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Friday, December 16, 2011

When Will TV Networks Adopt the App Model?

Posted by on Fri, Dec 16, 2011 at 3:43 PM

I've only subscribed to cable or satellite TV for a few years out of my 48, largely because I can't bring myself to spend $60 or more a month for a bunch of a channels I'll never watch. (Or whatever Comcast costs these days—it is literally impossible to figure out what your monthly bill will be with taxes and fees after your promotional period is up.) I know that makes me a little weird compared to the average American consumer, but less and less so with each passing year.

Give me the option to purchase only the channels I want at a reasonable price, and there are a handful of broadcasters who would find me a happy customer. But barring that, I'll continue to get my content elsewhere, mostly online, through whatever means I find most convenient.

When cable first started, and they were just jamming as many analog signals down a stretch of coax as they could, such a consumer friendly option simply wasn't possible. But with the advent of digital cable and the sophisticated set-top boxes it requires, all the technology was there to enable an a la carte alternative... if only the cable companies and the content providers were willing to offer it. They weren't.

But now, with the widespread penetration of broadband internet and streaming media, the networks have the perfect opportunity to cut the cable companies out of the distribution picture, reaping higher per-subscriber profits for themselves by selling directly to consumers.

For example, why can't I just download an ESPN app for iPhone or Apple TV, with or without a fee, and watch Monday Night Football via that?

Of course, I could, if the executives at ESPN were willing to rethink their model and embrace the inevitable. But rather than giving customers what they want—the hallmark of all great businesses—the cable and content providers are pushing the oppressive SOPA legislation in a short-sighted and mean-spirited effort to protect their monopolies from "pirates." As if the music industry's own disastrous experience with this approach never happened.

Cable TV was born as a response to crappy TV reception, with the added advantage of being able to bring hundreds more channels into people's homes than could be delivered via limited over-the-air broadcast spectrum. It was a technological solution to a technological problem. But now, like it's telephone land line cousin, cable TV as we know it is a dinosaur. In the broadband internet age, there is absolutely zero technological justification for bundling dozens of channels together into pricey subscription packages, and as such it seems unlikely that that the industry can continue to fend off competition based on more efficient and convenient technologies.

Yeah sure, an app-like model might sound scary to media companies that have grown fat and lazy bundling their various networks through cable monopolies and on to consumers. What if too many customers chose to purchase, say, only Animal Planet, instead of the full dozen or so sister networks Discovery Channel currently tries to force down our throats? But then, from Discovery's perspective, that sure as hell has to be better than the disaggregated alternative to which we appear to be headed, in which consumers purchase individual episodes of individual programs, obsoleting the whole concept of networks entirely.

Those of us who routinely watch TV through connected devices have seen the future... a future in which the old cable TV model is dead. TV networks that want to carve out a place for themselves in this future better get moving, before the television producers who create their content realize that the networks themselves are technologically obsolete as well, and start cutting them out of the picture in turn.

 

Comments (26) RSS

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seandr 1
I can't bring myself to spend $60 or more a month for a bunch of a channels I'll never watch.

Me neither.
Posted by seandr on December 16, 2011 at 3:50 PM
Foghorn Leghorn 2
Which is why we only have internet service. I can watch all the Daily Show I want on comedycentral.com.

But what I would LOVE LOVE LOVE is the opportunity to pay a small fee to stream the BBC and maybe some of the Sky networks out of the U.K. I mean, the beeb is supported by television fees anyway, I'd pay...
Posted by Foghorn Leghorn on December 16, 2011 at 3:56 PM
3
@2: Good news then, because BBC is reportedly soon going to be selling iPlayer subscriptions to US audiences. (Not that you can't already stream iPlayer using a proxy plugin.)
Posted by Goldy on December 16, 2011 at 4:01 PM
4
The problem with the a-la carte approach is that it would mean certain death of many small channels which no one will pay for specifically. Or, they would raise the rates prohibitively. Also, right now a lot of it is paid for by the advertising channels etc, which no one will subscribe to on their own.

http://www.newyorker.com/talk/financial/…
Posted by N123 on December 16, 2011 at 4:03 PM
Fnarf 5
The thing is, if you had an a la carte system, the minor-league channels couldn't survive. In particular, channels aimed at minorities would struggle. You are subsidizing them. I've seen research that shows some of the little channels have fewer than a thousand viewers at times -- that's not sustainable. You'll end up with Youtube -- amateur productions by people working for free, basically.

I wish there was a way around it. A huge portion of your bill goes directly into channels that you may not watch at all -- ESPN, Fox News. But if they were a la carte, you'd be paying $20 a game for MNF, so maybe not so good for you.
Posted by Fnarf http://www.facebook.com/fnarf on December 16, 2011 at 4:05 PM
gloomy gus 6
@4, 5 you sorta jinxed each other there. Very nice.

(@4, since you're unregistered your links won't come through. I think this is the New Yorker piece you were aiming for:)
The simple argument for unbundling is: “If I pay sixty dollars for a hundred channels, I’d pay a fraction of that for sixteen channels.” But that’s not how à-la-carte pricing would work. Instead, the prices for individual channels would soar, and the providers, who wouldn’t be facing any more competition than before, would tweak prices, perhaps on a customer-by-customer basis, to maintain their revenue.
http://www.newyorker.com/talk/financial/…
Posted by gloomy gus on December 16, 2011 at 4:10 PM
7
Um, Goldy, just who do you think provides a majority of people with their broadband connection? Who do you think, with the exception of the lucky folks in FiOS territory, generally provides the best broadband speeds?

That's right, the technological dinosaur that is your cableco.

And this isn't likely to change until wireless broadband really takes off. With many of their right-of-way contracts in the 10-20 year range, your cableco will have plenty of time to switch over to FTTH.

I'm not happy about this - but as someone who was forced to suffer through wireless broadband/DSL (I briefly lived in a building not wired for cable), I finally have a little respect for what you get from your friendly neighborhood monopolist.
Posted by dak7e on December 16, 2011 at 4:13 PM
MrBaker 8
There is an HBO app already., more or less glorified Comcast on-demand at this point, but I bet they would be ok spinning that off to something more independent from the provider middlemen in the future.
Posted by MrBaker http://manywordsforrain.blogspot.com/ on December 16, 2011 at 4:16 PM
9
@7: The cable companies provide both broadband and cable TV content. I'm talking about the death of the cable tv side of the business, just like land voice lines are a dying business, while telcos continue to sell DSL.
Posted by Goldy on December 16, 2011 at 4:21 PM
Kinison 10
I get all the football channels, live and free, via an jailbroken AppleTV with XBMC. Not exactly rocket science here and not exactly legal.

Cable companies dont want to break this up, they make way too much money on selling local ad slots and TV channel producers will NEVER let you subscribe to just one channel because it would kill all the horrible channels that nobody cares about. So you might as well jailbreak your AppleTV.

I suspect this could be a reality, but were talking 20-30 years from now when fiber is cheap and bandwidth caps are gone, but cities need to wire this up as Cable and Bell companioes will insist on caps (this is assuming they dont sue the city to prevent them from wiring it up with a sales tax).
Posted by Kinison http://www.holgatehawks.com on December 16, 2011 at 4:24 PM
11
Not exactly breaking news then. Comcast first realized this over five years ago, when they made their first go at NBCU.
Posted by dak7e on December 16, 2011 at 4:29 PM
Dougsf 12
@2 and @3 - The BBC 24 news feed is available via Roku, if that helps.

San Francisco once even tried pushing programing ala-carte legislation (at what level, I'm not sure. Needless to say, it didn't go anywhere.) Like @5 got at, big channels like ESPN, TNT, and Nickelodeon are the college football programs of cable television, and so many of the channels you or I might be interested in are Viacom's baseball and gymnastics programs.

I think what we're going to see (well, what's already started) is content owners creating their own channels rather than licensing content to cable providers and networks. We're in sort of a nice time of transition where I've actually got a few different options for bringing content to my television, but content is expensive, and the more avenues that exist, the less anyone's making on advertising or subscriptions. Good for us in some ways, but not ideal as far as the studios are concerned.
Posted by Dougsf on December 16, 2011 at 4:31 PM
Dougsf 13
@me - That should read a BBC 24 HOUR news feed. (also, Al Jezera, France 24, and Euronews, and just for giggles there's an Iranian news channel on there somewhere too if you'd like.)
Posted by Dougsf on December 16, 2011 at 4:35 PM
Joe Szilagyi 14
I hate this idea every time it comes up because it doesn't work. Half of our viewing entertainment if not more is HBO. Boardwalk Empire, Game of Thrones, True Blood currently. AMC's various shows -- Walking Dead, Mad Men, American Horror Story (yes, I know I should watch Breaking Bad). This stuff all gets subsidized backward and forward heavily, and you'd never be able to get something like the Game of Thrones pilot green lit for $10,000,000 or so like it was on "app sales".

Each episode of Boardwalk Empire uses an army of CGI techs to recreate 1931 Atlantic City. The per-episode cost The Walking Dead is said to over $1,500,000 because they shoot on film for that look and use only minimal CGI on the flip side favoring practical effects, 100% location shooting, make up and prostetics for that visceral, "real" feel. For a 14 episode season, how many "app sales" would we need to not only underwrite Walking Dead but make it profitable? Would you be willing to watch commercials in that sale model? If not, how much are you willing to pay per episode?

You think all those authentic outfits, props, cars, sets, and town/city designs on Mad Men is cheap?

Quality television costs a shit ton of money to do right, the same as film. Ala carte sales will not support it any time soon, no way, no how. Posts like this was wishful thinking.

(I speak with a smidge of knowledge, knowing people in the TV industry on both the creative and business side).
Posted by Joe Szilagyi http://www.joeszilagyi.com on December 16, 2011 at 4:36 PM
Joe Szilagyi 15
@Goldy -- for comparison purposes, the difference between money and quality:

Look at the pervasive CGI on Boardwalk Empire and Game of Thrones. Nearly every "long" outdoor shot is CGI. It's everywhere; half the show is green screen because 1931 Atlantic City no longer exists and on Game of Thrones, because, uh, Westeros doesn't exist and there are no castles like that in the world. But if you watch the episodes, except for maybe the early long shot of King's Landing by the seas, you'd never know these was CGI in any of that. It's that good.

Compare that to the CGI in TV shows like the new V and Once Upon A Time, where they clearly went entirely with green screen for most of their fantastical indoor shots. It looks like absolute shit, because A) they're going cheap and B) you can't CGI everything and expect it to look real unless you're Pixar.

tl;dr shit costs money, app sales can't pay the bill.
Posted by Joe Szilagyi http://www.joeszilagyi.com on December 16, 2011 at 4:41 PM
Will in Seattle 16
@2 for the Two Pounds a Month, Gov'nuh win!
Posted by Will in Seattle http://www.facebook.com/WillSeattle on December 16, 2011 at 4:46 PM
Will in Seattle 17
but good point in @14 @15.

@12 @13 most of us want BBC Programmes, not just News. We're talking the real stuff. Including the swearing.
Posted by Will in Seattle http://www.facebook.com/WillSeattle on December 16, 2011 at 4:48 PM
merry 18
Hear, hear.

I've been wanting a la carte television for years and years.
Posted by merry on December 16, 2011 at 4:52 PM
19
People severely misunderstand how much they would have to pay per channel if we truly went to an a la carte system. Right now the channels charge the cable companies on a per subscriber basis. ESPN might charge $5 per subscriber. They get away with this by bundling multiple channels together (if you want ESPN you have to take ESPN, ESPN News, ESPN2, ESPNU, the Disney Channel, and ABC Family). If you end the bundles those channels might start costing you $15 a month each. You'd probably end up paying $60 a month for 5 channels.

The other huge problem is that the cable companies own tons of the channels. Want to watch the Golf Channel, Versus (soon to be NBC sports), E!, G4, MSNBC, CNBC, Bravo, SyFy, Universal, or USA? To bad those are owned by Comcast. TNT, TBS, CNN, Headline News; owned by Time Warner. Right now the cable companies are more than willing to give the channels to the other cable operators because they don't really compete (If you can get Time Warner you can't get Comcast). But they're never going to give the channels to someone operating an internet delivery service.

We haven't even touched on the biggest problem. You most likely get your internet from the same person who sells you cable, and if you don't you're connection problem isn't fast enough to stream very much high quality video. What motivation does Comcast have to let someone stream me shows over the internet on a network they own so that I don't have to by service from Comcast? Unless Net Neutrality gets written into law (and I'm not hopeful) this has zero chance of happening.

The only way this problem gets solved is if the government steps in and basically says that the wires to your house are a utility. The cable operators have to spin off the upkeep of the infrastructure as a separate business unit and open up the ability to sell content services over those wires. This is the only solution that will really get close to what you want, I just don't see it happening any time soon. That's what it took to get the phone system working (remember when you had to buy a phone from at&t and you could be cut off for plugging in a modem or answering machine to the PSTN?).
More...
Posted by arbeck http://www.facebook.com/arbeck on December 16, 2011 at 5:14 PM
20
Man, a lot of defense here for monopolies. So much for the power of markets, I guess.

(And disaggregation is coming one way or another. The networks can either get out ahead of it, or be run over by the moving train.)
Posted by Goldy on December 16, 2011 at 5:29 PM
21
@Goldy

The problem is that cable is a natural monopoly. It makes zero sense for someone else to run wires once they are already down. The problem is that we don't do a very good job of regulating them like the monopoly they are.
Posted by arbeck http://www.facebook.com/arbeck on December 16, 2011 at 5:35 PM
Josh Bis 22
I don't think it's necessarily a defense of monopolies to ask what you consider a "reasonable" price to pay for each channel. HBO charges something like $20/month in addition to basic cable, which seems OK to me. If you assume that people should pay even half that price for non-premium channels, then it doesn't take very many channels to get to the same price that Comcast charges for a hundred bundled stations.

Posted by Josh Bis http://www.thestranger.com/seattle/Author.html?oid=3815563 on December 16, 2011 at 6:03 PM
lauramae 23
I could live with supporting some channels that I don't watch, like ESPN. What I could do without are things like shopping and religious channels. There is no reason for shopping channels. There is no reason for anyone to have to support them. Shopping channels are not Univision. They are empty suck.

Posted by lauramae on December 16, 2011 at 7:35 PM
watchout5 24
If it's not on the internet it probably isn't for me. It's like I told the comcast guy, I'm not paying you money to show me viagra ads for hours a day. I don't give a fuck who the person responsible for the ads are, it's totally and completely their right to talk about boners all day ever day but I'm just not going to pay you for the privilege of it. No I will not buy your shitty capped internet, there's no point in it being fast if you're just going to throttle it.
Posted by watchout5 http://www.overclockeddrama.com on December 17, 2011 at 12:51 AM
25
I don't think Goldy is proposing an app sales ONLY business model. Ala Carte could work if, for example, the Discovery channel sold access to all of their channels, included advertising with the shows delivered via those channels, AND sold information about consumers to potential advertisers.

Television producers have yet to figure out how to sell advertising via a two-way communication system. They're still trying to sell eyeballs instead of information.

Google has this shit figured out, BTW. They're practically begging the networks to take money from them.
Posted by six shooter on December 17, 2011 at 10:47 AM
orino 26
Wot you meen, "minor-league channels"? Every cable or satellite channel is owned by Disney, NBCUniversal/Comcast, News Corporation, Time/Warner or Viacom.

The latter has owned BET ("Black Entertainment Television") for years. Once I saw something on DirecTV called "Centric" which seemed to program reruns of old network shows that happened to have black people in them. And 25-year-old reruns of 'Soul Train'. I can't imagine that would be a great loss...
Posted by orino http://www.scootinoldskool.com on December 17, 2011 at 9:22 PM

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