The Problem With Cable Is Television

Saul Hansell writes in the NY Times about how various services offered by cable companies affect their spending and their revenue. As it turns out, a lot of the cost increases and investment needs are coming from television and video services rather than internet connectivity. The scramble for high-def and rising licensing fees for programming seem to be the biggest headaches for Comcast and Time Warner right now. Quoting: "By all accounts, Web video is not currently having any effect on the businesses of the cable companies. Market share is moving among cable, satellite and telephone companies, but the overall number of people subscribing to some sort of pay TV service is rising. (The government's switch to digital over-the-air broadcasts is providing a small stimulus to cable companies.) However, if you remember, it took several years before music labels started to feel any pain from downloads. As the sour economy and the Web start putting more pressure on the cable companies, they may be forced to consider breaking up the big bundles of channels they now insist that consumers buy and instead offer individual channels or smaller groups of channels on an à la carte basis."

Comments

Not the programming

[colinrichardday]

I thought the problem was that the programming sucked.

Re:Not the programming

[Narpak]

I guess the problem is that majority of programming suck, or at least that the broad scope of programs available through a cable package is so diverse that many only enjoy a small handful while the rest that falls outside the individual field of interest is uninteresting.

The tactic employed is to bundle "high quality" channels with "low quality" channels to ensure that if you want to buy the thing you are interesting you also have to buy a lot of crap that you don't are about. Selling individual channels, or smaller bundles, would mean you could probably ensure that what channels you get are those you actually want to watch; but it would also mean that a lot of marginal shows and channels would go out of business.

Of course personally I believe that this is pretty much inevitable and that shows and programming enjoyed by a smaller minority will have to find other ways to reach their targeted audience (like say the Internet). And it probably wont stop there either. In fact I would go so far as to say that over the next two decades the traditional way (in so far as something as new as cable can be said to have a tradition) of watching TV will change in many different ways. Using myself as an example I don't watch TV. Not because there aren't shows I would be interested in, but because I simply can not tailor my day around a programming schedule (nor am I inclined to buy a cable package and a Tivo like device). For me the only option when it comes to watching shows is getting them online (and I am sad to say the options for doing that legal is severely limited in my Country); so for the most part I just have to do without until reality catches up with technology and gives me options suited to my lifestyle.

Re:Not the programming

[Wrath0fb0b]

I thought the problem was that the programming sucked.

Americans are a varied bunch -- a lot of us like a lot of very different things. For most people, the Food Network is a total waste of a channel, but I wouldn't trade it away. My old roommate loved the Golf Channel, about which I felt the kind of apathy that he probably felt for FoodTV. There is no /.ers seem overwhelmingly in favor of ala-carte pricing, but I'm quite skeptical that this will improve the quality of programming. Instead, I think it will move towards the same "top-10" mentality where money is poured into the small number of large earners while the bottom half is ignored, or worse. I would love to pay $5/mo "directly" for FoodTV (directly, in the sense that Verizon would see that cash flow and value FoodTV appropriately), but I fear the result.

Plus, I'm generally not a fan of the kind of balkinization that I feel this will produce -- people that view only the things they already know they like are unlikely to branch out and view something different. There's quite a bit of interesting wheat (in there with the chaff, of course) flipping through that large middle block of digital channels.

Re:Not the programming

[IgnoramusMaximus]

If they had it their way, the only rights we would end up having were ones we could afford to buy and enforce as an individuals.

Quite right. It is no coincidence that most of them have fantasies of societal collapse followed by a "Mad Max"-type future where "real men" and their shotguns get to rule the day.

They never seem to get it that a "working" example of a "libertarian society" is ... Somalia. No functional central government to rain on the "real men's" parade there at all. Everyone there is free to conduct "free enterprise" any way they see fit. Curiously however, libertarian immigration to the Paradise in Mogadishu remains rather low.... perhaps not enough pamphlets at the weekly meetings at the temple of the Goddess Alyssa Zhinovievena?

The grouping is from the content providers

[YesIAmAScript]

I'm not a fan of cable companies. Not in any way.

But the problem with the groupings right now is that the content providers force certain groupings. For example, if you want to offer ESPN and ESPN2 (what cable company could afford not to), then Disney says "okay, if you want to offer ESPN and ESPN2, that'll $2.40 per month per subscriber". Which is $2.40 which goes straight to your cable bill. But then they say "well, but we have this new channel, ESPNU (or Classic or Disney Kids 5 or whatever), if you offer that channel IN THE SAME PACKAGE AS ESPN, we'll give you ESPN+ESPN2+ESPNU for only $1.40 per month per subscriber".

So each year, the providers will basically force another channel into their bundle this way. So each year, each of these content providers is raising the amount of money they get from each subscriber. And the cable companies have to offer big bundles in order to meet the requirements from the content providers.

Furthermore, it gives all the advantages to the big companies who already have lots of channels in your package. They can launch a new channel easily while the small guys are locked out since the bandwidth is already being chewed up by the big guys' new channels.

The internet is definitely the disruptive technology that will stop this. That is, if the cable companies and content providers don't find a way to prevent you from streaming video directly.

There's no technological reason why this bundling is necessary. It's just because the companies (cable and content providers) have found it to their advantage so far. I feel it would strongly benefit the customers to enforce an end to this bundling.

If you remember, it took several years ...

[six025]

However, if you remember, it took several years before music labels realised they had the perfect scapegoat on which to blame a failing business model that relied too heavily on back catalogue material as a prime revenue stream, and an extremely low level of quality regarding contemporary content.

Fixed that for ya!