable or satellite service:
Mark Glaser is executive editor of MediaShift and Idea Lab. He also writes the bi-weekly OPA Intelligence Report email newsletter for the Online Publishers Association. He lives in San Francisco with his son Julian. You can follow him on Twitter @mediatwit.
When I had to change to a lower paying job a few years ago, I reassess all of the household expenses including my cable bill. Here in Vermont, Comcast provides a “Broadcast Only” cable subscription for about $12/month. This cable package in combination with Netflix Unlimited, Red Box, local libraries and broadband Internet, I have my desires for video content almost completely covered plus I saved some money was well. It only costs me some patience in waiting for the content to become available. Basically, for about $75/month (cable, internet & netflix), I am getting my desired video content fulfilled.
John,
Thanks for the comment. I’m curious why you decided to pay Comcast $12 a month for a “broadcast only” package when you can get over-the-air digital (and sometimes HD) broadcast channels now for free. Most people say that with the right antenna they can get these channels in great quality. So why pay a cable bill for that?
Mark, I don’t know where in Vermont John is. But in many rural areas, getting over-the-air TV can be difficult to impossible. So maybe that is why he is paying for it.
Me? I cut the cord ages ago. We fell on hard times financially, and cable TV was the first thing to go. We live in the Boston area, so we can use an antenna to get TV.
At first, we missed our cable, but as time went on, we missed it less and less. Now we are doing well financially, and we sometimes travel and stay in hotels that have cable. I flip around the channels, and see very little that I’d be willing to pay for.
Now, we have no desire for it at all, even though we can easily afford it again. With digital TV, we get five channels of PBS, which is mostly what we watch anyway. Some of the money we don’t spend on cable goes to our local PBS station, they provide us more value than cable does.
If we want to watch TV shows that are shown on cable, we just wait for them to come out on DVD and get them from Netflix. Other stuff we watch online.
Thanks for the article!
More and more, I have been unsatisfied with the program my cable provider offers. I pay $70 a moth for cable and Internet and see less and less interesting programing. Channels are overrun with either silly reality tv shows or glitzy dramas. My fiance and i have been planning to cut our cable and rent shows that we are interested in. Being students, we feel that we are not getting our moneys worth from all our ‘extra channel options.’
Similar to Christine’s comment, we get extremely poor tv reception here. I’ve stopped watching TV altogether, as most of my favorite shows are available on hulu.com! I have never had cable, but enjoy many cable shows available on the site. I love being able to choose when to watch without paying for expensive tivo & other programs.
My only concern is that the really good shows (so many have already been cancelled, & are being rediscovered by a new audience online) won’t get the support they need to continue if their creators don’t look on the web to check their popularity as well as looking at subscriptions. Releasing things online creates better word of mouth than even the water cooler.
I want to live where Maggie lives! our internet and cable costs us close to $150 a month (no phone service). We have DVR service but no premium channels (HBO, Showtime, etc). In the town where I live (outside of Boston), residents have been raising heck about the lack of competition for the cable contract — we’re currently locked into a ten-year sentence with Comcast/Xfinity.
But while cable competition might help my rates, it will likely have only a marginal effect on content, which is not much to my liking. Services like Hulu seem to cater to teens, scifi fans, and the lowest common denominator in terms of content. My solution: I’ve read more library books this year already than all of last year.
I cut my cable due to job loss, but signed up for DirecTV. I did keep Comcast internet, but droppped to the lowest tier. Without a TV package, the cheapest Comcast internet is over $45! I am thinking of dropping DirecTV after my contract expires, and upping my internet speed in order to stream shows. I have a Sony TV with the internet link device, but the choices are rather slim and no ‘cable’ channels are available. Hopefully, by the time my contract expires, more choice will be available. ‘Till then, I’m tethered.
I also use Vongage for my phone, which has saved me a TON of money over Qwest. And, I do have an HD antenna from which I can watch local PBS and other broadcast network programming, but PBS is the only network worth watching. ;-)
You missed one incredibly important factor in cutting the cord – Sports.
I cut the cord last September. Totally Hulu and iTunes since then.
But I have to beg invites to friends for Final Four or Superbowl. I am not a crazy fan, but you just can’t get this content without Satellite/Cable/captive service.
I think this is a far higher barrier than the actual device. It takes about ten minutes to get a Mac Mini connected to your TV and watch Hulu.
Basic cable for us provides us with enough channels, especially PBS. Cost is $29.95 per month. We don’t need anything else. We like to read books and go to live theater. Too much TV is bad for the brain.
I cut the cord almost a year ago and I don’t regret it. I have Time Warner high speed internet with NO cable tv and I do not have an over the air digital tv tuner. I get all my tv through the Internet. I use Hulu, Netflix, Bittorrent and Miro (video rss feeds). The networks can byte my shiny metal hiney.
Cable stations won’t have their act together to offer (or keep offering) over the top streaming options and they can offload the platform and technical requirements of their online initiatives to the carriers, and the business model is already in place. Advertisers will be thrilled because we have to login with our cable subscription credentials to see the content, so they know exactly who I am and how to target ads at me. It makes great business sense and it will become more seamless to use and accepted by users over time. TVE will be fine and probably fairly well fleshed out by 2011, whether we like it or not. “Cord-cutters” will still get their content via downloads or the straggler sites offering some direct play or sampling. If there’s any luck, the carriers will someday offer some half-assed online-only option at a reduced cost to appease the “a la carte” pressures that arise from time to time from congress and the FCC.
Mark,
At Brightcove we support traditional and “new” types of content providers. Some of whom have a vested interest in preserving the existing system while others are creating new patterns for media delivery and distribution. So I’d like to think of myself as a fairly neutral party. I did a stint at Comcast years ago but that predates all of this Xfinity stuff.
I like your take here from the end user perspective. In short – we want a lot of choice and control, and want to pay a fair price for the programs that we want to watch.
The challenge is that high-production value TV (not judging it qualitatively) costs a lot to produce. Today, Hulu’s revenues can’t support the production of Sons of Anarchy or Deadliest Catch. It oversimplifies what’s going on out there when you and commenters here see Hulu as a replacement service, today, for traditional distribution. The economics aren’t there today, but they will come. There are exceptions, of course. Certainly the MLB has a thriving business that spans traditional and direct digital distribution.
Looking at this from the other direction, you could say that existing TV service providers, or MVPDs, are adding more features to their offerings at the same price. I see this as a good thing. It’s early – the user experiences are mediocre, the offerings limited. But that will change. I applaud the service providers to getting something out and trying to improve their products in the market, like a web company and not a utility.
There is a showdown coming, for sure. Can “over the top” services become compelling enough and have enough programming at the right price for users to serve as a replacement good for cable and satellite. In a perfect world, that should happen. Technically, it could happen today.
I like Will Richmond’s comment over on Videonuze (http://bit.ly/dCWlDa). That the MVPDs have their “auto industry” moment coming upon them. A chance to innovate and provide the right mix of value for consumers or be eaten alive. The good news is we’ll have a lot of new options and the playing field will level.
At the very least, things will get interesting for video software firms like ourselves and commentators like you.
Thanks!
Eric Elia
VP, TV Solutions
Brightcove
Fred Friendly demonstrated the value of the public airwaves when CBS aired reruns of I Love Lucy instead of congressional hearings on the military conflict in Southeast Asia(Viet Nam).I love Lucy,too!Too bad there was no C-Span(I believe the “C” stands for “Cable”) to allow concerned Americans to discover the true nature of this conflict before committing to it heart,body and soul.Our Atlanta community broadcaster,Radio Free Georgia(WRFG) carried gavel-to-gavel coverage of the Iran-Contra hearings when NO open broadcast outlet would carry it.CNN was pay cable only at that time, and they also carried it to a far more limited(paying) audience.Remember Brian O”Blivion’s warning:”When television becomes the retina of the mind’s eye,television becomes reality”.When the carrier becomes more significant than the content, it’s time to find another carrier.Death to Videodrome, long live shortwave radio! . . . and thank god for C-Span.
There’s no difference. Endure corporate and middle-brow censorship for another dozen years.
I first passed on cable several years ago – I was looking at an ad for 1 week in Hawaii (Waikiki) and after doing a little but of math, figured out the cost was what I’d spend on several months of cable. I’d much rather go to Hawaii than sit in front of the idiot box (to use an old fashioned term), My current is that while I’d love to have better reception, I’ll take the money I save and go out with friends.
Some of us have no choice – I’m in a rural area with (thankfully) no cable TV available. We have good off-the-air reception (unlike Vermont our part of Wisconsin is flat) and mostly watch public TV anyway. So I set up a media center with a Mac Mini and EyeTV; the picture quality is better than my friends with cable TV in town, and after a high initial cost my monthly bill is zero. Meanwhile in town an elderly relative has to pay a cable company $39/month to occasionally watch one of 3 channels that she looks at.
We cut the cable cord 10 years ago and haven’t looked back. We watch very little network TV by aerial antenna and watch movies from the library and Redbox.
What you fail to mention and seem to blame all on the cable companies is that the majority of the costs for cable television are derived from the networks/programmers. Cable operators are forced to take the suite of channels companies like Discovery, Disney and NBC offer and they’re forced to carry them on their most highly penetrated tier. Each and every channel comes with their own cost per subscriber. But they don’t stop there. Now those very same distributors of conten place it online for free, further stripping the revenue base from the cable providers. Ala carte programming doesn’t exist because the cable providers don’t want to offer it. They are prohibited to do so by the networks!
Patty,
I don’t think the cable companies are “forced” to take all the channels from the programmers. The cable companies are the ones who set up the business model for paying out a certain amount to the networks and charging people more and more. No one has forced them to use that business model. I think there’s plenty of blame to go around, from cable companies to satellite to cable channels to programmers to actors, etc. Instead of just looking to soak viewers with increasing costs, they should be figuring out ways to serve the viewers and deliver what they want at a reasonable price. Everyone along the production chain needs to rethink this broken business model that is unsustainable.
Cable the way you want it is the future of the entertainment landscape. I for one am sick and tired of “surfing” tons of pages of worthless content from the GUI provided by Comcast and DirectTV. I have no interest in 100 stations of Spanish speaking channels, but the millions of Spanish speaking people living in California sure do! I say let everyone pick what they choose to purchase, and only let the strong survive! I will bet you that the average consumers viewing habits will become more intelligent (less BS reality TV that sucks people in and sucks their brains right out of their heads!) and their families will keep inappropriate out if the hands of their children! Personally I cant wait for this new paradigm to kick in and take over the living room!
I cut the cord a long time ago. I recently moved, had extra income and tried a cable sub again with a few pay channels. I quickly realized I was wasting money to watch commercials and reruns of only a few movies that I liked and dumped it. I don’t know why the old model is still so popular considering how easy it is to hook up a PC/laptop to a TV with an HDMI cable these days. I much prefer a combination of Amazon Unbox, Hulu, Itunes and a few other services. I wouldn’t mind spending extra to get on-demand TV without commercials but I’m actually spending a lot less and have built quite a library for rainy days (and for guests to browse).
My thoughts are similar to Christine’s. We cut the cable cord years ago and haven’t missed a thing (except for maybe a few sports programs a year on ESPN). We save money and don’t spend as much time sitting on the couch staring at the television.
We get over-the-air HD programming from the major networks, plus multiple public TV stations. These meets our needs just fine.