

Okay, Okay, Maybe Netflix Is a Problem for Cable After All - jsherry
http://allthingsd.com/20110615/ok-ok-maybe-netflix-is-a-problem-for-cable-after-all/

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bradleyland
What's crazy is that Comcast is in a great postion to go head-to-head Netflix.
They are positioned to go vertical in a way that Netflix can't even dream of.

* They have a relationship with a huge base of existing customers. They're one of the few players with a subscriber base close to Netflix (who just passed Comcast).

* They have a large network based on good technology. Sure, it's not fiber, but it's a lot better than what most of the RBOCs are sitting on, and Netflix has zero.

* As part of NBC, they have established relationships with all the major content providers.

* They own the distribution channel from content library, transport, and the end-user equipment.

The problem, from my experience, with Xfinity is that the "experience" sucks.
Their cable box is a slow, buggy pile of crap. Browsing content on my cable
box is only marginally better than the craptastic PPV movie systems in a cheap
hotel. The new Xfinity apps for my iOS devices are a huge step up, but I'm not
convinced that using my iOS device as a remote for my television is where I
want to be. This is what the experience is like:

* Pick up my iPad and browser for "OnDemand" content * Initiate playback from my iPad * Switch to the Comcast remote to play/pause, ffwd/rwnd * Experience huge lag in response to my control inputs from any of these devices

I've measured it, and it can take up to three full seconds for my cable box to
respond to inputs. Three seconds is an eternity when you compare it to the
Netflix app running on my PS3. Not to mention, with Netflix, I don't have to
keep my iPad around. I can just use the PS3 remote to browse, select, play,
and ffwd/rwnd content. And it's responsive.

Comcast has only themselves to blame for this situation. They're sitting on
all the right pieces, and no individual component is a huge weakness if you
believe that going vertical is the right approach.

Such a shame.

~~~
butterfi
In my experience, Comcast has one thing that Netflix doesn't: customers that
hate them.

1\. Comcast is expensive. My rates have nearly doubled, but I haven't seen any
change in my service or their offerings.

2\. Comcast wants you to install their hardware because they "switched to
digital." Fine, but I don't need or want another appliance between me and my
TV. I already have several (Wii, Xbox, etc).

3\. Charging you extra to see HD. Here's a tip: if I can see HD versions of
the stations that I'm already paying for just by running the tuning auto-scan,
then I feel ripped off. Esp. because old 4:3 format looks terrible on my wide
screen.

I agree with your sentiment that Comcast has only themselves to blame. They're
trying to squeeze more and more money out of their consumers and offering
little in response. Which is why I dropped them like a hot rock and got
netflix and hulu accounts.

~~~
bradleyland
That's what blows my mind. There are very few _good_ business reasons for
Comcast to be in the position they're in. "Customers hate them" is a symptom
of the underlying disease: chronic-head-up-the-ass. They have the technology
and relationships to make huge headway on every one of the items you
complained about. The only problem not directly addressable by technology is
price, but I think there's a solution to that as well.

Apple does very well selling hardware (at a premium) that is typically 6-8
months (often more) behind the rest of the market. When they upgrade their
lineup, prices typically don't change much, but the hardware is upgraded. How
do they get away with this? Because they have something consumers want. They
provide a great experience.

What's the lesson? Consumers will pay what you ask, and they won't complain
(much), provided you give them what they want. Use your technology for good!
Provide awesome services that consumers want, and no, running down a check
list saying, "But we have streaming movies 'On Demand™'" isn't what we want.
We want an experience that makes us happy we bought your service. Get with it!

------
jerf
I pay Comcast ~$70/month for internet. I can get DSL cheaper, but only at
lower performance tiers. It's decent service, I'm not too upset.

I pay Netflix $8/month.

Comcast may experience some creative destruction, but even with their physical
infrastructure they really ought to be able to survive at those rates. I'm
"sorry" they're losing their content business, but it's not as if they didn't
have years of opportunity to figure out what to do about it.

~~~
pasbesoin
How have your rates been the past some months? With no change in service, mine
have gone up 24% since late last year.

Cry my a river, Comcast.

~~~
jerf
Because they haven't gone up, _yet_. They just called us a few days ago to
announce that they want to upgrade my speed from 12-ish to 20-ish, and they
will send us a digital cable box for basic digital, for 4 cents more a month
for a year (no typo, four-hundredths of a dollar). Presumably at the end of
that year, the rates don't go down.

I assume, though I don't know, that they are doing this to finally get the
analog cable channels off their network (which I approve of, they are a
shocking waste of bandwidth even at SD), and are complying with their legal
obligation to continue to broadcast the local stations to me even though I am
only an Internet customer by "giving" me the digital cable box. I broadly
approve of this. I am hoping they're trying to "hook" me back on digital cable
and that I can get back to my original rates (or a reasonable facsimile
thereof) by turning the box back in. Or... if necessary, switching to some of
that DSL. (Or threatening to switch to DSL.)

~~~
pasbesoin
I have the analog TV service -- because the final, discounted price is almost
the same as the price for Internet only -- and I can say they've done a lousy
job of providing that negotiated, legislated analog support. Noise, severe
(upstream, I'm assuming, as the last leg is analog) digital compression
artifacts, channels literally "freezing" for hours or a day before someone
"unsticks" them. Flickering letterboxing.

They also eliminated two additional PBS stations that had been in the basic
cable lineup here, prior to the digital conversion. The channels I most
valued.

(At least I'm really subscribing for Internet service. But those depending
upon the promised basic analog support are really being screwed.)

All this seems to be a combination of spending no money on the analog support,
and pressuring customers to "upgrade".

It's interesting that you received the offer you describe. I've had nothing
similar.

Technological trade-offs aside, I'm upset with them because, in my view, they
have not adhered to the agreement they entered. And no regulatory body is
making any effort to correct this.

And just how have my rates increased 24% in the span of six or eight months,
without those same regulators asking Comcast WTF?

Although it's been some years, I've had my DSL experience with SBC/AT&T. And,
amazingly, they managed to be yet worse.

(Three service calls -- each a half-day off work for me -- until they actually
showed. Exterior, bare, twisted wire connections left dangling on the side of
the building. Regular service drops. Phone support that finally admitted:
We're outsourced; we can't even see the status of the tickets we file when you
call.)

Sorry, this is way too long -- I'm venting.

At least the Comcast Internet service is fairly reliable. They just make you
pay through the nose for it, and push similar tactics with their TV service.

Where I am, now, there is no good choice. (Not even a competitor's DSL, as --
last I checked -- AT&T refused to extend support the extra mile to my
community of several thousand.

I have NO sympathy for either of these company's "laments". Based on personal
experience, I believe everything they say is bullsh-t.

(Final tidbit: About a decade ago, SBC/AT&T received upwards of $1 billion in
tax breaks and other incentives in Illinois in return for "universal service",
then lobbied the legislature to change the law and let them out of the
obligations they'd assumed in return for this largesse.)

Sorry for turning this into a long rant. But the lesson I've learned is to
_not believe a word they say_.

I only do business with these companies because I simply have no other choice.
A position a lot of other people are also in. Monopoly or duopoly, the
resulting behavior is straight out of the textbook.

------
jasonwocky
I'm in the same boat as many of you, paying the cable company for internet
access and relying on Netflix and Hulu for content (I subscribe to Hulu plus,
though I confess I was largely looking for some way, any way, to give Hulu
some of my money for the service they provide me).

My question, though, for others like me...how many of you have more than two
adults and/or teenagers in the house? Right now it's just me and my wife and
my young daughter. I remember growing up, though...in my family, we had
multiple TVs in the house, with everybody often watching something different.
Cable TV provides the bandwidth for that, but I was thinking it may be awhile
before cable internet provides enough bandwidth for that use case.

Of course, it could be that as this generation of new parents gets used to not
having a cable bill, families may grow used to watching TV together or
watching it less overall. That might be the greatest contribution that TV-
over-Internet provides us, in the long run.

~~~
calloc
Cable Internet already provides more than enough bandwidth. There are been
many times where my room mate and I are both streaming content from NetFlix,
and our third room mate is watching Hulu in the living room.

No issues with lag, or slow downs or anything like that.

------
boredguy8
Between Hulu (free) & Netflix ($8/mo), the only bill I pay to cable is for
internet.

It seems to me that Hulu is way worse for cable companies than Netflix, as
Hulu lets me watch current shows nearly immediately. If I didn't have Hulu, I
might get basic cable for current shows.

~~~
r00fus
If I could get decent french-language programming, I would also give up Dish.
As it is, TV5 Monde is only available on Comcast (in some areas) and Dish
(everywhere).

Anyone know of good streaming options for French language programming?

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pkteison
I know it's not a representative sample, but all but 1 of my friends have
cancelled cable in favor of Netflix + Hulu. So I'm continually surprised to
hear that cable subscriptions aren't falling.

What I really don't get is why HBO won't sell to me directly. I think that
would be the last nail in $100/month cable bills.

"Can I get HBO On Demand if I don't have HBO? No. HBO On Demand is exclusively
for HBO subscribers." from <http://www.hboondemand.com/faq.html#faq7>

~~~
kin
HBO Go is godsend. I can watch the entire series of any HBO show from the
pilot to the series finale and watch new episodes of awesome shows like Game
of Thrones on a computer or on my iPad. The second Showtime copies them and
offers this direct, subscription based, with clients on the Roku and the like,
it'll be over for cable.

~~~
tednaleid
Are you saying that you can get HBO Go without cable? From what I can see of
the signup, I need to pick my cable provider to sign up (something I don't
have). I'd be willing to pay for HBO, but I'm not willing to pay for other
cable as netflix satisfies my needs there.

I've got a Roku too if there's some integration there that I'm missing.

~~~
18pfsmt
Unfortunately, HBO is owned by...Time Warner Inc, and it seems their
executives like to talk about the two-year old TV Everywhere initiative[1],
but continue to fail to ship it.

An interesting quotation from that blog post, "Bewkes, who helped spearhead
the TV Everywhere initiative with Comcast two years ago, reiterated the need
for the industry to “take every channel on television and put all of it on
demand [...]"

[1]<http://gigaom.com/video/cable-show-panel/>

------
jsherry
Count me in the 40% who has cut their cable bill (I.e. no more premium
channels) since buying an Apple TV.

------
jinushaun
I've been without cable TV for over 10 years and don't miss it at all. Just
another industry with lazy incumbents whose lunch is being eaten by a
competitor that is giving customers what they've been asking for for decades.

Now I wish someone would just break up the sports broadcasting cartel. ESPN
has way too much power to dictate how its customers can view its contents.
What the hell is an ESPN 360 compatible cable internet provider? One that is
willing to pay their tariff?

~~~
joshfinnie
I am surprised that ESPN (with all their control) haven't adopted a better
online presence.

I would pay them directly $10 a month to access their sports and TV shows.
Can't be doing better through the cable contracts...

~~~
mikeryan
ESPN makes more then 1 Billion Dollars a year in cable carriage fees. As
stated in another response they get between $2-5 per cable subscriber from
these deals. This is _all_ subs including many that don't view their channel.

No, $10 a month ala carte is not a better option for them. ESPN _likes_ their
position in cable, its hugely profitable.

~~~
hardtke
ESPN makes more the $4 billion from those fees. And then they get to show
advertisments as well.

------
theflyingswami
Comacast was charging me 4 or 5 times more than Netflix per month and still,
twenty minutes of every hour consisted of advertising. That is, a third of my
watching time was spent muting the television and twiddling my thumbs.

Pretty much Comcast can go jump in a lake as far as I'm concerned. Of course,
now that Comcast, through MSNBC, provides both service AND content, I'm sure
they'll put a stop to Netflix as soon as possible. Thanks, FCC!

------
dkarl
I've just spent three months trying cable and have decided to cancel it. At
this point one thing would entice me back: channels a la carte. I like
watching sports sometimes and occasionally like watching a Discovery Channel-
type show in Spanish and seeing how much I can understand, but aside from
those two things, I don't get much out of it that I couldn't get from Hulu.

~~~
btilly
The problem with channels a la carte is if you have two competitors, one of
whom bundles content and the other of whom competes a la carte, there is a
strong tendency for them to get into a ruinous price war.

Since people already do bundle, that makes getting into an a la carte
variation very dangerous.

See <http://www.dtc.umn.edu/~odlyzko/doc/price.war.ps> for details.

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pdovy
I got rid of my cable service about a year ago and haven't regretted it. It
seems to me there is a lot of room for cable companies to easily improve their
service, yet IMO it remains consistently poor.

\- On demand selections are limited, and the interface is usually pretty
clunky. If I have a DVR, I have to remember in advance to record something,
rather than being able to just grab it after the fact.

\- You need to have a physical box, which either arrives outdated or quickly
becomes outdated, and they never replace it.

\- It costs $60-$70/month for decent cable service where I live, versus
$8/month for Netflix. Combine that with Hulu and free on-demand streaming from
major TV networks, and it's a great bargain.

The _only_ thing I miss about having cable is being able to channel surf when
I'm bored. Honestly, I am probably a more productive human being without
wasting my time doing that, so I'm not too disappointed.

------
dstein
I'm not going to shed a tear. Cable companies had to know their business plans
weren't going to work forever when pay-per-view movie rates started exceeding
the cost of renting a DVD, or in some cases actually buying the DVD.

Now... about those pesky 5000% profit margin usage-based-billing rates...

------
ankimal
I have a smart Sony BD player that lets me watch Crackle, Hulu Plus, Netflix
and half a dozen other things. It upgrades automatically and adds new services
every few months. (I believe most of these are available on the PS3 as well).
I was on this crazy cable plan that had all the bells and whistles but I
actually only watched 5 channels. When cable lets me subscribe on a channel by
channel basis I _might_ switch back. The only thing I missed is live sports
but networks are broadcasting live web streams as well, so 'cut the cord' =
'more money in my pocket'.

Also, something to note was that I dint have TiVo or DVR and so could _almost_
never watch shows on TV. Hulu for me is _free DVR_ (unless they dont have my
show which is rare).

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int3rnaut
The Internet and Cable companies here in Canada are already trying to
circumvent the issue and bring back the sheep by capping regular internet
plans in the same way you see with data plans on phones--Most companies allot
100gb (and then you pay huge sums if you go over) which isn't very much in
today's world, so it's gotten to the point where I had to cancel my netflix
(its inferior in Canada anyways) because by watching it regularly, I far
exceeded my internet cap. It's gotten to the point where excessive
streaming/downloading for entertainment is about on par with traditional cable
in terms of costs.

~~~
CountHackulus
Instead of cancelling Netflix, why not stick it to the people giving you
prohibitive caps and switch to an independent 3rd party ISP. I switched from
Rogers to Teksavvy (and later Teksavvy Cable) and have loved every second of
it.

The best part is that the customer service and tech support people don't treat
you like an idiot and don't just read their script and transfer you around
when you say something not on their script. (Not bitter.)

~~~
int3rnaut
Do you know what? I really appreciate that, and I might just do that. Thanks a
lot. :)

------
programminggeek
Between OTA HDTV, Netflix, Redbox, and Hulu, I've been without cable TV for
quite a few years now. Actually, I've been without a TV completely for the
last year and frankly it's quite enjoyable. Just not having that TV as the
focal point of the house is really nice, especially since I have a 1 year old
to be a dad to.

Considering that digital cable is $50+ a month(not including internet), that's
enough to buy new laptop or HDTV or iPad every year. Cable won't die, but I
wouldn't be surprised if they are forced to eventually morph all of their
offerings into a digital package like Netflix where you get Streaming TV +
Internet for say $50. Right now I'm paying $35 for cable internet and $8 for
Netflix, and a few dollars here and there for Redbox rentals, so $50 a month
is just about right for what it _should_ cost for cable companies to do that.

~~~
brandall10
"Just not having that TV as the focal point of the house is really nice"

This. I've always envied friends who didn't have a TV in their living room. It
totally changes the character of the home. It's somewhat perverted that TV
literally dictates how people setup their floorplans.

I keep on toying with getting rid of the TV (currently use a 42" lcd hooked up
to an HTPC w/ no cable) but spend at least 4-5 hours per week w/ the
girlfriend on the couch watching netflix, daily show, TED, etc. If I may ask
how does your family consume content? Have something like a 27" iMac in the
den?

~~~
lucasjung
> _If I may ask how does your family consume content?_

If I may ask, what makes you assume they do? I haven't followed any shows
since BSG ended, and my wife watches 2-4 hours a week of stuff she probably
wouldn't miss all that much. Our daughter watches an hour of kid stuff (Dora,
etc.) every day (1/2 hour during breakfast, another 1/2 hour while I cook
dinner), but generally prefers to spend her time playing with my wife and I.
If I were to sell the TV on craigslist tomorrow there would probably be some
whining for a week or three, but eventually we'd settle down into a new
routine and probably never miss it.

When I "consume content," it generally comes sandwiched between a couple of
paper or cardboard covers.

~~~
masterzora
>If I may ask, what makes you assume they do?

I'm guessing the part where they said that they use Netflix and Redbox is
probably a good indicator.

------
ry0ohki
I've gone cable free for two years thanks largely in part to Netflix (and Xbox
360 for my ESPN3 stream). Cable was one thing that should have been getting
cheaper over the years, but instead kept getting more expensive. Like
Blockbuster before it, I don't think anyone will be too sorry for Comcast and
the rest of their lot.

------
mark_l_watson
My wife and I have been experimenting with reducing the content that we buy
from Directv. Directv is a great service, great content, but we watch so many
streaming Netflix movies that Directv is less relevant. That said, we are
scaling back on what we purchase from Directv, but definitely not canceling
it.

------
mediasavvy
We cut the cable three years ago. And in our community, no cable means no TV.
It's probably not the much cheaper, to be honest. The big difference for us
has been the cutting random channel-surfing and our family's exposure to loud,
mentally corrosive cable TV advertising.

------
Legion
The day I can get NFL Sunday Ticket streaming to a set-top box (with a decent
user experience, not a computer-hooked-to-a-TV one) is the day I'm finished
with normal TV service.

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drivebyacct2
Wait, it's 2011 and people are still surprised by the threat that Netflix
poses? Jesus, when is anyone in any media industry going to get, anything?

~~~
jsherry
I don't think that the author was expressing his astonishment with the fact
that Netflix is threatening cable. He was just reporting the findings of a new
study which show hard evidence. In fact, he states that "this jibes with both
common sense and other anecdotal evidence we’ve seen.", so he's clearly not
surprised.

------
eyeareque
Instead of dropping cable for Netflix: why not drop them all together and get
an active hobby? We spend enough time indoors already in my opinion.

