Will Content Company Greed Destroy The Pay TV Business?

from the it's-getting-there... dept

Tue, May 5th 2009 2:34pm — Mike Masnick

While we've noted that the various studios, such as NBC Universal have, in the past, laughed off the idea that people would ever cancel their cable TV service in favor of just getting their content online, they're clearly waking up to the problem. That's why they freaked out about services like Boxee, despite the fact that Boxee is just a TV-optimized browser for legal content. Still, Saul Hansell, over at the NY Times, gets to the heart of the matter, by noting that the content providers have kept jacking up their prices to cable providers, and those costs keep getting passed on to users. Right now, it hasn't been a clear problem, as subscribers have increased, but the costs keep getting higher, and it's eventually going to drive customers to seek alternatives. We've seen this in the past, of course: Hollywood execs try to squeeze more and more out of people now with no thought for how that will impact revenue in the future. That's not a very good way to run a business, and the TV content providers are going to start discovering that sooner rather than later, if they don't start paying attention.

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Filed Under: cable companies, content, internet, tv

20 Comments

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Luís Carvalho, 5 May 2009 @ 2:57pm

"if they don't start paying attention."

And someday that will be: if they don't start paying FOR attention.

Right now I have TV by DSL, it's called IPTv. Over 60 channels, video on demmand, recording services, etc...

But, I only have that because it's the cheapest internet solution available here. After all, it's unlimited traffic.

If I could have a better solution without TV, I would cancel it in a heartbeat. I don't need paid tv. After all, the channels I pay for, are still filled with ads.

I could very well pass without their service. TV shows are my main download.
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TheStupidOne, 5 May 2009 @ 3:03pm

I'm done Paying for TV
I'm about to finally move out on my own (no more roommates) and I was looking at what I'll pay for internet, tv, and phone. Obviously I decided against having a land line because I use my cell phone for everything. I was debating about getting basic cable and internet or just higher speed internet and I've decided that I'll just get the fastest internet connection available. Then I'll use Netflix, Hulu, Joost, Youtube, content company sites, and when all else fails a torrent file. This will save me about 60 - 70 bucks a month.
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:Lobo Santo, 5 May 2009 @ 3:12pm

Re: I'm done Paying for TV
Way ahead of you. Been doing exactly that (savings and all) for the past couple years.
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Geoffrey Kidd (profile), 5 May 2009 @ 3:14pm

Pricing the customers out of the market isn't new.
Several years ago, Comcast tried to blackmail me into buying an expensive "package" of five channels, four of which I couldn't have cared less about and one channel I wanted: the SciFi channel. I was told in no uncertain terms that I could not get just the channel I wanted but that I had to buy the package. I ended up cancelling Comcast entirely.

This was so long ago that recently, when I discovered that the cable running around to the back of my house was sagging in several places, I simply clipped off a stub at the entrance, and took down all the cable back to the front of the house.

I still don't miss TV. Books, DVDs and YouTube have replaced it.

I'm curious as to whether anybody in the entertainment industries is conscious of two things:

1. Good marketing is the art of making people want to give you money.

2. Once people get out of the habit of buying what you're selling, getting them back may be almost impossible.
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Peter, 5 May 2009 @ 3:39pm

Over the air HD might help kill it.
I had free cable in my last apartment but when I didn't anymore I just started downloading and went back to over the air signals.

You know what OTA HD is awesome. Better quality than cable. Cable is dead to me.

I will never pay for cable.
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BigKev, 5 May 2009 @ 5:12pm

Cable TV
I know dropping the cable is a wonderful idea but I really do enjoy the programming that is offered. Granted, I have FIOS TV and the service is amazing. I'm more than willing to pay $100 for my bundle of blazing internet and amazingly awesome T.V.

Could I get the same shows online and save some money, sure! But in the end if you provide a compelling service (like Fios) coupled with great programming choices (Fios only has main packages) I'll pay. Yes, I know HBO and premium channels are extra. Just don't nickle and dime like the cable company.
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Anonymous Coward, 5 May 2009 @ 5:13pm

Pay TV is here to stay ...
but the numbe of subscribers may fall depending upon the cost.

It is simple supply and demand, but the media morons just dont understand - yet.
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Ima Fish, 5 May 2009 @ 6:01pm

I'd dump cable in a second, but it's the only broadband provider in my area so I pay for basic cable too. I'm just waiting for someone else to come along, like DSL. (Yeah, I live in the boondocks!)
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whiterook, 5 May 2009 @ 6:02pm

i ditched comcast last week and i suspect momentum is building. the days of 39.99 for six months then$120 per mo therafter are over. i would have kept it if stayed at a reasonanble rate but of course the world is not enough for these folks. the shenanigans are over ill stick to books and the net and not waste my life away watching commercials for things and a lifestyle ill never have
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DJ, 5 May 2009 @ 6:16pm

Re:
Ok so maybe I'm a little behind the times here, but last time I checked, cable internet was SEVERAL TIMES FASTER than DSL. Has DSL technology advanced past that in the past couple months?
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Anonymous Coward, 5 May 2009 @ 7:22pm

Re: Re:
Faster just gets you to the cap more quickly, the cap is the same ...
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Jerry Leichter, 5 May 2009 @ 8:27pm

On the matter of raising prices...
I recall a comment on this issue - from, I think, a Jaguar dealer! - that appeared in a newspaper article a long time ago. His basic point: In theoretical economics, price and demand are linearly related. In reality, for some kinds of goods - luxury (but not "if you ask the price, you can't afford it") goods in particular, but generally non-necessities - things are more complicated. You can keep raising prices until some critical point. Then the market suddenly dries up.

You don't know where that point is until you've passed it. And the problem with passing that point is that it's hard to get back. Dropping prices doesn't help: What defined the critical point was that it finally caused people to move on to other alternatives. (For true luxury goods, dropping prices is impossible for another reason: It "cheapens the brand", and may cause it to no longer be seen as a luxury item. Cable and other media sources aren't really subject to this hazard - it's hard to see how some of them can cheapen their brands any further!)

The media giants are convinced they are really the only game in town, and if they raise prices - well, people *have* to come back eventually, they have no alternatives. That was true 15 years ago, but they haven't figured out that it really isn't true any more.
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Anonymous Coward, 5 May 2009 @ 8:49pm

I'm the AC
I'm the AC who is normally bashing Masnick constantly because of his ridiculous anti-IP rants (not to be confused with well founded rants... like the one on slate about movie distribution and all the exclusivity issues), and how whenever you call him out on it, he denies what he said at the top of the page.... BUT

I totally agree here. I canceled my cable service almost a year ago. So much stuff is on hulu, cbs, or a few other sites, it's pretty ridiculous. I wrote a custom scraper to link to new stuff whenever it's available across about a dozen different fully legit sites and I'm just watching in the browser. And the upscaled analog cable (even +dvr) that you pay for is way worse than 640x480 streamed. It just so happens that the streamed 480x is usually downsampled from higher rates rather than the analog upsampled from shitty rates (like 240x or 120x) that they use to transmit a gajillion analog channels through their satellites.

Then the question becomes "so why don't you go buy digital" and apparently video service providers think that digital is worth another $20/mo. Except getting rid of their video service runs up the broadband another $20 (because it's no longer bundled) but drops the total bill by at least $50.

Either way, they're not providing any more value than the stuff online.
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TheStupidOne, 5 May 2009 @ 9:54pm

Re: Re: I'm done Paying for TV
Didn't bother me when my roommates were paying for it ... haha
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NSMike, 6 May 2009 @ 6:14am

Still Remarkably Backward
NBC Universal is still one of the most (if not THE most) backward content provider out there.

In Pittsburgh, during the NHL playoffs, they have started a tradition of putting up several huge televisions (portable ones usually suited to a stadium or arena) around the gates of the Mellon Arena in Pittsburgh for away games that fans can't make it to, and home games that are sold out (all of them, basically), so folks can come and watch the broadcast with a bunch of other fans. Every network that runs NHL playoff games, EXCEPT NBC, allows this. When NBC has the game, they shut the whole thing down.

It's hard to see how this harms their business. There's still audio, the commercials still play, it's all the same as it would be if you were watching at home. Except you're in a crowd of hundreds of Penguins fans. NBC thinks nothing of creating good will, and the most popular Pittsburgh morning DJs and sportswriters trash NBC for it.

They're simply mind-numbingly stupid about all of it.
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alternatives(), 6 May 2009 @ 5:54pm

Screw 'em.
The 'content providers' are the ones who lobby for DMCA and other laws.

Why enable their bad behavior by consuming their content in any form?
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lens (profile), 6 May 2009 @ 9:18pm

I agree, but the conclusion is all wrong
I have no cable, and get most of what I watch over the internet or Netflix. Mr. Masnick seems to get all the points right, but blows the conclusion. The content creators are not screwing themselves by jacking costs to cable companies. If I was the Discovery Channel, that's exactly what I would do. I wouldn't care what happens to Comcast Cable (I might even WANT them gone) because I'll then be able to cut out the middleman and sell directly to consumers, or at least get a bigger share of the ad dollars.
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Rekrul, 7 May 2009 @ 5:34am

I've been toying with the idea of ditching cable and just downloading everything. The problem is that to get good/fast internet service, you usually have to take TV service as well.

I know someone else who would like to dump cable also. My friend just got rid of cable, but he doesn't use a computer and switched to an antenna.
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Anonymous, 21 Oct 2009 @ 1:37pm

Ditch the Model of Paying for TV
On the avg. for every 1hr of Shows you watch, you're going to be watching about 17mins of commericals. So...

You're paying for content by watching commericials to begin with. Then you're paying AGAIN for content by paying for cable, satellite,etc service.

I ditched cable and don't miss it at all. Netflix and online content more than made up for the difference. Netflix even has streaming content of its own. By cutting cable, and increasing my bandwidth on DSL, and adding Netflix I sill made out ahead on the monthly. That's money that's staying in my pocket.

Ditch any model of p
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Anonymous, 21 Oct 2009 @ 1:39pm

Re: Ditch the Model of Paying for TV
And saving time not watching all those commercials.
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