The Next Big Battle: Cable TV vs. The Internet
from the grab-some-popcorn dept
Leading up to the New Year, I was inundated with submissions about the supposed "battle" between Time Warner Cable and Fox over fees. The quick background is that Fox wanted to get a cut ($1/subscriber) from Time Warner Cable and TWC claimed it wanted to fight it. Neither side was being particularly honest about what was going on, with TWC launching a hilarious website asking consumers to "vote" on whether it should "roll over" or "get tough" and if you voted for it to roll over, it told you that you were wrong, and asked you if you wanted to change your vote. I didn't write about the whole thing because it was an exact replica of what happened a year ago in a similar dispute -- and, just like in that dispute, the parties settled up just in time to keep Fox from being deleted from TWC's lineup. Of course, at the same moment, TWC also raised its rates. Of course, this was exactly what everyone expected all along, and TWC knew exactly what it was doing. Now it can blame the rate increase on News Corp., even though it had planned to do that all along. Other similar disputes will likely be settled in short order as well.Of course, I find it amusing that the at the same time that content providers are arguing for service providers to pay them to carry their content on TV, those same service providers are suggesting that content providers should pay in the other direction on the internet. All the "net neutrality" battles are about the very same TV providers using their broadband divisions to claim that content providers should pay the broadband providers more to "carry" their services to users. It's just two sides of the same coin.
Still, the more interesting battle may be shaping up elsewhere. Some consumer groups are asking the Justice Department to investigate cable companies for their "TV Everywhere" effort, which they claim is almost certainly an antitrust violation of collusion to keep certain content from going on the internet. Not surprisingly, the cable industry and their lobbyists have hit back hard, claiming that the whole thing is ridiculous.
To be honest, I think it's a bit early to worry about collusion here. From everything we've seen so far, the cable industry is doing a pretty good job screwing up TV Everywhere on their own, so it's not like it's a huge problem yet. They're trying to turn the internet into cable TV with extra ads. Like the recording industry's many attempts to create their own online efforts, it looks like they're hamstrung by their own legacy view of the world. That isn't to say that there may not be an issue eventually, but it does seem a bit early to be ringing the alarm bells.
There's no doubt at all that the cable companies view "TV Everywhere" as an attempt to keep people from ditching their cable TV accounts and going internet-only. But if those efforts are stymied by terrible execution and implementation it won't do much good. People are already learning how they can watch TV over the internet (without a cable or satellite subscription) and if the cable companies really succeed in blocking TV content from going online in other ways, people will simply route around those blocks and get the content in an unauthorized manner. We've seen this game before, and it doesn't end well for the companies pretending to be gatekeepers. But that doesn't mean the Justice Department should be wasting money investigating them just yet.
Either way, both of these stories suggest a prime battleground for the next year: as the old TV businesses come to grips with the internet (finally). Just like other parts of the entertainment industry, it will be messy and annoying -- and incumbent players are going to make a lot of really stupid mistakes. But, in the end, we should start to get some pretty cool stuff out of it -- though, most likely not directly from the incumbent players, but from the upstarts and innovators on the margins.
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: cable, carriage fees, internet, satellite, tv, tv everywhere
Reader Comments
Subscribe: RSS
View by: Time | Thread
However, most people want a Hulu/DVR type solution. They want to conveniently watch their shows when they want, for free, without impediment.
I don't know which side will win. But I'm guessing that the content, cable, and satellite industries are going to use every dirty trick in the book to keep the money flowing.
[ link to this | view in chronology ]
My response to TWC
[ link to this | view in chronology ]
In all honesty the cable companies are least trying various business models to make money. I like the Hulu/DVR solution... parents-in-law have never had cable and never will as long it is still free over the air via rabbit ears. No one solution will work for everyone.
Some cable companies show online via clunky user interface embedded a browser with minimal commercials. Hopefully in 5 year the interface will improve and I can watch it just on my TV (with out a computer). Maybe some free stuff and pay for just the channels I watch.... what a novel idea to kill the middle man (local cable companies) to save money for both parties.
[ link to this | view in chronology ]
Re:
AAAAHHHH! Alert the Hoover Dam and that place that killed Jean Grey! AAAHHHHH!
[ link to this | view in chronology ]
re: Cut It...
[ link to this | view in chronology ]
Re: re: Cut It...
This supports your local economy, and you're helping to keeping people employed. I can't think of a better way to spend entertainment dollars.
[ link to this | view in chronology ]
Re: Re: re: Cut It...
Agreed. This might be my unholy love for Wrigleyville, but there is something oddly different and special for a sports fan in cheering on your team with several like minded fans. Some of the most interesting sports conversations I've ever had have started just that way....
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
Cause and effect.
Why do you think Fox was pushing for more money per subscriber? Quite simply, the advertising model is broken, no longer functional. Yet, most of the models being pushed for internet distribution are based on advertising. It seems like a bit of a paradox, moving from one system which is failing because of a lack of advertising revenue, and moving to another distribution model that will be even MORE dependent on advertising dollars.
Can you see where this will crash?
[ link to this | view in chronology ]
Re: Re:
Hmm. Do you have some insider's reason to think/know this, or are you simply assuming that your explanation is the most logical reason for Fox to take such action?
Because the "We simply want more money" reason makes at least equal sense to me as "advertising is broken"....
[ link to this | view in chronology ]
Re: Re: Re:
They are also competing against cable only properties that get paid by the cable and sat companies (often at quite high rates) allowing them to survive well with lower ad rates. They cable outlets are also more likely to use recycled programming (USA = the Law and Order channel, it seems). Their programming costs are lower, they are getting paid more by the cable companies, and they don't have to maintain broadcast stations around the country.
I don't think it is that they want to make more money, they just want to make what they were making before, and want to be sure of it in the long run.
[ link to this | view in chronology ]
Re: Re: Re: Re:
Yep - its the internet. The ad model isn't broken - it has simply shifted. It WILL work on the internet because that's where it's gone....
[ link to this | view in chronology ]
Re: Re: Re: Re: Re:
Living in an alternate universe is weird.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re:
What they were making before was criminal and their crimes should land them in jail. What they were making before was a result of them using the government to unethically monopolize the market. It needs to stop.
[ link to this | view in chronology ]
Re: Re: Re: Re:
We as a society do not owe them a monopoly and we do not owe them the money they were making before or the monopolies that enable them to make the money they were making before. That's the problem with these evil corporations, they want to make all this money and not do any work and they want the government to provide them with a guaranteed revenue stream. We owe them no such thing. They need to get some sense of morality and stop lobbying the government for monopolies.
[ link to this | view in chronology ]
Re: Re: Re: Re:
[ link to this | view in chronology ]
I don't get it
My reasoning is simple. With 20 minutes per air time hour devoted to commercials, the cable/satellite companies are expanding the exposure of the network's commercials. It just stands to reason that the content providers should be paying the companies that send it on to consumers.
[ link to this | view in chronology ]
Re: re: Cut It...
[ link to this | view in chronology ]
Just cut out the middle man already
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Cable vs Internet
[ link to this | view in chronology ]
We have a winner!
I haven't see a beating like that since Tyson-Spinks!
I hope Cable's got a good cutman.
[ link to this | view in chronology ]
yep, just about right
Then I started working again (I work in advertising) and I was definitely out of the loop on the channels my demographic watches. So i bit the bullet and resubscribed to cable. I really don't watch it though. It is only slightly more conveniant but the HD DVR box I have just sucks, super slow changing channels, and more disturbance in the signal then I had in my online viewing. I have my computer set up behind my TV with an IR receiver so I could watch the online content through my TV (Via HDMI or VGA cable)
I miss the days of not having cable. Granted I like working so I need it for when I meet with TV vendors and they talk about their content.
When you say you canceled your cable it makes them nervous.
[ link to this | view in chronology ]
That's enough for NetFlix and one of two other options 1-2 Blu-Rays a month or I can go to the pawn shop and get the older format DVD's for $2.00 a pop - which I usually do, the upconvertors do a good enough job to justify the 38/48 dollar savings per disc, IMHO.
If I do the NetFlix + Pawnshop route, I can watch about as many movies a month as I want to - and Blu-Ray along with the 'bad economy' is leaving *no shortage* of DVD's at the Pawn Shops, heh. (That's like 30 movies a month purchased and 15/20ish via NetFlix) - 30-45 movies a month is one a day or more - plenty to watch and I get to keep most of it.
[ link to this | view in chronology ]
"Renting" versus buying...
[ link to this | view in chronology ]
Rate Hike
I will keep the high speed internet because they are the best option available in my area for the price. But I will stick to over the air digital TV or nothing at all. Next up, figure out a DVR system that I don't have to pay a subscription for... or just watch TV online.
[ link to this | view in chronology ]
Re: Rate Hike
By the way, does anyone know of any set top boxes that can connect to the internet to update its TV schedules and automatically record my shows (without paying for a subscription)?
[ link to this | view in chronology ]
Re: Re: Rate Hike
http://www.mythtv.org/
http://www.boxee.tv/
http://www.team-mediaportal.com/
http://xbmc .org/
http://tvtime.sourceforge.net/
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Windows Media Center, has a built in Guide, that will download info, just get a t.v. tuner and a version of windows with media, center, BOOM built in DVR management as well as few other goodies. You can also download the Netflix plugin for media center. Then you can also download Media center studio http://www.adventmediacenter.com/ and add shortcuts which will launch boxee, hulu and whatever else media programs you want right inside media center. I have mine set up this way and it works great.
I haven't paid for cable in quite some time we do just fine between Netflix, Hulu, Amazon, boxee and our own movie collection. Cable is over rated these days and over priced. We're saving ourselves about $70.00 a month.
[ link to this | view in chronology ]
The owner of fox news said...
Seriously now I want to see TVs trying to charge people LoL
[ link to this | view in chronology ]
Re: The owner of fox news said...
http://localtvmatters.ca/
This is a big battle in Canada as well. The networks and such want to get paid, because while the networks as a group are making money, the reality is that the smallest players have either been swallowed up (City, A Channel, Chum), are losing their asses bigtime (Global) or are running on the public dole (CBC). The local end of things is losing money hand over fist, and each of the networks including the CBC have been forced to shutter stations and terminate local news coverage, just to stay viable.
A more viable market model for the networks is to have only one "east" and one "west" network feed that runs 24 hours per day, don't broadcast locally at all, and just present via cable / sat. All of the local stuff is expensive as hell to do. They either want enough income to support the local model (which actually does matter) or to be able to walk away from regional broadcasting altogether, perhaps replacing it with a network repeater system.
The funniest part of this story (and the one that Mike would love) is the cable and sat companies are running the counter site:
http://www.stopthetvtax.ca/
Campaigns like this are why I tend to object to the term "DRM Tax". Using the word TAX is an attempt to scare consumers, to make them angry and upset, rather than to truly explain the nature of the situation. The cable companies fail to explain how they in facts of the situation, such as that they already pay the cable only channel companies significant money per user. They fail to explain how they in fact need Canadian content to be able to bring in more US programming (there are ratios here of Canadian to US channels), etc. They fail to explain to the public how they often take off hours times for cable channels and turn them into infomercial channels, not for the benefit of the broadcaster but for the benefit of the cable company, etc.
It's ugly.
[ link to this | view in chronology ]
Something for nothing...
If it were not for my cable provider I would not be willing to watch my local channels due to poor signal quality. This is something that has not changed much over the decades despite the change to digital.
As long as cable doesn't hijack their commercials, the broadcasters should have no cause of action. This nonsense will inevitably lead to me being charged more. If I am going to be charged extra for a network affiliate than I WANT the non-local affiliate.
Cable already charges far too much for relaying channels full of commercials.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
In an age of true corporate greed, I want it now, and I want it at my convenience. You have two groups fighting against each other. The consumer and the corporate entity, one wanting to save money, the other wanting to optimize profits. Currently we have reached a point in telecomunications where a saturation point has been reached. Cable companies have no further possiblity of profitablility and have become ulitities and last mile providers.
This as led them to collude with content providers to prevent a redistribution of wealth. The only outcome that will work in the end is for them to become public utilities.
[ link to this | view in chronology ]
Bundle Packages Is Their Only Way
TV over the net is about to get huge. As the quality increases, more and more people are going to make the switch unless cable TV services can give consumers more value for the monthly fee they charge.
[ link to this | view in chronology ]