Forget Piracy Or Boxee… Could Netflix Take Down Cable?

from the submarine-innovation dept

A bunch of folks have been sending in the recent Wired Magazine article talking about how Netflix’s online streaming offering may be a disruptive innovation that takes down cable. The thinking is that, with Netflix service being built into lots of different settop devices, and the ability to watch various TV shows that are offered via DVD (and the Netflix streaming service, as well), why would people need cable any more? They can just wait until the “video” is out, and stream it via Netflix. The article may go a bit far in proclaiming Netflix as the winner of this battle right now, but it does suggest that (whether it’s Netflix or some other provider) the model that cable television has relied on for so many years is certainly facing a pretty big disruption, one way or another.

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Comments on “Forget Piracy Or Boxee… Could Netflix Take Down Cable?”

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Rose M. Welch (profile) says:

New Netflix Subscriber

I just signed up for Netflix and I love it. However, all of my friends complained that there weren’t many good movies to stream, and they don’t bother to do it. I’m a geek, so having so many documentaries to stream is AWESOME but I’m a pretty small demographic.

In addition, all of those people who are raving about the article must have missed the part where they talked about Netflix only being able to offer so much streaming by slipping throught a windowinging loophole, which may be closed when ‘unhappy studios or cable companies… renegotiate their contract with Starz to discourage it from working with Netflix’. Hmm.

Sounds like we don’t know how stiff a competitor Netflix is until we see whether or not the cable industry is going to close that loophole. In a few years, let’s talk again about this. For now, not enough info.

MarksAngel (profile) says:

I would think what cable should be more concerned about is Hulu and/or boxee, these sites offer instant access to your favorite shows, no downloading or waiting for the dvd to arrive. I personally am setting up a media center in my living room with a p.c at the center, I’ll be getting rid of cable, who needs it thanks to hulu, fancast & boxee.

Pitabred (profile) says:

Re: Re:

I actually just did that. Dumped cable, and I use my PS3 hooked up to my big screen, and Hulu is available via a $40 server I purchased called PlayOn for my desktop computer/server. Works pretty well, considering the whole DRM cat and mouse crap that goes on. They change something to disable 3rd party redirection, then PlayOn updates, etc.

zenasprime (profile) says:

Cable is Obsolete!

Hulu + Netflix(DVDs + Online) + iTune Music Store + DVD + youTube + independent media > Cable

I’ve already abandoned Cable TV last spring for DSL + the above mentioned content providers/distribution. Cable TV, particularly Comcast, is becoming way to “lowest common denominator”. I just couldn’t see spending upwards of $100 per month (internet included) on a service that I almost never used because 99% of the programming was just not of any interest to me and to put it blutly, mostly advertising. I’d rather save that money and put it towards products that I actually had an interest in. Since then I’ve actually spent more money on DVDs and iTunes MS downloads then I previously did.

Get rid of the middle men, IMO.

Personally, I’m hoping that the entire financing model for video production move away from the current advertising model based on lowest common denomenator advertising dollars to people actually producing quality products and investers seeing that there is a market for such and investing in such productions with an understanding that the market is going to be buying their product directly through either DVD sales, online distribution, or through the model being promoted here at techdirt.

Ragaboo (user link) says:

Re: Cable is Obsolete!

Yep yep, I stopped getting cable about two years ago when all of the channels started broadcasting the shows I watched on their sites. Now there’s Hulu/Netflix, and it’s still very easy to torrent a show that isn’t on one of those sites, or I’ll rent/buy/borrow from a friend a DVD set of a TV show. Now that I’ve had a taste of watching what I want whenever I want, why would I go back to paying for them to tell me when to watch something?

Nope, cable is gone and I have literally had NO desire to reobtain it.

zenasprime (profile) says:

Re: Re:

For the longest time that was the only reason I was keeping cable around, but then Comcast started it’s war against it’s own customers and my connection was dropping several times an hour all day long. When customer service continued to insist that it was my modem that was at fault, even though it had been replaced twice, or that my lines were at fault, despite their own tech saying everything was good, and that after calling customer service the problem would magically disappear for a few days, I decided to bite the bullet and put my money where my mouth was. I fired Comcast and went with Verison DSL. I know it’s not as fast but my service has been impecable and while I don’t really like Verizon any more then Comcast, I’m not forced to pay for additional services that I don’t use (ie cable TV). I do, however, have to fend off the Verizon FiOS salesman at my doorstep trying to sell me a “bundle of crap I don’t need” every few months. Why don’t these ISP understand that all I want is internet ACCESS, not phone service, not TV programming or On Demand movie service. I can do all those things for myself with just the plain old interwebs damnit!

zenasprime (profile) says:

Re: Re:

I have an old fashion roof antenna circa 1970s that’s linked to my media computer in my living room. I hardly watch any of the programming on any of the available stations but it comes in handy when dad comes over and wants to watch whatever golf tournement is happening that day. 😉

HD broadcasting was one of the last puzzle piece, asside from the abysmal internet service from Comcast, that led to my cancelation call.

Christopher Froehlich (profile) says:

Staged Release Cycle, Anyone?

Netflix is the quintessential example of customer focused innovation. The Xbox Netflix experience is a dream. Netflix has spent thousands and tens of thousands of man hours on perfecting the art and science of streaming HD content over bandwidth of fluctuating strength and quality. Their software is intuitive, sophisticated and comprehensive. Within the confines of a 4 button remote, one can command an entertainment giant.

That said, Netflix’s streaming service provides me the same gag reflex as my local Blockbuster. The selection is limited, arbitrary and fleeting. This is not the fault of anyone in the Netflix employ. Netflix simply suffers the hand that feeds the staged release cycle, be it by the MPAA and its affiliates or the major network studios.

Netflix has, in my opinion, the best user interface and user experience of any IP based delivery system (Boxee, Hulu, etc.) that I’ve used to date. Whether they will be allowed to deliver content is still up in the air.

Anonymous Coward says:

Re: Staged Release Cycle, Anyone?

Netflix on XBox?

How 1990s. Watch out- a new DVR company called “Pleebo” is going to take over the world. Not only is PleeboDVR working with NetFlix, Rapshody, YouTube, Apple, Amazon, and OnDemand, but they also just struck a deal with Pizza Hut to bring you something called Professor MovieTime’s Movie Satisfaction

Here’s how it works:
If you want to watch a movie but the Jews in Hollywood can’t get it to you via the PPV window’ed release, PleeboDVR will automagically try to get it on NetFlix or Amazon OnDemand.

If it can’t acquire the movie, the customer is presented with an onscreen dialog window will come up saying it’s “buffering” and will be available momentarily. They’ll let you watch the trailer on YouTube and also stream the movie soundtrack from Rhapsody.

What the customer doesn’t see is a little tricky, so try to stay with me:
In the event the movie isn’t available, PleeboDVR will dispatch an all-points bulletin to Pizza Hut and Local Cabbies to stop at RedBoxes in your area to see if your video can be acquired and *delivered to your house* in the next 30 minutes or it’s free.

But as Techdirt has been reporting, the Jews in Hollywood usually don’t like to have movies available for $1 at Redbox. Naturally, this has created some logistical issues, which PleeboDVR is working out.

So what’s PleeboDVR has been working on is it’s new Patent Pending “Professor Technology(tm)”. Here’s how it works-

While you’re jamming to the soundtrack, and watching the trailers, your PleeboDVR may interrupt you and offer the movie for $49.95. Now, I know what you’re thinking- $49.95 sounds like a lot, but they guarantee delivery.

If you accept the fee, what happens behind the scenes is ingenious: Using it’s vast network of Pizza Delivery Chains, PleeboDVR will pick up and dispatch a highly trained idiot savants to the closest movie theater who will watch the movie for you.

The Pizza Hut Delivery Guy will then pick up the idiot savant and deliver them out to you where they will describe the entire movie to you in excruciating detail.

Think of it like sneaking into the theater, but not really. But, all the Hollywood Jews are happy because ticket sales are counted, and that’s what matters.

Thanks, PleeboDVR!

Blatant Coward (profile) says:

Thought I was odd one out...

Haven’t had a TV in about two years due to the same issues listed here. Too many crapomercials, too many ads, niche channels, too much money.
Some folks at the office freak out when I say I don’t have a TV, then they ask me how I know about all the stuff we talk about with current shows and such.
Personally online books (not Kindle book rental thank you very much.), google news, webcomics, MMORPG’s, Hulu, and the occasional DVD are all I need.
Hulu has shown me that I can stand commercials much better when they have a count down timer.

deadzone (profile) says:

I wish

I wish that it would happen but I don’t know if it’s really got a chance of happening or not. I think that Netflix can give cable a run for it’s money and become possibly a real viable alternative, but I just don’t know.

Big cable will do a lot of things to protect their business. I think we are about to see a historic amount of predatory pricing. 🙂

Pjerky (profile) says:

I have been a Netflix subscriber for years

I have been a subscriber of Netflix for years and I love it. That combined with RedBox, Hulu, Torrents, and other online video sources I have been seriously considering getting rid of cable TV. I only have two problems, my TV doesn’t work so well with my computer even though it is a plasma and my two roommates are no where near as computer savvy as I am so that would piss them off. But when I get a place without roommates I will be kicking cable TV to the curb.

This will of course make the net neutrality discourse right now even more important.

Anonymous Coward says:

Dumb question about streaming, Courts have already said a DVR is a DVR hosted at home or at a data center. So why cant Netflix use a keyserver to rent out its DVDs from its warehouse directly to the customer via digital stream. The disk will be in a datacenter and could be rented at any given time up to the amount of copys Netflix owns? As long as Netflix owns every copy it rents is there any reason this wont work?

Ragaboo (user link) says:

Re: Re:

I’m not entirely savvy about these kinds of dealings, but the reason this wouldn’t work is because the DVD companies don’t want to let Netflix do this without charging them an arm and a leg. It would mean that Netflix wouldn’t need as many plastic discs, which means the DVD companies would make less, so they’d demand that Netflix pay some licensing fee, even though Netflix wouldn’t legally (I think) have to. BUT, the DVD companies could then block Netflix from getting their movies in the first place, and Netflix doesn’t want to risk that. If you remember, some movie companies tried to do this with Redbox.

Anonymous Coward says:

cable isnt dead just yet folks.
there are still people around that have to be drug kicking and screaming into the digital age by paying for them to have a digital receiver… the same people i might add who would not have the foggiest idea of how to set up a media server or use netflix to stream.

cable will be around for a looooooooong time to come.

I have my media server in the living room (behind my tv actually) running xbmc and acting as a whole house media server, an old xbox1 that is also running xbmc as a client machine and a couple laptops that run xbmc when in other rooms rather than having tv in them. quite honestly, i still get a lot more for my bucks with cable than i can with any combination of any kind of streaming right now.

until streaming media sites can give me the ability to watch what i want when i want to for a competitive price (say around $30 a month TOPS) then they will never be able to fully replace what i can get now from either the cable or satellite companies.

(and yes, i do realize i cant watch whatever i want whenever i want, but on demand services are getting closer to that and i only pay the aforementioned $30 per month now so they would need to give me more for my bucks before i would consider such a change)

Michael Whitetail says:

I see a lot of hate piled up here on the cable co’s for things that are not, strictly speaking, their fault.

Content and advertising is chosen by the channel operator, not the cable company. The cable co has the option of carrying the feed, or not to carry; never do they have direct access to change the content/adverts on that feed.

Cost is always a factor, but the main cost to cableco’s is the yearly increases in carriage fees; i.e. the fees charged by the channel operators to the cable company. These go up every year, and the cable co is in the unenviable position of either dropping the feed (and potentially loosing that paying audience) or paying the new fees and passing the costs on (which and potentially loosing large groups of paying customers)

Damned if you do, damned if you don’t.

Here in Orlando Florida, Brighthouse seems to be pinning hopes on Business class services like 24 line Digital Phone, PBX emulation, and Dedicated Access (Fiber to the business.)

At least, that?s what it feels like. I rarely see residential service commercials from them, just company branding. But I do see an almost overwhelming amount of Brighthouse Business class adverts.

And lastly, I do not see anyone saying that cable providers are in a sense becoming like Netflix themselves with on-demand programming, Virtual DVRs, and expanded interactive programming and applications. I do not see anyone saying anything about IPTV from carriers like uVerse and FIOS.

IMO, cable isn?t going anywhere, it?s changing how and what it delivers, but it’ll still be here 5 or even 15 years down the road.

Michael Whitetail says:

Re: Re: Re:

The increase was about 39$ million /yr *over* the already built in increase in the *signed* contract. Two reasons why it was such a problem for TWC and affiliates:

1) Loss of subscribers when the costs were passed on.
2) Caving into Viacom opened the door for *all* other channel operators to demand gigantic increases in carriage fees.

The impact equaled something like this:

TWC has about 13.3 million subscribers.

39$ million cost increase divided by 13.3 million customers is roughly 2.90$ increase per subscriber. But that fee wasn’t passed on to every subscriber; you have to take into account that not everyone has the TV package that includes Viacom channels. Some just have internet or phone, or just basic cable; so the cost to the *affected* subscribers was like 4$ or more. That *is* though business for both the company and the consumer.

“That adds up to a rate hike of about 12% for the package of Viacom cable channels. Time Warner estimated that amount would increase its payments by $39 million a year.”

Jari Winberg (profile) says:

Torrents still rule

TV and cable are so outdated when it comes to broadcasting. I don’t want to schedule my life based on TV schedules. I watch “TV” when it suits me.

There’s no Netflix in our neck of the woods. Hulu doesn’t work here either, at least not easily. So guess what is the best way to get “TV” content.

Anyway, even if Netflix and Hulu would be available here torrents would still be the best solution. I just got into Friday Night Lights which started 2006. There’s no way that would be available on Hulu. And Netflix doesn’t seem to have the recent releases. So torrents seems to be the only “service” that provides all that is needed.

Maybe someday there will be a service that beats piracy. I hope I’m still alive when that happens. I’m not holding my breath, though.

Michael Whitetail (profile) says:

Re: Re:

There is no limitation of competition for cable companies. That is just a bullshit myth spread byt he telcos so that they can get their slice of the pie.

Cables competition is:

* 1-2 other cable providers (Orlando has Brighthouse or Comcast for example)
* Satelite services like Dish
* Various IPTV services offered by several telco’s and independants
* OTA broadcasts

Whether you specifically have access to these is irrelivant. The competition for the overall market still exists.

People who complain about the cable companies having shit programming/ too many ads are ignorant of the reality of the situation. They have no control over what the channels they carry show.

Claiming that the cable company is responsible for the ads/programming of a carried channel is like blaming Ford Motors for drunk driving deaths.

AJ Russell (profile) says:

Same in the UK I think...

Over here in the UK, we’ve had the same ‘on demand’ service on TV for a while now. The difference is that there is no Hulu or Netflix, the channels themselves offer the service individually. BBC iPlayer, Channel 4 4oD and a few others are available online, Sky and Virgin satellite/cable packages have these and the providers’ own OD service built-in. I can’t speak on behalf of the whole country, and I certainly haven’t seen any studies, but I know that out of my circle of friends, very few of us still watch “live” TV, ie TV as it is broadcast. The only thing I can think of people actually watching on TV is sport.

The ‘grey area’ for this at the moment is TV licensing. We still pay the government for the right to own a TV, which is ridiculous, but it allows the BBC to run commercial-free, so nobody complains too much or too loudly. This tends to freak out Americans the first time they hear it. We hear about global nasties like Iran and China broadcasting state-sponsored TV, and this is almost always portrayed as a Bad Thing, but we in the UK also broadcast state-sponsored, publicly funded TV…

However, we’re only paying for this to watch TV as it is broadcast, as BBC’s iPlayer is only too keen to point out. So if I (hypothetically) never watch TV, I don’t even own one, and I only watch the programmes online, then I don’t need to pay for a TV license, right?

Anonymous Coward says:

The model IS changing...

I work in business sales for a major cable provider. It’s been interesting to see the focus shifting in our priorities over just the last 12 months. We have always divided our quota up between the products we sell; over the past year there has been an incredible de-emphasis on selling cable-television. Locally, we don’t even talk about it to clients anymore but there’s still enough of a demand that we exceed our quota every month. Instead, regional and divisional management have directed the sales efforts to focus more on selling telephone, high-speed coax and fiber Internet access, and point-to-point data services.

And Michael Whitetail is (sort of) right about the programming; the channel providers sell their channels to cable companies in blocks and they make it extremely difficult to renegotiate the distribution rates. In fact, the honor of the highest costing block of channels in your cable bill actually belongs to the Disney/ESPN block of channels; it wouldn’t be an exaggeration to equate a pro football player’s renegotiated contract with a higher cable television bill. That money’s got to come from somewhere and the bill eventually gets passed on to the consumer.

I’ve had conversations with some of the higher-ups in my company and they’re not oblivious to the technological changes affecting our industry. They definitely understand that delivering television is basically just moving data, and they seem to internally suspect that it won’t be long before the channel providers are going to be contending with more agile competitors in the very near future that will be able to deliver programming and content that consumers want over the Internet, on demand, at very cheap rates, which will naturally drive down the price of television at the provider level.

Netflix is a fantastic example of this principle at work; I’ve met dozens of cable consumers in just the past few months who have reduced or elliminated their cable television service in favor of a home media server and a Netflix subscription. These same consumers then exchange cable-television dollars for increased Internet bandwidth from their cable modems. For cable companies, delivering bandwidth is FAR cheaper than delivering cable-telvision, so the exchange of services is a profitable one for the cable company, even if it hurts the channel providers’ revenues.

From the evidence I’ve seen, it seems that cable companies are currently working to reduce debt-load and trying to take whatever reveneues they can in order to expand infrastructure so that, as consumers abandon their subscription-based television programming and turn to more agile and less-expensive alternatives, the cable companies will still be able to deliver a relevant and competitive product in the form of cheap bandwidth, which everyone will need anyway in order to access their content.

A Different Anonymous Coward says:

Pull vs. Push

This summer I made the switch out of DTV and Cable (2 locations), and all I have now is an AppleTV’s that I occasionally update with the latest boxee so I can watch Hulu. I thought I’d miss cable programming but I find life without it is awesome. When I had cable/DirectTV I only watched stuff I recorded anyway, so my viewing habits haven’t changes much. I haven’t gotten there yet but I’m convinced I’ll eventually spend as much or more on programming I want as I did on pushed channels I didn’t watch. And cable internet is fast enough to make it work nicely.

The only drawback I’ve found is with real time or near real-time programing. I need a place online to watch breaking news video, and I wish I could watch NFL games (within some reasonable amount of time after the game finishes) online somewhere. I’m willing to subscribe/pay for news & sports. Any suggestions? Thanks in advance.

Josh - To common a name. This is me. (profile) says:

Re: Pull vs. Push

I’ve got the same complaint about NFL games as well. The only game I get to watch each week, unless I’m at a resturant or a friends house that has it on, is the Sunday night game on NBC. NBC is the only network that airs a football game online. And it works very well. Now I can understand maybe ESPN or the NFL network not putting their games online for free, but ABC, CBS, and FOX already send these over the airways for free, so in my opinion they should be able to simulcast them over the web as well.

Now before you slam me and say I should just put up an antenna, you should know that I can’t. I live in a town that is in a valley that is at 2000 feet above sea level, but all of the mountains around are 8000 feet higher or more (we have the tallest mountain in the continental US in the mountain range near us). So OTA TV is just not feasible. You might get 2 or 3 channels, like PBS and the local city council meetings, but none of the networks. And I just can’t justify paying for a Cable or Sat. TV subscription that I am just not going to use.

When we did have Cable TV, we only watched maybe 7 channels, CBS, FOX, Disney, Discovery, A&E, Food Network, and maybe one or two others. Now if they offered some type of Ala Carte programing fee, I might be more interested, but for now, I’ll just stick with my Hulu and Netflix watching for TV and movies and NBC on Sunday nights for my weekly football fix.

Dave (profile) says:

That's great. What if you're a sports fan?

Here’s the one arena where cable and satellite TV still win big — live sports. There are a TON of sports fans out there who don’t want and/or can’t afford to go to a sports bar for every single game, and they want their ESPN.

Yes, the combination of Netflix, Hulu, YouTube, video podcasts and OTA DTV would be enough for most people, but not for me. I’m a huge NFL fan. I watch a lot of college basketball, especially here in the ACC. I follow the English Premier League and UEFA Champions League, and I think I might like to watch those Real Madrid v. Barcelona battles this year, too, or the occasional Serie A or CONCACAF battle. Where’s the Netflix-like alternative for me and all those others like me?

Yes, the baseball fans can get live games on their Roku player. Can college football fans get that? What about NBA and NHL fans? ESPN 360 doesn’t work with my ISP, and the ISP it *does* work with here can’t give me reliable service.

Yes, tons of people who aren’t sports fans are cutting cable and dumping the dish. Good for them. This ignores the fact that there’s still a huge market here that remains untapped. So what’s the solution for us sports fans?

brent (profile) says:

Re: That's great. What if you're a sports fan?

Big 10 network offers ALL conference sports games streaming to international customers (non US or Canada), and i’m pretty sure all it takes to become an international customer is a proxy server in another part of the world. Hopefully the other conferences will follow suit for that. I know there is a place where you can stream NFL games online as well but I can’t remember it off the top of my head.

Jamie Nelson says:

I don't like anything on Hulu

So Hulu is fine, but I don’t watch any of the major network shows to begin with. Hulu is out. I love the concept of it, but the actual programming sucks (to me). Netflix on the other hand is great, but I like documentaries. Laptop when I’m out and about and Tivo or Roku when I’m at home. As far as the cable companies go, pick your poison. I just moved from a Dish VIP722 DVR to a Tivo HD XL. I had no problems with Dish’s customer service or programs offered or price. My wife cannot use the dvr. The interface was terrible for her. So we switched to Cox cable to use a Tivo and she loves it. And I just got a Roku box for Netflix and she loves that too. Then she asked, when are they going to sell movies on a box like this (Roku) so that I can buy the movie on release night? THAT is the key. When content providers realize that people like me would pay twenty dollars to rent (not even own) a movie for the night instead of going to the theaters, it’s going to change everything. When I can buy a la cart programming on the same box, stream any film/movie/tv show, watch live sports; then I will no longer need anything but an a fast internet connection and a credit card.

CitizenWhy (profile) says:


Hasn’t Hulu already taken a bite out of cable, especially for those of us with big screen monitors? Plus, of course, the convenience of watching away from home. The young saleswoman at the local Apple store told me she got rid of her cable because of Hulu.

A BBC Radio 2 host, with a long career, today mused that all media will become internet media within 10 years. With the internet I do not have to listen to those miserable local radio stations, nor confine myself to US stations.

AnonCow says:

Cable will be what “takes down” cable.

Cable is the next RIAA. In a couple of years, Comcast and its ilk will be suing anyone it can find claiming that the defendants are unfairly destroying cable industry’s long held municipal charter monopolies.

Look at the similarities between Comcast and the RIAA:
-Controlled by old men
-Unwilling to adapt or change
-Blames everyone but itself for its business failures
-No sense of the future
-Hatred of its own customers
-Would rather litigate than innovate
-Uses government lobbying to protect interests
-Views the world as “us v. them”

another mike (profile) says:

add one to the no cable tv column

I dropped my TV service when Cox botched a roll-out last spring. At first my “TV” viewing went down. To exactly 3/4 what it was before; without commercials my shows are only 45 minutes long. But Hulu and Netflix make it so easy to discover and watch new material, now I watch more TV then I did when I actually had a TV.

Just wish they’d get their targeted advertising a bit more accurate. Or make those Summer’s Eve commercials more explicit.

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