Cutting the (Video) Cord, Part 2

by on November 16, 2008 · 12 comments

In an essay I posted here back in October called “Cutting the (Video) Cord: The Shift to Online Video Continues” (part of an ongoing series), I reflected on an interesting piece by the Wall Street Journal’s Nick Wingfield’s entitled “Turn On, Tune Out, Click Here.” Wingfield’s article illustrated how rapidly the online video marketplace is growing and noted that so many shows are now available online that many people are cutting the cord entirely by canceling their cable or satellite subscriptions and just downloading everything they want to watch via sites like Hulu and supplmenting that with services like Netflix. In today’s Washington Post, Mike Musgrove writes about these same trends and developments in a column entitled, “TV Breaks Out of the Box.” Musgrove notes:

This has been a big year for both Netflix and online video services like Hulu.com, where people can watch episodes of popular shows such as “The Office” for free, though users do have to sit through a few commercials. When Tina Fey debuted her impression of Sarah Palin on “Saturday Night Live” last month, more people watched the comedy sketch online at NBC.com or Hulu.com than during the show’s broadcast. Last week, YouTube announced that it would start carrying old TV shows and movies from the film studio MGM.

As for Netflix, it seems that somebody there has been busy this year. While most customers still use the online video rental site mainly for movie deliveries by mail, the company now has a library of online content available for viewing on your TV through a variety of devices. A $99 appliance from Roku that plugs into your TV set and connects to the Web has been popular among some folks dropping their cable subscriptions. A couple of new, Web-connected Blu-ray players from Samsung and LG Electronics also allow Netflix subscribers to instantly watch titles from the company’s online collection.

Musgrove continues and notes that it’s about more than just Hulu and Netflix:

During a visit to The Washington Post this past summer, Microsoft chief executive Steve Ballmer mentioned that his favorite TV show is “Lost” and that he watches the show online, not on cable and not through a purchase on Apple‘s iTunes service. “I have to admit I’m annoyed by the [ads], but not enough to pay a buck,” he said.

Ever have a billionaire make you feel dumb for leading an overly extravagant lifestyle? Ballmer didn’t mention the show’s availability on Microsoft’s Xbox Live service. That’s where I’d been buying and downloading episodes of the show, on an a la carte basis. But starting this week, a major revamp of the Xbox interface makes it possible for owners like me to access the Netflix library without shelling out on a per-title basis. The day after CSI airs, for example, I’ll be able to watch it with a few clicks on the device’s controller. This is available only for people paying for a Netflix subscription, but I’ve already heard some gadget fans, the ones who don’t care about video games very much, wondering if the new feature might make the console a worthwhile purchase.

For those interested in checking out some TV on the Web, some networks, like NBC, put almost all of their programming online; others, like HBO, have little content online. One Web site, Cancelcable.com, has a page that tracks where Web surfers can find their favorite shows online.

I was not aware of that CancelCable.com site until I read Musgrove’s article, but it really does show how this migration to alternative video distribution / consumption is picking up steam.

Unfortunately, as I noted in my previous essay, someone forgot to tell the folks in Washington about all this. They’re still busy obsessively regulating broadcast TV and radio as if the 1950s never ended. And they’ve increasingly expanded their regulatory coverage to include cable and satellite even though they are now struggling to keep people from moving to the completely unbundled, a la carte world of online video.

It’s an old story, really: Technology advances; regulation stands still.

  • Tim Schneider

    You're gradually convincing me, Adam. But what about sports? I don't have a TV, and this is the one thing I really miss. Even the few online packages I've pursued are no help: I can't watch the games because they are broadcast locally . . .

    This is something that a la carte _could_ address.

  • http://www.techliberation.com Adam Thierer

    Tim, thanks for your comment.

    As you probably know, in many ways, the a la carte debate is being driven by sports programming. Many people don't like paying for a bundle of television programming that includes expensive sports channels that may drive up the aggregate cost of service. Of course, it is also true that if we stripped sports programming out of the mix and required it all to be purchased on a per-event basis, we could witness a serious escalation of live televised sports programming. (Look what pay-per-view boxing and MMA already costs for an indication). So, bundles help equalize those costs a bit, but not without downsides.

    What will be really interesting to watch over the next 5 years is how major sports leagues continue to create their own media platforms (think NFL Network or Big Ten Network) and then, eventually, start experimenting with delivering that content over the Web as well as broadcast, cable, and satellite platforms. Is it crazy to think that the NFL, for example, might eventually take the “NFL Sunday Ticket” and just put it all online using? If enough homes had broadband (and knew how to connect their computer to a larger display) then this scenario becomes very attractive to the owners.

    So, interesting days are ahead and it's not at all clear how we will be watching sports programming a decade from now. Keep in mind, however, that the economics of sports and sports programming is a very unique world. It's like no other type of programming since:

    (a) It is the most time-sensitive of all forms of media. The demand to view a particular sporting event drops dramatically in proportion to how long you delay it. That's why a pay-per-view boxing match is $60 bucks live but then free on the TV the next weekend.

    (b) People are fanatical about sports and demand to see their local teams in action. This creates a strong incentive for owners to get sports programming placed on mass media platforms.

  • Ryan Radia

    OTA broadcast TV is free and you can usually get it with a sufficiently powerful antenna if you're within 100 miles, so the only sports programming pertinent to the a la carte debate is content that's available only on cable sports channels like Comcast SportsNet, ESPN, Big Ten Network, etc.

    There have been several major moves toward a la carte sports programming–for the past few seasons, MLB has streamed every single game online for a couple hundred bucks per season. You can also now stream all NHL games online. Even the NFL streams games online, albeit only for DirecTV customers for now.

  • http://dtv-guru.blogspot.com/ DTV-Guru

    Tim Schneider wrote: “But what about sports?”
    Now sports from ESPN is also availalbe on the Xbox, PS3, Popcorn Hour and other UPnP video players using a small server application that runs on your PC. The product from themediamall.com is called PlayOn. In addition to ESPN, it also offers Hulu, CBS and YouTube on the Xbox. It even offers Netflix from your Xbox without requiring the Xbox Live subscription!

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