Will this be the year you break the cable habit and move entirely to getting your “TV” entertainment over the Internet? The Wall Street Journal’s Kevin Sintumuang has. For those who watch a very limited amount of TV, have a great Internet connection, and can either do without live sports coverage or can pick enough up over the air, it is a fine option. For the rest of us though the conditions aren’t yet ripe to make the move. I think the trend away from traditional cable towards Internet-based non-sequential programming continues to spread slowly for about five years and then hits the knee of the curve. But it’s at least a decade before Cable truly starts to fade into the sunset.
Cable has two problems. The biggest is that it forces you to pay for a lot of programming that you never watch. My favorite personal example was receiving a letter from my then Cable company announcing that we were getting five more channels and as a result our monthly cable fee was going up. Those channels consisted of three more home shopping channels and two Spanish-language channels. We don’t watch home shopping channels and we don’t speak Spanish, and since we couldn’t opt-out of this change it was nothing more than a (substantial) price increase. That was 15 years ago, and that trend continues so that now we have hundreds of channels but there is “nothing on”. Not only do Cable (and Satellite) companies keep adding channels few want, and raising prices to cover them, but existing channels blackmail the Cable companies. Want to carry Channel X then you have to carry (and pay for) Channel’s W, Y, Z, A, B, and C from the same company (e.g., NBC Universal or Disney or…). Or, pay us more for Channel E or we’ll cut your viewers off from their favorite programming. ESPN and other sports channels now represent such a large chunk of cable programming costs that Cable companies are considering creating packages that don’t include sports programming at all!
The second dynamic is that “there is nothing on” one. Of course that’s not true, but it always seems that way. My wife and I have a terrible problem finding something we both want to watch. We both love House and it’s just about always on, but the episodes are all repeats. Worse, we didn’t watch the first few seasons and we always find the repeats are ones we’ve seen and not the ones we haven’t seen. Or Starz is about to start a new season of Spartacus, a show I didn’t watch in its original 2010 season. A friend suggested the series and now I want to watch the old season before the new one starts. Cable is not good for this, Streaming or Video-On-Demand services are.
Now what are the dynamics holding us, and the world, back from a rapid move away from Cable are extensive. Of course the Cable companies are fighting the move in various ways (e.g., their own Video-On-Demand services, included in the package, attempt to mimic the benefits of Internet-based services). And content-providers are conflicted, fearful of angering their primary channel (Cable) by making content too easily available over the Internet and worrying that they won’t be able to make enough in the Internet world compared to the Cable world. But there are two bigger dynamics at play, the current state of the Internet infrastructure (at least here in the U.S.) and perhaps most importantly Age.
Let’s get the Internet infrastructure out-of-the-way first. Very few Americans have Internet service capable of providing reliable, high-quality, video streaming. Most don’t even have it available to them. And even when they do from a spec standpoint the infrastructure behind it doesn’t have the capacity to support everyone who wants to stream video. My 10 Mb/s home service usually gets at least 6 Mb/s to my Internet provider but their connection to the rest of the Internet frequently seems to overload so that I’m getting 3 Mb/s or less. Often during busy periods it might drop to 1-2 Mb/s. And so a service that in theory should allow for reliable watching of high-definition programming rarely is capable of doing so. Most Internet video either degrades dramatically in quality for periods of time (with Netflix for example), stalls or even reports the loss of the Internet connection (pretty much all streaming services other than Netflix) during the course of a program. Even the 25 Mb/s FIOS service at our second home has these problems, though less frequently. These problems at best degrade the overall viewing experience and at their worst ruin an otherwise well-planned evening. Until most people can reliably watch streamed media (or quickly download to local storage and then reliably watch) they aren’t going to start dropping their Cable or Satellite service.
But the biggest factor hindering the move away from Cable, and the one that will eventually accelerate it, is the Age of the customer. Or rather the generational viewing habits. The remaining members of the “Greatest Generation” are never going to make the switch. For Baby Boomers, who grew up alongside Cable, our viewing habits are too well ingrained for most to entirely make the switch. We are going to augment our Cable with these services, and we may even move to reduced content Cable programming packages. But by and large we like channel surfing and instant gratification too much to give it up. But the younger you are the less attractive Cable becomes.
We are now 20 years into the DVR revolution and 15 years into DVD revolution. More realistically we are about 10 years into the general acceptance of both. When I talk to parents I find that very few allow their children to just turn on the TV and search for something to watch. Generally they record specific programs on their DVR that they want (or will allow) their children to watch and supplement that with DVD (or more recently Internet-based services) programming. A simple look at the timeline means that we are just entering the period in which millions of kids who’ve never been hooked on the Cable habit leave the nest and make their own decisions about the entertainment they bring into their home. Getting their entertainment on-demand over the Internet is going to be the norm. Cable is going to be a hard sell.
My five slow years followed by a knee in the curve, and then a real decline in Cable in about ten years, is predicated on both improvemenst in Internet infrastructure and the generational shift that is underway. It is also predicated on content providers “falling into line” and making it easy and cost-effective for consumers to obtain their content on-line. So for the next few years they’ll offer some resistance to protect Cable and DVD sales, but eventually enough consumers will choose to give up programming unless they can get it over the Internet (without a Cable subscription) that content providers will be forced to treat it as a first class citizen. There are other things that need to develop as well, such as better ways to create virtual channels and channel guides, and improvements to sampling programming, but those will come along soon enough. Even ignoring the dozens of other options, a battle supreme is emerging between Microsoft’s Xbox, Google TV, and whatever comes next from Apple towards defining the future “TV” viewing experience. At least one of them will nail the viewing experience to the degree that most people, even those unwilling to drop Cable, find Internet-based TV truly compelling.
So the bottom line is that 2012 will be another year for early adopters, but for the vast majority of us Cable or Satellite will remain our primary means of bringing entertainment into the home. Many of us will follow the 2012 Presidential elections on the Internet, but mostly turn on Cable TV to view debates and watch the results roll in. But in 2016 a significant minority, and perhaps most first-time voters, will use only the Internet to follow the elections and their results. Because that is the only thing they’ll have.