Cable Companies Negotiating To Control What TV Shows You Can Watch Online

from the this-won't-end-well dept

Earlier this week when Hulu cut off Boxee, supposedly at the request of its content partners, there was some speculation that the real pressure may have come from the cable companies who are losing customers at a pretty rapid clip. And, while the content companies pretend to deny it, the fact that people can get so much content for free online is almost certainly contributing to that situation.

Now, in theory, this should be a good thing for the TV guys -- who you would think want as many people watching their shows/channels as possible. But, the problem is the business model. Doesn't it always seem to come down to the business model? The TV networks make so much money by selling the channels to the cable companies, that they're scared to death of losing that revenue. We saw a hint of this late last year when Viacom and Time Warner Cable played a big game of chicken over channels like Comedy Central and MTV.

However, now reports are coming out that the cable companies are negotiating with TV programmers to offer their TV content exclusively via their cable internet offerings. In other words, forget Hulu and routing around the cable company and the $80/month they're charging you. You'd have to keep your cable, even if you don't want it, just to get access to many TV shows over the internet (well, legally). Not surprisingly, both the cable companies and the TV programmers seem to like this sort of deal: the programmers continue to get their big fees from the cable companies, and the cable guys avoid losing many more subscribers. Comcast's CEO Brian Roberts is even saying "Online video is our friend, not our enemy."

And, to some extent he's right. If Comcast is going to survive it does need to look at online video as a friend, rather than an enemy -- but the problems may come about if they think that they can force customers to only get online TV if they keep their cable TV service at such a high price. Because, while these deals may make sense for the TV networks and the cable guys, they seem to be forgetting the customers -- many of whom have received a nice taste of TV online for free, and aren't going to be happy about having to pay up for it. The problem is that these cable guys aren't adding any new value. In actuality, it seems like they're looking to take away value from what's already out there -- and that never works. It will likely just lead to increased piracy, increased anger at the cable companies, and a continuing of the downward spiral. But, these days, watching old school companies accelerate their own downward spiral happens so often, you almost have to assume it's likely.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Kirk, Feb 20th, 2009 @ 3:06pm

    The customer

     

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  2.  
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    Kirk, Feb 20th, 2009 @ 3:07pm

    The customer: The Missing Piece

    A good business model is like a jigsaw puzzle. You can't force it, but if you get it right, it just fits.

     

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  3.  
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    Matthe, Feb 20th, 2009 @ 3:33pm

    I dumped pay TV

    I'm tired of paying for TV. So about a year ago, I dropped the cable. And with digital OTA, I've got a way better picture than the cable company ever gave me. So cable/satellite: It's really not that important.

    There are only about 3 or 4 (and 2 of them are on OTA networks) shows I watch religiously. For what I would have to pay for cable a month, I can buy the season of one of these shows on DVD. Sure, it's nice that I can see it on Hulu for free, and not have to wait till the end of the season to see the episodes for the cable only shows. But if Hulu (or whatever net broadcast system) drops the shows, well I drop Hulu.

    Either way the cable/satellite companies are not going to get another dime from me. It's never made sense to me that I have to pay for the service, and still sit through commercials. I always thought that commercials were supposed to pay for the broadcast. Oh well.

     

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  4.  
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    Anonymous Coward, Feb 20th, 2009 @ 3:43pm

    Already gave up cable tv

    Just netflix for everything I want to watch.

     

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  5.  
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    sehlat (profile), Feb 20th, 2009 @ 3:52pm

    Haven't watched TV in over fifteen years.

    Comcast demanded that I pay for a "package" of five premium channels on top of regular cable service, just to get the one channel I wanted. The Sci/Fi channel lost one viewer and Comcast lost one customer.

    Anything I want to watch, I'll rent it from Reel here in Berkeley.

    When will the marketdroids learn that you can't FORCE people to want to give you money.

     

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  6.  
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    David T, Feb 20th, 2009 @ 4:34pm

    I canceled my cable, an expensive single-trick pony, when HDTV/cpu became an easy entertainment hub, just like my telephone line when cell phones became communication hubs.

    Funny thing is, all my media consumption is legal because it's easy right now. Cut me off from hulu, restrict my Netflix online streaming, and other (slightly) less easy distribution channels become attractive.

     

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  7.  
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    Aaron Betts, Feb 20th, 2009 @ 4:47pm

    Cable Monopolies

    This is exactly what's wrong with the way our media companies work. It's all about what's good for the customer until it "threatens" their revenue. what happened to competition? If someone has figured out a way to deliver what people want in a better way than you - THEN CHANGE! I agree that all this will do is cause people to pirate more!

     

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  8.  
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    Rex, Feb 20th, 2009 @ 4:51pm

    paying for "content"

    I've been subscribing to DishNetwork for years now. I only noticed last night, and only because someone else pointed it out to me, that Seattle (WA)'s channel 4 is not on Dish these days. There seems to be a contract dispute over price. Dish won't pay. Channel 4 wont cave. Apparently it's not been on Dish for weeks on end. I just discovered it yesterday.

    These yokels best get it together soon. I'm just short of cancelling Dish because I'm not getting my money's worth. It just is not worth it. Maybe I cancel on income tax day.

    The "content providers" are making money hand over fist with commercials. They had best get used to the idea that if they want me to watch, they'd better provide it for free.

     

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  9.  
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    Jon L (profile), Feb 20th, 2009 @ 5:29pm

    RE: Paying for "content'

    Just don't confuse "content providers" with "content creators."

    These organizations, the networks, have massive legacy overhead costs, so their net revenues continue to shrink (think about how many 6 figure salaries are between the content maker and the audience - on an average, cheap show at say, MTV, I've had over a dozen network side 6 figure earners on a show. Know how many the show itself had? One.)

    Whoever figures out a workable way to cover production costs upfront, and get rid of the network middleman costs, will be a huge winner. (unfortunately, unlike music production, professional film & television production is really, really damn expensive, even if your above the line isn't making that much. Those "above the line" salaries on series between $5m and $12m or so, usually only make up 10-15% of the actual show costs).

    And camera operators, gaffers, grips, set decorators, wardrobe, makeup, all those people - they don't get anything but their daily paycheck if something goes on to do well (critically or commercially). So those people still need to be paid and make a living...and they're not by any means "great" livings....

     

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  10.  
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    Anonymous Coward, Feb 20th, 2009 @ 5:31pm

    Over Valued Content

    And then there are those who will not watch the content no matter where it comes from.

     

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  11.  
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    hegemon13, Feb 20th, 2009 @ 7:28pm

    Another bullet-assisted pedicure for the industry

    Well, once again, p2p will be the only way for many people to get the content, and certainly the most convenient. The only thing they are likely to accomplish with this is to drive even more people to file-sharing, including some who have been happily using legal means like Hulu up to now.

     

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  12.  
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    Michael, Feb 20th, 2009 @ 10:56pm

    Re: paying for "content"

    It sure sounds like you missed that channel. However isn't channel 4 in Seattle an OTA station? Why should Dish have to pay extra to carry that to viewers in your area? I could understand an argument if they were also providing it to other areas, however even then it sounds like Dish would be adding VALUE to advertisers which should make it either free or even cut Dish in on some of the new profit opportunities.

     

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  13.  
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    james pierce, Feb 21st, 2009 @ 1:14am

    There is no free lunch

    I already cancelled my cable and use netflix.com for video and mytvpal.com for live tv and OTA for local HD programming using rabbit's ear. I am the cable's worse nightmare.

     

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  14.  
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    NIck (profile), Feb 21st, 2009 @ 10:37am

    This is partially a network neutrality issue. The right thing for the cable companies to do for long term survival is make the content providers take less money for content. Why? So they can cannibalize their current business model of tiered TV programming, and differentiating TV from internet. They need to be a dumb pipe. Cable TV can and should just be another internet application. The content providers' new business model and source of income will not and should not be based on a business deal with the distributor (ISPs). Distributors (mainly ISP) cannot and should not have control over what content is sent through them because it is a losing game of whack-a-mole.

    But of course, none of it will play out like this. There is too much pressure on short term revenues. They will ride it for all it is worth until it is over.

     

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  15.  
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    Rekrul, Feb 21st, 2009 @ 12:05pm

    I've never watched a single show on Hulu or any of the other streaming sites. If I want a copy of something, I download the scene release of it. Then I not only have a good quality copy without ads, I can keep it forever.

     

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  16.  
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    mikee, Feb 21st, 2009 @ 4:38pm

    Comcast

    Portland Oregon just started a Wimax wifi service called Clear. They supply they wireless modem. just plug and play.
    No cable hook up was necessary, and they only wanted one months rent to start. I searched their site until I found a deal with the installation fee waved. I've been unhappy with Comcast's business practices for a long time. I'm getting a fast rate of speed for $35 including my modem rental @ $5 a month, unlimited use. Comcast charged me $57.00 a month! Extrapolated over a year I am now saving $264. Comcast used to bill me a full month in advance, which is basically me extending them credit. They also helped Cheney-Bush spy on Americans.

     

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  17.  
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    bob, Feb 22nd, 2009 @ 12:38am

    Between Hulu, Netflix and alt.binaries.drwho I'm good to go. They can take away Hulu and Netflix but it will be dang near impossible to stop every alternate avenue of file procurement out there. Much like illegal drugs have proven time and again, if people want something badly enough they will go great lengths to get it.

     

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  18.  
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    mark, Feb 22nd, 2009 @ 7:46pm

    Re: Re: paying for "content"

    Because full power tv stations fall under something that the FCC calls "must carry." Stations can either ask for cash in exchange for getting carried by Dish, the cable company, etc. Or they can basically demand to be added to the local channel lineup for free. This is why you will see home shopping, all the religious and foreign language stations on your channel list at home. The smaller ones wont warrant paying them so they get added for free instead.

     

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  19.  
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    Anonymous Coward, Feb 22nd, 2009 @ 9:22pm

    Re: Re: Re: paying for "content"

    "This is why you will see home shopping, all the religious and foreign language stations on your channel list at home."

    Ohhh, so that's why.
    Because I found it hard to believe that anyone actually watched those channels.

     

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  20.  
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    R. Miles, Feb 23rd, 2009 @ 4:01am

    What the hell are customers?

    Because, while these deals may make sense for the TV networks and the cable guys, they seem to be forgetting the customers
    I agree, in part, but you're missing the bigger picture: It's the entertainment industry that's forgetting about the customer.

    Well, what I should say is they're placing the burden of costs to customers.

    Every day, more advertising is pushing expected content out of the way, and consumers are getting tired of it. These cable companies think it's online shows that's causing the large exodus?

    This is the stupidity of the cable company (et al programming distributors) which can not understand people are tired of paying for advertisements.

    Every day, more "Paid Programming" shows are filling up slots. Worse, to save costs, programmers are increasing the time a show is rebroadcast. Missed it at 8pm? Don't worry. It'll be back on at 10, then again the following two days.

    The entire point of cable was to get stations people couldn't get over the air. Now, however, even OTA broadcasters are trying to force distributors to pay for lost ad revenue.

    It stuns me these idiots think they can get away from it, and until people stop watching shows, they will. Worse, these programmers think people will pay more to keep shows going.

    Wrong. People expect a show to be free if it's filled with ads. For the past 5 years, this has been changing and customers are catching on. They're not going to pay for the ad and the show.

    This is the point Mike totally skips over when he argues content=ads. If a customer thinks its content, pays for it, and feels it's an ad, there's going to be backlash and that's exactly what's going on.

    Except the backlash is now being forced online, in which the entertainment industry is trying to carry the same control to online as it has with television broadcasting.

    Things are going to get much, much worse.

     

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  21.  
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    Michael B, Feb 23rd, 2009 @ 8:03am

    Comcast: The Greedy Giant

    It would seem that, if Comcast ventures into attempting to control online content so only its subscribers will have access, they will be facing some pretty huge court (if not regulatory) challenges. What happens, for example, to Dish Network or DirecTV subscribers who want to see Comcast-controlled content (maybe that should be Commie-Controlled content, since Comcast seems to be positioning itself as the "new Communism" which controls what viewers can and cannot watch)?

    I dumped Comcast in favor of DirecTV specifically because of their policies. They feel as if they can control everything, whether it's what you watch on cable TV (and how you watch it) or how you use the Internet (I shuddered when I saw that Comcast is part of the Clearwire WiMax consortium, because "here we go again").

    It's time the customer lashes out at this bully and tells them to pack it in.

     

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  22.  
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    Michael, Apr 9th, 2009 @ 12:19am

    Contemplating Dumping Satellite

    I'm testing this out this week. No TV. Guess what? I'm not really missing it. The cable channels have turned to cr@p. Speed Channel is now just NASCAR and reality TV shows. The music channels like MTV no longer play music videos. Even Headline News doesn't cover headlines anymore.

    I understand that the satellite companies are being strong armed into higher and higher fees from the show producers and networks. When I first got Dish, it didn't go up for years. Now my bill has been going up over 5% compounded annually for five years now. Enough is enough. When the subscribers leave, maybe these greedy show producers will get a little less greedy. I calculated HD Satellite TV was going to cost me over $10,000 over ten years! That's some serious coin.

    Also I'm getting so many projects done around the house without TV, and out socializing more, so I think the lack of TV is actually improving my life. The net will replace pay TV just like it is replacing newspapers. I'll probably cut the cord to pay TV in a few days. I think I'm done.

     

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