
The Disruption of Cable Television Has Arrived - stonlyb
http://buysidenotes.com/2014/04/02/the-disruption-of-cable-television-has-arrived/
======
Volscio
People have been writing stuff like this for like 20 years now, ever since the
internet became viable for a future of streaming video.

But cable TV has continued on strong. If anything I feel like, despite cable-
cutters, the vast majority of people out there still regularly consume cable
TV in one form or another. Perhaps what's changed is that the "golden age of
TV content" right now feels more like the movie industry, in that big cable
networks release big TV series and market them heavily almost as if you were
going to the theater to watch a blockbuster movie.

The online streaming services actually seem diluted now, while cable networks
have very strong brands; I don't really have netflix but my wife and I have
ondemand and a dvr through time warner and 3 different devices to watch amazon
through. The fobs you can get from google and amazon and whomever else will
continue to dilute that access to streaming (which is good for competition and
for DIYers at some point, I suppose)

But really the battle is about whether cable TV will continue to be an always-
on service, and in that regard I think it will. Just flip on your TV, which
you may have in several rooms in your house, or at your favorite sports bars,
or in the office lobby, or wherever. It can be background, it can be a social
experience for live sporting events (probably the most compelling reason for
keeping cable), etc.

The other component is that video games are now more compelling to play/watch,
and in fact a lot of youtube and twitch channels are now regularly consumed by
viewers.

I would argue that the "disruption" already happened a long time ago but the
cable networks and service providers have adjusted and assimilated to various
degrees, such that we now have tons of avenues for stuff to watch.

Maybe this just takes some perspective to see because I feel like people keep
predicting cable TV will just die or something, and that seems like such a
naive way of looking at the world.

~~~
TarpitCarnivore
The disruption of cable TV wont happen, at least in the US, until major sports
leagues start allowing their content to be viewed online without blackout
restrictions. The MLB and NHL are probably the most forward thinking here, but
the NFL will never give up on this. They get paid billions every year from
just TV deals alone.[1][2] A new network in LA just paid $7BN to be the
exclusive provider of Dodgers games. [3]

And this is so obvious when you look at cable packages that put certain sport
networks in upper tiers, or charge a premium to get something more specialized
like SEC Network.

[1] [http://www.washingtonpost.com/sports/redskins/nfl-
completes-...](http://www.washingtonpost.com/sports/redskins/nfl-completes-tv-
deal-with-fox-cbs-and-nbc-totaling-about-3-billion-per-
year/2011/12/14/gIQARJdmuO_story.html)

[2] [http://www.nytimes.com/2011/09/09/sports/football/espn-
exten...](http://www.nytimes.com/2011/09/09/sports/football/espn-extends-deal-
with-nfl-for-15-billion.html?_r=2&)

[3] [http://www.huffingtonpost.com/2013/01/28/dodgers-tv-deal-
tim...](http://www.huffingtonpost.com/2013/01/28/dodgers-tv-deal-time-warner-
mlb_n_2570677.html)

~~~
chrisgd
I would agree. Plus a lot of organizations are tying your ability to watch
something on your phone / tablet to your login with your cable company. I
couldn't watch March Madness without logging in through xfinity. Additionally,
the SEC network won't let you watch unless you are already a subscriber to
Dish.

~~~
TarpitCarnivore
I'd expect that most of the crowd here knows how to circumvent blackouts, but
the issue is you still don't get access to the major network channels. No MLB
Network, NFL Network, etc. These stations may not matter to some, but a lot of
people probably enjoy having a station dedicated to their favorite sport.
Additionally if you're a motorsport fan, as I am of F1, you have no choice but
to get cable.

~~~
avn2109
A guy in my lab loves F1 and he claims to get same-day HD torrents of
races/qualifiers/etc. Every time I look over at his desk, I am impressed by
how non-bootlegged they look.

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luckyno13
I cut the cable 5 years ago and I have never looked back. I can utilize many
sources and avenues for what I want to watch, but I am technically inclined.
The advent of Popcorn for the general masses is going to push the cable cutter
approach even further.

Really, if someone would just find an easy, reasonably priced way to give
sports and local news to everyone on a Roku/ATV/FireTV/etc. I think it would
push the demise of cable tv into hyperdrive.

~~~
chrisBob
I expect that Comcast will try and get their $100/home if you are interested
in TV or not. The price will just shift and you will pay more for internet.
Saving money by dropping the TV portion is a fallacy and at best temporary.

I don't pay for cable TV, but I am fully aware that I only get with that
because I have an account I can borrow to watch subscriber-only content.

~~~
luckyno13
I am part of the group of people who would go back to the cable companies if
they would budge on their channel packages. I would pay per channel if I could
just customize my listing.

I bring this up because you are totally right, but at the same time if the
cable companies will evolve to what consumers want, they may not have to take
this route.

If not, we can hope they dont charge too much more, they are already making
the US look stupid on the world stage of internet access prices.

~~~
pbreit
"Unbundling" is completely stupid. Be careful what you ask for because you are
going to wind up paying the same amount for your 20 channels as you do now for
your 200. That's just simple business and economics. The marginal cost to
deliver you a channel is zero.

~~~
jeremyjh
Imagine there is a channel - BlubTV - that NOONE would subscribe to if it were
unbundled. Yet the cost of producing it is not zero. Unbundling eliminates the
tax we pay to support useless TV that people only watch out of pure
desperation.

~~~
pbreit
It's the opposite. A channel with limited appeal would likely need to pay the
cable provider to get included. This is all very basic economics and human
behavior.

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happycube
When I read on reddit that a recently single dad moved from cable to Netflix -
and the kids greatly prefer it (think about it, no ads etc) - that's when it
hit me that it will be All Over for cable. At the very least, it's going to
lose the next generation, if not this one!

~~~
xur17
I've used both Netflix and Cable pretty extensively. If I was given the choice
between cable and Netflix (for the same price), I'd choose Netflix. I don't
want to deal with scheduling shows, commercials, etc, and I'm willing to wait
for the newest shows to be available to watch (worst case, I can buy a season
of a show I have to have now).

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greatdox
I really love my Roku box and my Amazon Prime membership.

But it will never replace Cable TV. It might compete with it, and there are
people called 'cord cutters' that dump Cable TV, U-Verse, Satellite TV etc to
watch videos on the Internet.

Heck Youtube is now offering channels for a monthly fee.

I think we should call it Internet TV, because we are watching TV shows and
movies over the Internet instead of Cable or Satellite.

The WWE just did this with their WWE Network for $9.99/month that has all of
their old shows and pay per view events. That NXT show moved to WWE Network,
and they made more WWE Shows for the WWE Network. I predict other media
companies will make their own Internet TV Networks this way.

I think there is money to be made in Internet TV with Roku, Amazon Fire TV,
Google TV, Apple TV, and video game consoles can play Internet TV shows too.
Plus any smart phone or tablet has Internet TV apps now as well. But it is not
the end of Cable TV, just cutting into their business.

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programminggeek
Wow, they didn't even mention the WWE Network, which is the closest thing we
have to a proper cable network disruption as I've seen. However, let's not
forget the cable/telco oligopolies still own the last mile and they won't go
down without a fight.

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earlz
When I moved out on my own in 2010, I didn't get any kind of TV service. I
didn't need it, had rather my money go to other things, and traditionally it
only functioned as background noise since I was usually on the computer or
game console. I heard about netflix at some point and signed up so I could
watch a few movies (through the mail). I became aware they had this streaming
thing (such a foreign concept at the time to stream full length seasons of
shows).. and well, Netflix was good enough for me. I've now added on Basic
Cable not really for the TV, but for weather and news

~~~
onedev
Have you heard of this service called The Internet? It has fantastic weather
information and news as well :)

~~~
zenocon
Really...there are hundreds of apps for those as well. I'd think weather and
news would be the last thing you'd look to basic cable for. As a cord cutter
for several years now, the _only_ rationale I can find for continuing the
Comcast train is sports. Movies are passe on live cable (want some movie with
those commercials?) High-demand TV series are another, but many of them show
up via on-demand services not long after broadcast (w/o commercials) -- or can
be had by "other" means.

The cable + sports networks have people in a headlock, though. Want to sign up
for Big 10 football? You must have Comcast. A lot of other sports networks are
similar. The minute sports goes to an a la carte or subscription model that
doesn't require a cable package, I think it will signal the death knell for
big cable.

~~~
wtvanhest
Yes, sports is exactly what is keeping customers.

Right now, the comcast packages look like this:

1\. Internet only ~$50/month

2\. Internet + really basic cable ~$50/month (for me it was actually less to
have both, they made me get a cable box to get $10 less, it makes no sense
except for the fact that they want to up sell me later.

3\. Internet plus sports ~$100/month (plus you get lots of other garbage)

4\. Internet plus HBO ~$100/month (plus you get lots of other garbage)

5\. Internet plus HBO plus sports ~$110/month

6\. Internet plus everything including a phone $180/month

Sports and/or HBO are about half the revenue which is exactly why the cable
companies want to make them bundled.

The only way out I can think of to get out of this bundling is to legislate no
exclusivity for content, or at least live content. That would be major blow to
the revenue streams of college teams & the NFL.

------
rglover
It still blows me away that Time Warner, Comcast, and others have failed to
take advantage of their existing relationships with networks to rollout their
own Netflix style of service. Nowadays, most of the content is already
digitized, so building a VOD style of offering would only be a matter of
setting up the infrastructure/team to manage it.

Surely these massive companies have the resources?

I don't subscribe to cable primarily because it's too expensive and also
because I'm never around to watch what I want to when it's on.

~~~
dragonwriter
> It still blows me away that Time Warner, Comcast, and others have failed to
> take advantage of their existing relationships with networks to rollout
> their own Netflix style of service.

They have -- its the video-on-demand service that is part of their cable
offerings. (And also available over the internet to their cable subscribers.)

> so building a VOD style of offering would only be a matter of setting up the
> infrastructure/team to manage it.

Cable services have had VOD offerings longer than Netflix has had streaming.

~~~
rglover
> They have -- its the video-on-demand service that is part of their cable
> offerings. (And also available over the internet to their cable
> subscribers.)

I should clarify, I mean purely internet/device based. Without an existing
cable subscription/set top box setup.

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salmonellaeater
Don't underestimate the power of bundling. Even if content becomes decoupled
from the cable companies, bundling is still a powerful way for content
companies to get a small amount of revenue for content they know you don't
care much about.

The way it works is this: consider customer A, who isn't subscribed to any TV
service. Customer B is subscribed to HBO only. Which customer is likely to pay
more for a subscription to a different channel, say AMC? The content provider
wants to charge less to the customer who already has HBO, since they know that
customer gets less marginal value for an additional channel and is willing to
pay less. The best way to figure out which customers already have HBO is to
bundle the services.

This is also why dreams of splitting the 100-channel packages into separate
deals for a dollar a channel are so misguided. If you're trying to buy a
single channel, the content provider knows you _really want_ that channel, so
they'll charge you $40 for it. If you already have 99 channels and you're
buying channel 100, they know you don't want it at all and might charge an
amortized $0.05.

~~~
eddieroger
Exactly right, and I don't understand how people don't notice this already.
Cable packages are deliberate. The crossover between channels is low, but
those why watch TNT (for example) help pay for TBS, which they may not watch,
and vice versa. Not to mention that the cable provider is subsidizing
subscriptions back to the content provider, so while you may only pay $3 to
ESPN (which you don't watch, of course), Comcast is also paying for the right
to carry it.

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snake_plissken
Hmm maybe. But in my area, you NEED to have a cable subscription to have
internet connectivity. There are no broadband only packages that I am aware
of.

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chrisBob
I am not sure I buy the disruption by piracy argument, and I hope it is false.
If correct, it means we will start to lose the high quality entertainment I
enjoy.

~~~
w1ntermute
> If correct, it means we will start to lose the high quality entertainment I
> enjoy.

That didn't happen in the music industry. It was disrupted by piracy, but
music today is no worse than it was 10 or 15 years ago.

~~~
bsder
> That didn't happen in the music industry. It was disrupted by piracy, but
> music today is no worse than it was 10 or 15 years ago.

I'm pretty sure I disagree with that. And this isn't just a "music in my day
was better than the garbage kids these days listen to..."

Look at the complaints about SXSW this year. Why is Lady Gaga ... someone who
is nominally _HUGE_ in pop music .. even bothering with something _so small_?
Why did Metallica play such tiny-ass venue and associate with Comicon (hint:
think they've sold out something like Qualcomm Stadium recently?)? Look at the
ticket figures for Beyonce vs Madonna even after her prime? Why are Taylor
Swift and Selena so important (answer: teenage girls and their mothers spend
money on music while nobody else does)? Why are opera and symphony houses
closing their doors? Take a look at the Experience Hexndrix Tour:
[http://www.experiencehendrixtour.com/artists.php](http://www.experiencehendrixtour.com/artists.php)

Where's the _next_ Johnny Lang or Kenny Wayne Shepherd?

I would argue that the diversity of the music industry died fairly horribly.

Now, I don't think the disruption was purely piracy. The big problem is that
males (and now an increasing number of females) buy video games instead of
music.

How much can you get for music _today_? Even if you managed to extract $100
per year out of every American, that's only a $30 billion industry. That's
what ... 2 or 3 blockbuster video games of revenue? Now cut that by an order
of magnitude and remove the amounts that famous bands like the Rolling Stones
take (quite a bit), and you've got an industry of absolutely peanuts.

------
chrisgd
The idea of Apple TV as a set top box with Tivo like features for the over the
air HD I can pull in from NBC, CBS, etc. is really exciting. I clicked on his
link for the story about that and it is a WSJ story about Apple partnering
with . . . Comcast.

Even if I drop TV, I still have to get my internet from Comcast or AT&T (at
least in Nashville). Seems like I can't get there anytime soon.

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msoad
Get ready for "exclusive contents" from every single provider or hardware
manifacture. Soon you will need a Roku, Apple TV, Amazon Fire TV, Google
Chromecast, Hulu, Netflix, Xbox Live, Amazon Prime and many more to access
media.

There should be law to avoid this. I shouldn't have to buy Netflix to buy
House of Cards.

~~~
pbreit
It's funny that this is what people claim the want (unbundling)! Basically, if
unbundling ever really happens, you're going to be paying the same amount of
money for 20 channels as you currently do for 200.

A law is not the answer.

~~~
photex
For me it's about not paying for ads and being able to watch an episode on
_my_ schedule. I'd rather pay the same for the 20 shows I actually watch and
see them without commercial interruption after I've put the kids to bed, than
pay for 200 I don't care to watch while being sprayed by advertisements hoping
that a show doesn't air while the family is eating dinner or tucking the kids
into bed.

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drawkbox
When HBO and live sports are online there is no need for broadband provided
content.

We just need the pipes and they should be required to have multiple companies
in an area. The squeeze will be on GB/per month and they will add capacity
very slowly to keep users bumping up against the limits.

~~~
npizzolato
That's a big when. HBO, ESPN, and live sports are deeply tied with existing
cable companies because it's a huge source of revenue for both parties. But I
agree. Live sports are the only thing that keep making me want to purchase
cable.

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crazy1van
Ahhh I want to cut the cord so badly. I'm so close except for sports. In fact,
my family actually prefers "replacements" such as Hulu, iTunes, Amazon Video,
and Google Play to watching or dvr'ing live TV. But, we haven't found a good
option for sports.

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forgotAgain
I think it has also but for a different reason.

I've been with Fios for a number of years. I just received an offer from them
to lock in my current rate with a $10 monthly discount if I agree to a two
year contract. That smells like fear to me.

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blt
I have never subscribed to cable TV. TV programming quality sucked in the
past. The rise of higher quality shows has coincided with easy availability
online, illegal or legal.

Live sports were probably the best reason to keep a cable TV subscription over
the past few years, but even that is being replaced by live streaming (see
NCAA basketball tournament).

You'd be crazy to bet on anything less than a fully on-demand future. Always-
on channels will just be a menu option in the monolithic on-demand service.

~~~
sliverstorm
That's probably obvious to just about everybody, but here's an important
question: when does that fully on-demand future come? You'd be crazy to put
your bets in on-demand if it's still 50 years out. _That 's_ where most of the
disagreement stems from, and as a result that's the real opportunity for money
to be made.

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jtoeman
It's actually the most accurate piece on what's going on inside the TV
industry I've seen from a non-insider...

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dalek2point3
Popcorn Time? really? I'm skeptical -- how many users do you think it's
seeing?

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_superposition_
Three letters why this won't happen until a deal is cut. N-F-L

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mantrax4
I think the disruption of cable TV is that many people don't care about any
kind of TV anymore.

Apple TV is interesting because you can watch your movies and home videos on a
big screen with the family. It's not "TV" for me as I watch neither series,
nor live TV on it.

Before Internet, people had no other place to get current info except radio
and TV. Now there is. Ergo, those who still watch TV or look for TV
alternatives to disrupt TV, are mostly people who haven't truly moved on.

But the world is moving on. Especially the population below 50 years old. At
least how I see it.

~~~
sukuriant
I'm not so sure I agree with that standpoint. Sure, there is a population that
doesn't watch any TV; but for a while, it was "Breaking Bad" this, and "Game
of Thrones" that. People still like to watch their series, they just like to
watch it on their time, be it anime (Crunchy Roll), recent TV (Hulu), movies
(Amazon, Netflix, etc), recent televised news and pseudo-news (various news
and private websites).

TV as an injestible X amount of time where you're fed pre-recorded or live
content isn't going anywhere any time soon. In fact, many services exist to
provide even live TV in brand new forms. Twitch.TV and LiveStream come to
mind. For modern pre-recorded things, there's YouTube, Vimeo, Vine Videos to
some degree, and so on.

TV as defined as radio with pictures (prerecorded, 24-hour, jockeyed video
experiences) may be steadily shrinking right now; but TV as a video-based
communications platform is far from gone.

Funny enough, I wouldn't be surprised if, if the TV as we know it fades away,
new internet tools are brought up which create video playlists that follow
your preferences, and play and suggest videos all around that concept so you
can watch it in the background, like some TV viewers do. See YouTube playlists
and a few other services for examples of this already.

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jebblue
I quit reading after seeing the glowing comments about stealing stuff that
others have to work for.

~~~
jebblue
Who is downvoting this? Is there no agreement in the HN audience that stealing
video or music is as morally wrong as going to the liquor store and holding it
up?

~~~
PhasmaFelis
What's your opinion on going down to the liquor store, waving a magic wand
that turns one bottle of tequila into a dozen, then stuffing the extra bottles
into your bag and legging it?

"Software piracy" is a dumb phrase, but it's necessary because software piracy
and theft are not the same thing. When you steal something, the person you
stole from doesn't have it anymore.

