I was reading an article where the Boxee CEO said content would eventually be al a Carte. Why does he, like so many other internet people think content producers are stupid ? Has he, along with so many others pushing internet video not noticed what is happening to the revenues of the content and distribution industries ? Ad Revenues are falling. Quickly. DVD sales are slowing. The per subscriber fees they are getting paid are going up. Not only are they going up, they are consistent.
Now I dont know about you, but for HDNet and my other content companies, we tend to be very nice to those of our customers who pay us every month. Commentary from cable networks and their content producers are saying the same thing. They can’t afford to upset the people who pay the bills.
Which is exactly why, as I have said before, Jeff Bewkes, of Time Warner’s model of TV Everywhere is the EXACT RIGHT MODEL for content creators, cable networks, and video subscription providers like your local cable, telco or satellite provider.
The vast majority of broadband internet users already subscribe to a video service, so for most people they would not even notice a change. So it would make absolutely zero sense for legit content providers to compete with the most consistent and largest source of revenue they have. In fact, because the TV Everywhere approach will most likely not only increase the value of cable, telco video and sat video subscriptions, but also increase the value of broadband and mobile internet subscriptions (because of the content and the fact the video can be hosted intra- network and deliver far better quality), TV Everywhere should be a no brainer
As much as over the top providers or interfaces like Boxee would like to think that LEADING content providers will slice and dice content to make their business models work. They won’t. They arent’t that stupid.
Updated : One of the commentators made a point that I’m mad at myself for not making. The gist of which is simple, why is your internet access not a la carte ?
I only go to maybe 10 sites regularly. I get RSS feeds for another 50. Why should I have to pay for the resources required to provide access to the other 10zillion sites that consume resources ? Why shouldn’t I only pay for the 10 I go to ? I never go to sites like Revision 3, why should I contribute to the infrastructure required to support it. If they want to reach me, let them spend some marketing money and convince me to pay for their content.
If I want blogmaverick to be more popular, then I need to market it so that people will pay for it, right ? If blogmaverick is any good, I should be able to get an ISP to pay me a nickel per month and charge their subscribers that want this site 8c per month, right ? Why should people who dont come here contribute to the cost of enabling readers to come to this site ?
Why should I pay for my ISP to provide bandwidth for P2P downloaders ? I only want to pay for the bandwidth I consume, not a bit more. 99pct of the sites i use are text based information sites. Why should I pay for the bandwidth I might consume ? I only use the internet 8 hours or so a day, why should i pay for the other 16 hours in a day ?
Worse yet, because of the P2P bandwidth consumers, not only do i subsidize their habits, but they slow me down. So I’m paying to enable those that distribute content via p2p to do it for free(big companies like NBC Universal as an example), and Im paying for those who download the content via P2P to do it by consuming a disproportionate amount of resources that I pay for. AND they slow down my internet connection when they are on my network segment. At least my tv picture quality is never impacted by who is using it or how much they pay.
If al a Carte is the way of the future, then it should apply to the internet as well, right ?No one wants to pay the cost of the websites they don’t use, or the bandwidth they dont consume, right ? Bring on Al a carte internet. Make those who want 1mm websites available pay for it !
Mark represents the old school media company. Well entrenched, coffers flush with money and ongoing petulance of wanting to continue gorging themselves at the trough.
Old school media companies and content providers can (should) be wiped out. Anyone with a digital camera and Final Cut Pro can produce a show that someone will watch. I mean, look at the shit that’s produced on mainstream tv now? Reality shows like dancing with the stars? Someone could stream and HD feed of puppies playing in the backyard and gain viewership.
Content producers and carriers (big ISPs like TW, Comcast etc) are colluding to make sure that the old model stays in place. This is why it should be illegal for a company to be a content creator AND a carrier. Simply untenable and unfair. Instead, community owed fibre networks should be put in place (already started thanks to the broadband stimulus) and ISP’s should be falling over themselves trying to compete on providing services. Everyone should have incredibly fast symmetrical connections to their home (the last mile) that let’s them selectively choose what they want to watch.
From MC> you also dropped any resemblance of sense
Marks (and other media giants) dream is to subvert the internet into some lame $39.99 dollars a month cable package with 10-15 websites that are offered. The rest are cut off. This goes against everything the Internet was created for, and is (shitty) “business as usual for the media companies”.
Fuck them. I’ve found better content online and at other locations. I dropped mainstream media a long time ago.
Comment by Bubba -
Also, all this BS about home internet not being adequate to host several streams of HD video at once is just a bunch of F.U.D.
The great thing about the internet is that you don’t HAVE to stream EVERYTHING. We have hard drives in our computers. If we set up things such as RSS feeds, or if a forward-thinking content provider were to set up a more user-friendly means, they could simply pre-cache any episodes you want to watch on your local computer while you are sleeping or at work, and only stream the shows/movies/programs that are live content (or that you decided to watch at the last minute). The ONLY people who would have to worry about are the sports fans who want to watch several games of their favourite sport ALL AT ONCE. Talk about a niche audience ? Most sports fans would prefer watching the game on THEIR time… meaning they could stream the big game, while downloading the others in a queue… by the time you are done watching the first streamed game, the next is already downloaded, and your download queue has moved on. If you think any household other than the most rural cannot support one stream and one download at a time, you are fooling yourself. For the sports fan who absolutely MUST watch all their games at once… they can upgrade their internet access to higher bandwidth.
Bandwidth is of no concern in this debate, except in the cases of rural residences, who most likely couldn’t get cable TV anyway.
Worried about those who want to watch their shows right as they air ? Again, you can pre-cache these files on the customer’s machine. Steam does this with video game releases… they allow you to download most of the files, so on release day, you simply download a license or the final critical file to run the game, rather than all 8GB of the game when everyone else is stammering to download the whole thing… All the technical details of how to get Network Television on the internet can be worked out with current technology. The only thing holding it back is the content providers who refuse to take the ball and run with it, by building a web presence. I commend NBC for their forward-thinking in creating Hulu, and I hope it spurs a trend with the other networks so we can finally cut the cable company ties.
Comment by 3Z3VH -
I am curious…
Am I the only one who has been disappointed in “network television” for other reasons ?
Sure, everyone argues that their bills are too high to pay for channels they don’t watch, etc… but what about how Network Television is KILLING creativity and true entertainment ?
My favourite shows of all time have been canceled before even finishing their first season, due to the “Fox Syndrome.” Fox seems to love picking up shows that have a great storyline, great acting, directing, writing, etc… then just canceling them because they didn’t get a billion viewers on their pilot episode. These shows include Drive, Jericho, and Firefly. The letter two of which had millions of dedicated fans launching massive-scale protests against the canceling of their show, yet the networks did nothing (up until they finally allowed Jericho to finish one season to end the series)… even going so far as to refuse to release the rights to a show to another network, or even to the show’s producer (a-la Firefly by Joss Whedon).
It is like the networks would prefer no other network could ever air that show just because they, themselves couldn’t make a profit off of it.
You want to talk about not generating enough revenue for a show if it were internet-based ? I guarantee, two years ago if Fox had allowed Joss Whedon the rights to his own show, he could have put it on the internet (via iTunes, Hulu, or private site) with a pay-per episode structure, and every last Firefly fan would have been more than happy to shell out $2/episode. Without all the middlemen, like the cable providers, taking their cut, he would be a rich man, and the show would be hugely successful both in fanbase, and profits.
I see the de-centralization of video programming as a good thing for the content producers. If the Cable Companies were smart, they would see this, and see the opportunity to become a web-portal, much like Hulu, and a separate internet provider. If they were REALLY smart about it, they would charge for their web portal on an a-la-carte basis, but offer customers of say “Time Warner Cable Internet” free access to all shows in the Time Warner library… encouraging users to get their cable internet from Time Warner, to avoid internet fees to watch their favourite shows.
Another thing it affords, is the fact that networks no longer have to cancel a good show because it isn’t as profitable as a “more lucrative” show in the same time slot. With no time slots on the internet, you could host as many shows at the same time as you want. This mitigates the lower advertising dollars per-show, since you can replace a single ad for a single time-slot with a hundred ads for a hundred different shows, all in the same slot.
This makes it:
Good for the advertiser, since they can choose the programming they wish their products to be featured in.
Good for the content provider since they can now expand their advertising potential, by not selling time-of-day ads.
Good for customers, since their favourite shows no longer get canceled due to a lack of a good time slot.
The only downside, is that the content providers need to make a sizable shift in their business model to adapt to the new format.
Either they adjust for the times, or they WILL get replaced.
Comment by 3Z3VH -
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Wow! I am astounded that a billionaire entrepreneur even would engage in a argument via internet blogs about internet content vs. cable content. Get over it Mark. There is plenty of room out there in media land for the coexistence of cable/sat content and internet content. You are acting like a bunch of children. But to be honest with you here… you will never EVER bring down internet media content. Some consumers will take advantage of the extra content that the internet brings while others will not and continue to enjoy the programing that you get to choose for them. It is certain however that the existence of this new content source will be sought out by at least some of your customer base and I’m sure will contribute negatively to your businesses… but keep on fighting the good fight little buddy.
Comment by Tim -
Mark,
You keep mentioning the fact that all of this content over the internet will be unusable in the last mile. I will tell you that I have a pretty low end 6MB download DSL service and I am able to watch streamed video on 5 different devices at the same time, without any regular stuttering. To be honest, you have already lost. I can watch everything I need or want to, except one show, through the internet. I also have OTA which is how I know about that show, but it is much more convenient to use the time shifting allowed by the internet. Thankfully ABC,CBC, NBC, HULU, SCI-FI already get this. To be honest I do not know, how or where you could create value enough for me to switch from this model. I was the only person I know who did this even as little as a year ago, but for the past year I have probably walked 5 people through the process of switching to OTA and the internet. It will only keep building sorry your day is coming, and in my world your day already left.
From MC> call your internet provider and give them a big kiss on the mouth. And you might want to thank Sci Fi and the producers of the content on the networks. The minute they think they will lose subscriber fees, they will pull the shows just as others have
Comment by Alex -
There is an indirect relationship between the number of widely utilized distribution channels and the value of content. Fact is that the cost to produce content is dropping and dramatically. This is being created through a combination of trends, namely new technologies and the unraveling of dinosaur institutions like record labels and studios. Content creators and distributors generally want the number of available points of distribution to be limited – it is the principal means they have for maintaining unrealistic value. It is no different than other legacy industries trying to hold on to outdated modalities and the status quo in order to make a lot of money with little new risk – all under the guise of the public good (Think time warner, disney, sony et al).
That the users of an ISP or satellite or mobile video receive a bundle of available content above what they utilize for free is only the result of a transition from one market paradigm to another. Let the market decide – keep the internet free and distribution channels open and expanding and what content is worth and what value it will receive will be up to us to decide.
Comment by Bryan O'Rourke -
A correction to my prior post.
“Not allowing affordable flexibility is what is going to kill the cable content providers.” should be: “Not allowing affordable flexibility is what is going to kill the cable companies.”
Is it any wonder that Time Warner is pushing “TV Everywhere” and is upset with cable content providers that put content online for free?
Sorry, Time Warner. It is time for the monopoly to end. Bring me free, advertisement-sponsored web content!
Comment by Adam -
“…Ad Revenues are falling. Quickly. DVD sales are slowing. The per subscriber fees they are getting paid are going up.” Guess who pays the difference? That’s right, the consumer. This is what is wrong with the cable/satellite subscription model.
For the Boxee or no Boxee argument, if I only want the major networks, all I need is to pick-up what is going over the airwaves. If I miss a show, I will catch it on the web, or better yet, on Boxee. Yes, I do get the shows in HD-quality without having to pay for it. Commercials? Yes, I will watch them on the TV or Boxee for free content. Oh, and Boxee doesn’t mess with the commercial content. Why the heck would content providers have an issue with this? This is why they are stupid. Posting content on the web is ok, but treating the TV like a web browser is not ok? Limiting content to specific formats/players didn’t help the music industry either.
Is cable/satellite content so much better than broadcast TV? If so, why do we have commercials on cable/satellite AND consumers also have to pay monthly fees? It’s communism and greed. Not allowing affordable flexibility is what is going to kill the cable content providers. Quit gouging the subscribers and get the content providers to get up off their lazy butts and fund their own content with advertising revenue!
Companies are dying in this lousy economy. Why shouldn’t inadequate content providers?
Comment by Adam -
“AND they slow down my internet connection when they are on my network segment.”
seriously… stop whining and get DSL. The guy that owns your cable company has it.
Comment by chip -
You’re update is utterly ridiculous. The whole point of the internet is to be able to have instant communication and unlimited content. Making the internet a la carte simply restricts the information available JUST AS NETWORKS DO DAILY by feeding us the news that THEY SELECT. While blogs can certainly be biased and flat out wrong, the idea is that you chose what you think is right and wrong, rather than have a multi-billion dollar corporation do it for you. But by all means, you can have your a la carte internet, but it better not mean that I have to have it too.
Comment by Pete -
Comment on your update:
We already have a la carte. Most DSL providers offer DSL light, DSL 1.5, DSL 3.0 and DSL 6.0 (or other flavors depending on your area)
I haven’t found this among cable companies at least not in my area but its already out there.
With internet you can’t A la carte the content you can only A la carte the bandwidth. Your comparison of a la carte TV to a la carte internet is extremely bad, apples to apples my friend, internet does not equate to cable by any means. One is a video delivery system with specific channels, the internet is vast and ever changing, people explore and find new content on their own as well as create it, the 2 can never be compared.
Comment by Rob -
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Ummm, funny how the proprietor of a channel that is one of the many “bundled” channels that I think are garbage and I don’t want is arguing against unbundled ala carte content. Sorry Mark, love the team but I have no use for the channel. Best of luck.
Comment by MavsFan -
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Content on the internet must remain predominently free, otherwise it will be the end of the information age.
http://www.supercrazyideas.com/5-ideas-to-keep-the-internet-free
Comment by supercrazyideas -
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You just totally jumped the shark with the a la carte Internet suggestion. Apples and Oranges. Precisely why Internet people think content people are stupid.
Comment by Matt -
What you’re suggesting would defeat the purpose of the internet. It is meant to be an open network through which to share information. Just because some of that information belongs to businesses with marketing budgets that can afford to place the advertisements you speak of, does not make it so for the vast majority of sites on the internet. I think what rubs you the wrong way about the internet is that it – unlike the landscape of the corporate world – is in theory, a truly level playing field. From you’re position, the easiest way to crush companies, like boxee, or even competing user generated content providers, like youtube, is to force people to make a choice about what content they will actually “need” with monetary incentive. The damage that would do to the internets innovative potential would be immeasurable. This is a medium where money does not necessarily dictate how valid your ideas are or weather or not they will be realized. ANYONE with an idea can express and create it and its success is not the product of its advertising campaign, but its viability and genuine appeal to the unwashed masses. Yes the rhetoric is one part hokey populism and one part postmodern facade of democratic values, but at least its better than the manipulation and ruthless tactics of the bloated systems already in place – so far.
Comment by Mark -
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Why do internet people think old, established industries are dying just because they are old and they don’t 100% cater to the 1%?? Its ridiculous.
This entire argument reminds me of the early days of DSL. It was going to be a new age! Freedom From The Evil Telco! DSL For The Masses. Big investments,early in, change the world. My take was always “just because ma bell is not doing anything doesn’t mean ma bell WONT do anything.”
Sure enough, 10 years later, once the model was proven, consumers educated and billions spent by non telco entities we now buy our network access from Telcos and Cable Companies.
Its the same argument here “The future is different because it CANT look like the past.” or “First one in the pool wins!”
Guess what, the past is the present because it works and it most likely will be the future. All of these alternative models that are attempting to burn down the house are playing in an incredibly tiny sandbox, so small they can’t even see the real world beyond.
Say what you will about MC but he is playing in the bigger world beyond and he looks down at things like Boxee etc and thinks “Thats interesting, I’ll keep that in mind when I change the world next time.”
Scale counts kids.
Comment by John -
The problem with the whole Cable = Internet analogy is that with the Internet you’re paying for all this content you might never use, but it’s still available to you (unless you live in China or Australia). For the same monthly overhead cost as everyone else, the sites you visit and the content you subscribe to is essentially up to you (read: a la carte). With cable, you’re stuck with the programming choices that your cable provider makes for you. So even though I used to watch HDNet Movies all the time, I don’t have that option anymore with Comcast in Houston. Instead, I now have Golf HD, which I have no interest in.
Going back to your Internet analogy, this would be the equivalent of your service provider restricting access to blogmaverick.com, then telling you you’re free to visit twitter.com any time you want. You would be pissed, just like I’m pissed, just like everyone is pissed. Just charge me a flat rate for 50, 100, 200 channels, and let me pick the ones I get. I realize that’s easier said than done, but providers are going to have to do something before they’re sitting on a lot of SUV’s watching everyone drive by in a Prius.
Comment by -SK- -
@Richard
My thought here is – and I shouldn’t have said internet since this in only the carrier – that internet services are potentially facing a similar threat of being disintermediated.
Take Yahoo for example. They started to disintermediate the incumbent media players and took a share of advertising. Yahoo was perceived as new MEDIA player and the incumbent media players certainly saw new competition here. Then new models evolved and Google turned out to be more successful in search, an important element of Yahoo. But also in the other categories Yahoo saw new competition (basically in all the verticals). To me it feels that this process of disintermediation is now even faster than the offline2online migration. Other examples might be AOL or even the social networks, take a look at the discussion around myspace two years ago and now.
What do you think?
Comment by Ralf -
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Could not have said it better myself! Excellent angle of insight and related opinion.
Comment by Ben -
Well when we subscribe to a cable provider, we are still paying for the time we don’t watch. It’s not like there is a meter ticking off our usage.
Do we really want to go back to the old AOL days of charging by the hour for access? Some people may like it, but most don’t.
We’re not always passive with the content on the internet, we do interact with it at times.
I also don’t see how you’re subsidizing someone else’s bandwidth. You’re paying for your own access. If you don’t want DSL or cable speeds, then you can just get dial up.
You aren’t paying for the infrastructure of Revision. They have to pay for their access and infrastructure themselves. If they can’t, they lose their access.
Content people may not be stupid, but they can be clueless.
Comment by Thomas M -
Why do we think that? Glib answer: experience.
But you deserve better than a glib answer. “Content People” have demonstrated, time and again, that they are more interested in preserving existing business models than they are in adapting to the demands of the market.
We’ve seen this nearly run its course in the music industry. It became clear in the Napster era that people wanted the Celestial Jukebox. The industry insisted that was nonsense, and all people really wanted was free music. Apple finally managed to get the agreements with “Content People” to put a celestial jukebox on the net, and they’re now the largest music merchant in the country. They sell more music than WalMart.
So now, the market is telling you that they want on-demand content. I’ve worked in the cable industry, and 10 or more years ago, everyone was talking about the glories of VoD. I heard it described best as “High School Sex”: Everyone says they’re doing it, not very many people actually are, and the ones that are doing it are doing it badly.
10 years on, not much has changed. And L’Enfant Terrible, the internet, is getting to the point where it does VoD better than the cable companies are. Often over the same wire, which pleases me greatly.
The point you make in your update is emblematic of the other problem with “Content People”. You don’t pay your ISP for content, no matter what your cable/satellite mentality leads you to believe. You pay your ISP for connectivity to the cloud, nothing more. The content on the net is funded in other ways, some of them more successful than others.
I honestly believe that the way forward for cable companies is to convert entirely to IP service. Live TV feeds can be handled quite efficiently with IP multicast, and the “Content People” will need to adapt their business models to the new market. It would be the most efficient use of the (rather significant) bandwidth that the cable companies have available.
It’s not the bundling of content with content that the Boxees of the world will disrupt, that’s already doomed. It’s the bundling of content with bandwidth. This is the other side of the net neutrality fight, of course. “Content People” seem to think that they should be bending the model of the internet (which frankly ain’t broke) to look more like cable and satellite. That’s the wrong answer.
We’ll see who’s in that deadpool in ten years. 🙂
Comment by Zandr -
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What I find absolutely fascinating about this discussion is that Mark and Boxee are arguing basically the same thing. Both agree people should have access to the content they want where they want. Mark, you said TV Everywhere was the exact right model. Isn’t that essentially what the folks at Boxee are promoting? Access to the shows you want when and where you want them?
Sure, Boxee may have some lofty goals of getting things free, or a la Carte with pricing, but that’s just a business/pricing model. The bigger concept is exactly the same, people absolutely will and want to watch a la Carte, regardless of the underlying business model.
Comment by LD -
People will change it there is a service that can provide EXACTLY what they want w/o feeling ripped off.
BTW, what’s to prevent TV Everywhere from having unauthorized streaming-out? Sling-farm hosting anyone?
My DSL is a la carte. If you have a cable modem, you are sharing bandwidth and are getting screwed from day one by all your neighbors.
P2P, they are paying for access, not for the content. Why would ISPs care about the content? They just want to be paid for the bandwidth. Unless you are an MSO with ownership in content. Bad business model!
Very poor red herring blogMaverick. If people only pay for the content they want, your attempt to make this an arguement is laughable. P2P is the distraction, the power that the MSOs and the studios wield regarding content access is the key issue.
Again, if I can’t find a way to watch what I want, when I want, where I want…I will find a way.
AND, whoever can provide such service for the right price, quality of service and depth of content will win my dollars.
If the MSOs keeps jacking up my rates because they got jacked by ESPN, NBCU, Nick or YOU, that’s their problem. I only want to watch a handful of channels and am totally pissed-off that it is spread out through various tiers. If that is your business model, mine is to flatten the market.
Comment by P. Lee -
Let me add to Marks example, since you think it works for Cable providers and would like to see it implemented for Internet providers… How about the local supermarket just prepackage what it thinks the groceries an average person needs for a week should be and I just come in and pay for them. Why would I want to choose the items myself. The provider should just tell me what I want and collect the money from me.
Sounds a little ridiculous in that context. I find it just as crazy for a satellite or cable company. I’m paying a lot of money for things I don’t need.
Honestly I’d like to see a future where it’s even more granular than picking what channels you want. Let’s just pick the content you want. Let me just choose the shows I want, and when a new episode is available it’s on my DVR. Just like THE INTERNET and RSS. And I only pay for the shows I watch.
Comment by Kevin -
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“Hey dude. For all your dudeness, you didnt say a single thing based on fact. Feel free to post nothing of consequence again.”
/snort
nice. a passive aggressive 7 year-old’s response of “nuh-uh!”
hrm.
lessee. you want facts?
yeah. you’re right. i guess i didn’t really spout any numbers of anything.
alrighty. maybe you can enlighten us? help me out a bit? straighten me out? let’s go through my points and maybe you can help me dig out relevant facts, eh?
1) when was the last time you created art — of any kind — and sold it for money?
2) when was the last content protectionist plan (say, drm or the like) put forward that consumers thought was awesome?
3) when was art invented?
4) when was copyright invented?
5) how much of a subscription would you actually pay to get every website’s content and services for free? essentially the equivalent of cable tv’s top, hot-shit plan.
6) how’s icerocket doing? the benefactor? mamma.com? and is hd.net really down almost 30% year over year?
7) how much stock, really, should we put in anything you have to say?
i’m sorry i had zero facts at my disposal when i wrote that. hopefully, you can help a fellow dude out, right?
m3mnoch.
Comment by m3mnoch -
This is a fascinating conversation, but I think that maybe we need to look at the issue a little differently.
When radio came along, it tried to act like a newspaper. When TV came along, it tried to act like radio. Now the internet is here, and it’s trying to act like TV.
One medium is better at some things than another medium. For instance, when TV came along, radio didn’t die, it instead evolved to focus on the strengths of the medium. What’s radio better at than TV? Music and call-in talk radio. TV sucks at those things. Radio stopped doing things like episodic story telling because TV was better at it.
The internet will never be as good at tv as tv can be. The internet will eventually figure out what it’s good at and will beat tv at whatever that happens to be. In addition, tv will need to figure out what it’s better at in order to survive.
And when I say “better at”, I mean in the types of content it delivers.
For instance, I’m sitting here right now watching the NCAA tournament. Normally, I watch whatever I have on my DVR, fastforwarding through the commercials, but I’m watching the tournament live…and I don’t even mind the commercials. They give me chance to go take a whiz, make a sandwich, or whatever. I can only watch sports live…I have NEVER DVRed a sporting event.
Consequently, I think it’s safe to say that TV is the best medium for viewing live sporting events.
What’s the internet better at? The news. I’ve never seen your Dan Rather program, but I hear a lot of good things about. However, I can’t even begin to imagine how it can do news better than the internet. TV, as a medium, is just too limited to do a good job at giving me news. It’s like the difference between watching a sporting event on TV and listening to it on the radio…it’s no contest. I’m sure your Dan Rather program is good, as far as TV news goes.
The internet will eventually stop acting like TV and establish it’s own identity.
So, here’s my point. Content producers need to figure out which medium is better suited to their particular type of content. News, sports, sitcoms, etc. Each is better suited to one medium or another.
The TV completely transformed our culture, and the internet will do the same, even though it has a long way to go. The people who will profit are the ones that can see where the paradigm shifts are going to occur and get there first. TV Everywhere is not properly addressing these shifts. It is still operating under the TV paradigm, and it will fail.
I love these types of discussions and watching these experiments. These are exciting times.
Comment by Kevin -
Mark, the argument you’ve presented is fundamentally flawed.
The argument says “if content should be a’la carte, why isn’t the internet a’la carte?”. The flaw here is that the internet and content are completely different elements. The internet is an information transportation system that is not owned by any one company. Content are discrete elements owned by the individual copyright holders. The internet and content cannot be compared in the way the argument would like to compare them.
To make an analogy, the internet is basically our road and highway infrastructure. Content are the places to visit. Does it piss you off that you pay taxes to fund our roads, yet shipping companies (aka heavy P2P users) with large heavy trucks get the most benefit out of them? Or does it make you upset that you support families with RVs that make a lot of road trips? Of course not.
I would argue that content on cable TV has always been a’la carte, but the cable networks who own the distribution system make deals with the content owners to force you to take an “all or nothing” package to extort more money from subscribers. They’ve gotten away with this because they own the network.
The internet is not owned by a single company like cable TV networks. This is why things will change and why content will become a’la carte. In fact, I would argue that content available via the internet is a’la carte already. I pay $44/month for my internet service. This just gets me connected, nothing more. I have subscriptions to WSJ and other sites. I purchased them “a’la carte”.
Now, there’s nothing stopping the content producers from banding together and saying “If you want access to content X, you need to buy a subscription to all 30 of our content partners”. Video gaming sites did this back in the late 90’s. If you bought a subscription, you got access to 10+ different sites. If the content is compelling enough, people will buy it. If not, the market will work itself out.
I agree with the Boxee CEO. Content will be a’la carte. We’ve heard consumers complaining for DECADES that they hate how cable companies force you to take everything. Now that the cable companies do not control the content distribution, we will see a dramatic change in how people consume content.
Users want one thing: control. Tivo/DVRs are popular because they give users control to skip commercials, pause, rewind, etc. Internet usage is growing while television use is declining because the internet gives users orders of magnitude more control than TV. I would reevaluate any business plan that restricts user control. Give users control, they will love you. Take their control away and they WILL hate you.
Comment by voidstardb -
Mark, you never answered my question about bandwidth, yet again in a reply you again use the argument, “but if I DVR, I can use the internet while my kids watch TV!!”. this is silly.
Your arguments and assumptions are 7-10 years too late.
Comment by mikie -
There’s a disconnect here in comparison terms. While the Internet isn’t ala carte, it is a fixed price for an all you can eat buffet. Cable at the moment is neither of those. Instead it functions more like a mafia-run restaurant where in order to stay in business you have to put half a dozen of their do-nothing “employees” on the payroll, buy from their overpriced suppliers and while the service is bad they still add on the 20% tip automatically.
It’s another in a long line of fat cat overcharging revenue models that will slowly meet its demise because it gets drunk from its own history of excess and is unwilling to adapt when its disgruntled and long suffering customers flock to a near equal but non-gouging alternative. Think AOL charging $20/mo for bring-your-own-access for the same things Yahoo! and then Google provided for free. AOL had all the eyeballs and traffic necessary to be Google but they were addicted to a non-sustainable revenue stream. Same goes for traditional newspapers and their now gone hugely overpriced classified ads. There’s no loyalty in an exploited customer base.
In fact cable operates like a reverse all you can eat buffet, because it allows studio operators like Time Warner to get paid to serve customers the same chewed up meal over and over again. You paid to see our latest crappy theatrical release and felt ripped off? Fine we’ll charge you again on HBO and air it 30 times. Then we’ll move it over to Cinemax and charge you again. Refuse to pay for premium? We’ll charge you for it when it airs on TNT. And those are just the channels we own outright. Each step of the way we can afford to overpay licensing fees to the studio in order to air the movie, and in return overcharge a monthly channel fee per subscriber because it all just goes back to ourselves anyway and allows us to justify our bloated bill to the customer. Meanwhile Fox, Disney and Viacom do the same through their same content tiers and we look the other way because it’s a cozy quad-opoly that allows us to overcharge too.
It’s a great gravy train while it lasts but eventually someone comes along with a more competitive offering or your bled dry customers get fed up, say enough is enough and go pirate rogue and say buh-bye big bucks bloat. There’s a tipping point where ordinary consumers see piracy as not so much stealing as it is self-defense and the typical cable bill is teetering over the edge of that right now.
Comment by sirdonic -
I guess I don’t understand the either or argument. The question should be “Why can’t we do both?” I get upset because Comcast only offers NBA league pass as a season package. What sense would it make to market Maverick home games as Season tickets only? Individual tickets are also sold because it makes good sense. The same should be considered by Comcast to offer season packages and $3.99 live individual pay per view games. I’d also like to see a Blues television network. Because cable is over saturated with music for young adults.
Comment by Darryl -
lots of old dinosaur thinking in these comments, you older dogs need to wake up and realize things are not like they were 15 years ago and are going to change even more over the next few years as well
anyways, i just canceled most of my cable with comcast for 3 reasons, 1. internet and ‘soft’ media WIN (media centers, apple tv, etc) 2. i like watching the news sometimes 3. MRC’s are getting ridiculous
Comment by anon -
Why do “internet” people think “content” people are stupid?
Here’s why:
“I was reading an article where the Boxee CEO said content would eventually be al a Carte. Why does he, like so many other internet people think content producers are stupid ?”
–This is Rush Limbaugh linguistics. Preaching to the converted, and turning a semi-deaf, totally-obtuse, generally insulting ear to the unconverted.
“Now I dont know about you, but for HDNet and my other content companies, we tend to be very nice to those of our customers who pay us every month. Commentary from cable networks and their content producers are saying the same thing. They can’t afford to upset the people who pay the bills.”
–Now, I don’t know much about HDNet, mainly because I get all the content I want without paying you, but you, sir, are a moron if you think cable companies and content providers care about their customers. Not only am I FORCED to choose Time Warner as my cable provider (in the middle of Brooklyn!), but they have the worst customer service and technical support out of any provider I’ve ever used, including Comcast, Verizon, and CableVision. They CAN afford to upset the people who pay the bills, because they’re often the only choice for cable subscribers. When those subscribers get fed up, they upgrade their internet and get their entertainment that way, circumventing the entire cable fiasco. It’s the natural order of things, especially when you get down off your pedestal and look at it from the customer’s perspective.
Blowhards and old-boys like you will no doubt hang on till the bitter end, moaning and groaning about “piracy” and “bandwidth limits” till the cows come home. Good thing I’ll be watching free TV on Boxee, listening to free music on Last.Fm, and downloading movies from Demonoid, ThePirateBay, and Google. All I have to worry about are the rising internet rates, and it’s a good thing I don’t have a whiny CONTENT PROVIDER as my internet provider…oh wait!
Comment by Drew Pei -
I reread your post and I think I understand some of the disconnect between you and the commenters. You include NBC and other networks/channels as content creators whereas most of their role is content aggregators. A lot of the content on NBC, ABC, Discovery, etc. is not produced by those companies but instead is purchased by them to be resold to advertisers and distributors (cable companies, etc.). The real content creators, the production companies, such as Bad Robot (Lost) and Reveille Productions (The Office) sell their show to ABC and NBC because currently this is the best method for them to monetize their content. If there was a better way for them to monetize it, and free themselves from the constraints of network control (edits for language, content, advertisers, etc.) I think they would jump at this in a second. They stick with the networks because there is not a better alternative currently.
The audience as well sticks with the standard cable tv model because there is not quite a better alternative, but that is changing. As you can seem from many of the above comments the audience is shifting away from cable TV to the net because of convenience (less commercials, available when they want it, etc.). Once a critical mass moves online the content creators will follow. The middle men, unless they can offer something compelling, will begin to dry up. Look at the record business for a similar change. It is happening slowly but both established artists and newer ones are avoiding the traditional distributors and instead distributing directly to their audience.
Comment by Anthony -
Mark, you’re right but only because of some false premises. Of course, LEADING content providers won’t go ala carte, the upstarts will. The next Office will be distributed online and it will be sold ala carte with micropayments. The content creators won’t do it until the technology has been built to distribute and monetize their content, but once the tech is there, the content will follow. Another false premise is that streaming is the future, when people have already gotten used to the Tivo model: download in the background overnight and watch when you want. You’ll tell your TV that you want The Office, Mavs games, and 60 Minutes automatically downloaded the night they’re released and you’ll just watch them whenever. This will also save on bandwidth as the downloads can be scheduled during off-peak hours. Your settop box will also download promising new shows that you might like, based on your past preferences, just in case you get bored with your existing lineup someday and want something new. The first taste of that new show is free, if you like it, you pay for each show from then on or lock in a lower subscription price if you like it a lot. As for ala carte pricing for internet service, that’s actually the future too for precisely the reasons you state. Right now, the grandma who only checks her email is subsidizing me, the guy who steals TV shows and movies over bit torrent. That’s not fair and it will change, I’m all for it. As for your valid point about home network management, that’s only because the telcos are monopolies who deploy cheapo home routers that provide essentially no network management. If they ever want to do video conferencing, they will have to change that and ala carte video downloading will force them to change. Even if only 1-5% of available bandwidth is allocated to ala carte internet video, it will beat out the telcos trying to choose what consumers want like some dying communist state, ONCE ala carte video is monetizable through micropayments. However, before micropayment monetization is worked out, you’re right that only the telcos will succeed with their existing billing systems: it’s just that their content arms will be destroyed quickly once micropayments are in place and they won’t necessarily care because they’ll be trucking a ton of ala carte bandwidth, as a dumb pipe to the home.
Comment by Ajay -
Mark,
Your metaphor is incorrect. You aren’t subsidising the connections of 3rd party web sites. That’s the whole point, you are paying for access to a network interconnection point. The web sites also pay for access to that interconnection point.
That’s part of the wonder of the Internet. Everyone pays for their own connection, and their own traffic.
If you don’t like being part of a bundle with the rest of the people on your local network, go get a business account. In other countries data caps and $$ per byte charging are the norm. It costs between $1.00 and $15 per gigabyte of traffic on a residential broadband connection here in NZ, depending on your chosen package.
Have you ever lived in a student neighborhood? Have you ever picked up the phone and not gotten a dial-tone? Is that the fault of the other students or the phone company? Do you have the same complaint about how your monthly fixed line rental is subsidising your neighbor’s teenage daughter’s free local calls?
Perhaps your second comment was just a malformed rant.
As for the rest. Cable TV can’t get any faster or any better. They aren’t going to get any more money from their subscribers. The Internet though, it can get faster. It has gotten faster and it will continue to get faster. Does the future look like Hulu? Who knows? Does it look like cable TV? No. PVRs have already shown that playback is separate from delivery. Cable TV is just another method for content producers to get their content to the viewer. It is no better or worse than any of the others. The only difference between Cable TV and the Internet is the cost of entry. Internet delivery is a heck of a lot cheaper to start.
Comment by Jason -
Dear Mark – Anyone who thinks he knows the future and basing it purely on the past events is stupid. that’s what I think.
thank god some people think out of the box and are not afraid of paradigms and so produce us app stores on the iphone and flat rate data plans which “who would have though possible” just 2 years ago.
Yeh – the ISP’s are really a great example of innovation… ah, yes, you’re right, content will be just like internet service…
(BTW – I think that all good web sites with god content – news etc. – will be a-la-cart as well somewhere down the road – the only thing is controlling the user experience for which there’s currently no good enough solution).
Comment by Adam Mamei -
I have been without cable for about 2 years now. We are currently getting OTA HD and get most of what we want to see on TV. For movies, we could always subscribe to a cheap Netflix subscription or take a quick trip to one of the 3 rental places within 5 minutes. I’ve also used Boxee and enjoy it immensely. I used to watch Hulu with it to catch shows I missed. Now, I can still use it if it’s up or I could just use the same computer that is pushing Boxee to the TV to connect to Hulu or NBC, etc. straight through its browser and full screen it. If they stopped offering the content online? I would just wait until it came out on Blu-ray or catch it on Netflix. Why would I pay for cable when I feel it’s unnecessary with the current environment? I was at a friend’s house who has cable and 100+ channels. Guess what? Her picture was worse than mine from my antenna because she doesn’t pay the extra $/mo. for HD. The movie channels don’t play what you want when you want, and as for the VOD, I can just wait and get it with Netflix where I have this nice little monthly fee to watch it when I want. The VOD prices would add up to over the subscription fee rather quickly. Does it come down to choice? Probably not, I would say it comes down to money first for me. Then I would say convenience and then choice. I don’t want quantity. I want quality. The cable companies seem to have lost the pulse of today’s consumers.
Comment by JSR -
Pingback: Internet People Versus Content People : Beyond Search
Mark, you were kind enough to stop by and comment on my blog, and asked the question:
“if Rev3 could get consistent monthly revenue by being available exclusively to cable/sat/telco subscribers online and via their VOD to TV services, which would in turn increase your revenues, which in turn would allow you to expand your programming and marketing, why wouldnt you ?”
So I figured I’d come back here and respond:
Don’t get me wrong… I totally lust after affiliate fees. To get ten cents every month for every household that has the opportunity to watch my content would be like a dream come true. But I think the days of independent niche cable networks achieving that success are long gone. We tried to build just that at TechTV, built a hugely passionate audience, it just wasn’t big enough to pay the bills.
But all this back and forth has me thinking… and here’s what I’d really love to do – create a “best of internet video” 24-hour cable channel that takes the best of what’s available online, puts it into a wheel and delivers it as a channel for the multi-channel world, VOD for the shows, and an on-line destination site that pulls it all together ala Joost or Hulu.
I could totally program this channel with high-quality HD content, and build it for a fraction of the cost of most cable nets.
Whaddya think? Call it HD-Internet!
jim
Comment by Jim Louderback -
thanks for making my point jim 🙂 Of course you would love to create a best of internet video channel. Every internet programmer would love to be on TV if they could be. Unfortunately, its been tried and the content has not drawn an audience. Current has tried it. Others have programmed shows around it. What is happening instead is that the most professionally produced content is finding its way on to VOD. Comcast/Time Warner/Charter/Verizon/ATT, etc have created folders of content available through their programming guides. Heck, even Lodgenet has done it for hotels as well. but if you have any good programming ideas geared towards men that are not technical in nature, HDNet wants to hear about it.
Comment by markcuban -
Mark,
In response your response…
You’re too focused on the business model driving consumption habits when in reality it’s the reverse. Take a look at the record industry…
Overall I’m not saying this will change overnight, and I’m not saying it will change for the entire current user base… but the user base will shift more towards this every years as more “kids” graduate college and enter the work force. A percentage of older people (you know, like your age) will likely adopt after the tech “crosses the chasm”.
“You wont use the net in 10 years like you do today anymore than I listen to CDs because I did 10 years ago”
Exactly! And people won’t watch TV in 10 years like they do today. The thing that you’re missing in all of this is that computers, “TV” displays, and set top boxes will be one and the same–as will the delivery method. Look at fios/comcast… hrm… same fiber/coax delivering the content. Just look at CES this year… it’s starting.
” And your kids ?”
I have two. My toddler is allowed to watch 30min *max* a day–he chooses the time. He usually wants to watch Top Gear or Thomas the Tank Engine sometime after I come home from work. No problem Downloading it off iTunes or Netflix… AppleTV (plus xbmc plugins) solve that. Usability? Easier than a cable box–my wife loves it. Buffering time? Fast enough for a toddler w/ a 1.5Mb connection (30-60s?). And this will only improve.
” tying up the internet connection watching Youtube and Hulu”
Sir, are you serious? Do you really believe that bandwidth will stay stagnant for the next 10 years? My dad has a 20Mb connection that he doesn’t know what to do with (in the USA); my wife had a 30+Mb connection while working in Tokyo in ’07. Your argument about “tying up the internet” is laughable. As I said before, you’re stuck in the 90’s… it’s not like ’96 where talking on the phone prevented you from dialing into AOL. This just goes to show your age here…
“cant do video conferencing with their friends”
Really? Again? Still not seeing how this is being prevented. Event on my slow 1.5Mb connection, I can still watch Hulu, surf, and use Skype video. With any faster connection, I’d be able to do that however many X over. So in 2-3 years when 15-20Mb connections are common, what will your argument be then? Moreover, you can easily segment your network into partitions and allocate a minimum for your set-top box (AppleTV, XMBC/Boxee/Netflix device). BTW, I don’t know anyone “young” who calls it “Video Conferencing”… heh. Enjoy the one-hit-wonder retirement home.
“You will see its where you are in your lifestyle that defines how you use the net and media, not your age”
This is one of your main false assumptions… it’s your generation rather than age. Your generation is old now–face it. Just as my sons will have entirely different consumption and usage habits than myself, the young 20’s have different consumption habits than you. My “net” and media habits have changed little in the last 6 years (little things like p2p->hulu, netflix disc->streaming changed)… yet I’ve gone from a single college student->working/living by myself->living w/ wife->popping out kids (newborn and 2.5y/o). The only thing that has changed is that I can basically never watch any programming when it airs… but i usually never did anyway. *shrugs*.
Comment by mikie -
Then riddle me this. Why are DVRs selling more units , and growing faster than laptop/software(boxee etc) ?
I have a 2 yr old and a 5 year old. We DVR everything for them. No laptop. doesnt tie up bandwidth. We can go to barbie.com, noggin.com, wherever and watch or download videos, and while they dont care what screen its on, my wife and I are active users of our laptops in the house . When the kids are allowed to watch their TV shows, we usually are working on our laptops.
And check out this very informative post from Netflix on streaming http://blog.netflix.com/2009/03/netflix-trying-for-consistent.html
Comment by markcuban -
Hey Mark – I want to first start by saying I am a fan, I enjoy your blog and keep it up.
Also – I am a web guy in the newspaper business and I think the fundamental issue is the business model is broke. It reminds me of the record business – we went from an album, to individual song sales and now many bands are giving the music away.
Why? Well, marketing for one. It’s hard to get through the over arching cloud of noise. I think it is getting the same way with TV – and definitely in the newspaper.
We need to figure out a new business model on a new medium. It will work…it has in the past and it will again.
thanks,
tom
Comment by tomaltman -
1st of all, comparing video and music is the wrong analogy. The cost to create the most professional sounding music (exclusive of the artists’ time) is nada and can be done in any garage or basement and often is. The cost to produce an episode of Lost or American Idol isnt something you or I can afford to do for Youtube. Huge difference.
im all for new models. In fact, its exactly why Im making this argument. Everyone thinks the internet is the foundation for some new model. I think the net is old news and not capable of what many are praying it will be capable of in the future.
Technology does evolve, but it doesnt always follow the path we expect.
Look at cars. mpg ? Look at planes. slower since the concord was abandoned. Green vs Electricity. All technological bound issues that havent gone anywhere near as far as we hoped they would. You can blame the problems on the nature of the incumbent companies, but again, that also is the point. Someone has to come out of left field to gen the change. Given last mile economics, wired or wireless, where is that going to come from ?
Comment by markcuban -
chip chip chip chip… that is the sound of change. These things don’t happen overnight, remember, for a very long time (15 years) the internet (or BBS or ARPANET) were: 1. complicated, 2. very expensive, 3. slow 4. not incredibly exciting or accessible to your average Joe.
The early adopters are in full swing, I took the plunge, canceled my Time-Warner-(AOL?) Triple play package, put together an HTPC for ~$400. So far Hulu + Netflix + over-the-air HD + iTunes + the occasional torrent has FULLY satisfied my entertainment needs. Boxxie, Apple, Microsoft, every PC maker, hardware vendors (my motherboard came with an HDMI connector) will continue cranking out faster, cheaper, easier platforms to access this content.
This doesn’t mean that well produced content is going to be extinct. Eventually, internet CPMs will be the ONLY CPMs, advertising dollars will have no choice but to flock online and start paying a meaningful amount for exposure. Maybe we won’t get 9 minutes of advertising for every 21 minutes of content, but, then, maybe people are sick of a system established 70 years ago.
Comment by Jake -
My parents are in their late 60’s. They don’t have cable. They do have digital broadcast TV. My mom loves Hulu and often re-watches DWTS on CBS on her laptop (it’s easier than then dealing with another converter box for the VCR). My dad loves YouTube on his desktop. My mid-40’s brother-in-law is into Netflix, online video games, and iTunes. I’m in my 40’s and have an HD Tivo with Netflix, broadcast DTV and I love, love, love it! My parents neighbors are 80 and 81 and have a DTV converter box for OTA and love their Mac their 50 something son set up for them.
If we’re all decades over the age of 25 and doing this it certainly means the younger crowd is doing it in even bigger numbers. The mailing list for my neighborhood association has at least 1 non-techie type person a week asking how to set up a DTV converter box, a wireless network, or how to connect their laptop to their TV. We are moving past the early adopters and it’s being accelerated by the recession.
The description in a comment above of how content production for cable is subsidized is interesting. It may mean that program prices to consumers go way up when there are no longer enough of them buying the bundles and the production of content is not being so heavily subsidized. Since this is all hidden from view, I don’t see the point of blaming the consumer for not wanting to be at the mercy of the pipeline process. One can stand only so many Sham-wow commercials without wanting to throw something at the TV, particularly when looking at the latest cable bill.
The freedom of choosing what to watch when, not worrying about schedules, not missing things because of conflicts (I missed the finales of MASH, Cheers and most of the 84 Olympics)is just awesome!! It was years before I got to see the last episodes for those shows because there was no other avenue available. VCR’s weren’t common, series weren’t available and re-runs might be along time away. I believe “appointment TV” is history. Many of us missed a lot of the appointments anyway. So if you cannot convince customers to stay with the way the things are what will you do if they continue to do what they want instead?
Comment by jafi -
Pingback: Mark Cuban: Why do internet people think content people are stupid? « Raja Jasti’s Blog - Renaissance Thinking
Great idea. Cell Phone providers already charge for bandwith you use in regards to file transfers. Revenues from continuing operations will fall signifcantly for U.S. ISPs. Broadband is not a revenue growth story. They do need to reivent themselves otherwises, they will die off one by one.
Comment by Darren -
Your response to Avner was that the cable companies can (or will in the future) do anything that the internet can do with content delivery. WRONG. There are things we as consumers do with the content that you guys will always try to prevent. For example, we can download a movie, slice and dice it, clip our favorite scenes, share it with our friends, put it on youtube, add captions, put it on our web pages, etc etc whatever. For example:
http://www.youtube.com/watch?v=0v4_rzwk52A
There are more copyright violations than I can count in that video and some of it is your content, Mark. Why don’t you sue? Because you love it as much as the rest of us. Stop fighting it and let’s have more of the internet model.
From MC> I dont care about videos like this. Nor do i fear piracy. Heck, Magnolia DVDs dont even have DRM. But you miss the point. No one cares about videos that have already generated all the revenue they are going to generate. THey are just promotional. Anything that can have a dollar signed attached to it, we care about
Comment by Jeff in Dallas -
Mark,
At the end of the day, all of this boils down to one thing: consumers drive business in the long run–business models will not drive consumers. Sure, right not 95% (making this number up) of consumers want their big traditional bundled TV packages… however, wait 5-10 years and that will change.
I do not watch terrestrial TV or cable/satellite. iTunes, traditional Netflix, and Netflix streaming covers 98% of my (and my kids) content needs–the remaining 2% is covered by Hulu or sites that offer live streaming (Olymics, NCAA tourny).
*All* of my friends that are 10 years my senior have cable TV. 7/9 of my close friends my age (26) do not. Out of those who do not have cableTV, only 1-2 use torrents/illegal methods; everyone else buys or uses Hulu. Times are a changin…
It’s time to face the fact that you’re not so young anymore, it’s not the late 90’s, and you’re out of touch with the next generation of content consumers.
– Mike
From MC> Actually its time for you to face that when you are mid 30s and older your consumption habits will change. You wont use the net in 10 years like you do today anymore than I listen to CDs because I did 10 years ago. And your kids ? If you are talking about kids that live at home with you , when they want to watch what they want to watch, when they want to watch it, and they complain about you tying up the internet connection watching Youtube and Hulu, why cant you just watch it on TV because everything is available on demand there and it doesnt slow down the whole house and they cant do video conferencing with their friends or whatever they are doing.. Or you will complain that they have to get off because you cant get your work done online at home and you damn sure dont want to have to go into the office to work. You will see its where you are in your lifestyle that defines how you use the net and media, not your age
Comment by mikie -
At some point content distribution networks will have to come clean and admit they are operating as a walled garden. Cable, FiOS delivered TV shares the same physical medium, same bandwidth as the internet currently does. To say that “The Internet” cannot deliver the same content as TV providers is dishonest. It all goes over the same pipe; the restriction is arbitrary and artificial.
Should there be a cost commensurate with service levels? sure. But it’s a commodity, and Cable providers do not offer a perceived value added outside of perhaps a means of allowing some niche quality programming be produced on the shoulders of mass market drivel.
Comment by Brian -
I get vastly better quality from DirecTV HD than I do from the internet… so I keep paying for DTV. When I can get the same quality from the net, DTV will go away.
I hate paying for 200 channels I don’t use for the 50 or so I do use.
My internet costs me $60 a month. DTV costs me $100 p/m. I’d gladly pay $100 p/m for internet that would give me everything it does now, + high quality HDTV… because I’d be $60 p/m better off.
And if I have to choose between the two, internet stays, and DTV goes.
Comment by TKV -
What would this “A La Carte” world do to hosting costs? The small people would be squeezed out because the low bandwidth revenue they generate would be replaced by higher paying content. Providers wouldn’t have to create any new bandwidth or space. They could just auction it off to the highest revenue generators and say the hell with everyone else. Content would become bland and dominated by a few major players. Others would be forced out by the high cost of entry. (Wait a minute….I’m describing network television)
Ok, I’ll take off my tinfoil hat long enough to say be careful of what you wish for. Everything has a price and often times that old cause and effect thing can get amplified. Just ask anyone who had money in the market either recently or before the dot-com bubble burst.
We can’t forget that the low cost of entry brought by the internet is what has driven all the innovation that we all benefit from. We should be wary of changing too quickly because it fits an agenda.
Just my two cents…
From MC> Finally , someone looking forward and asking questions rather than surmising the internet cures all..
amen
Comment by cidman2001 -
Seems to boil down to a surplus of distribution layers, weighed down by years of distribution baggage. The industry has to toss out the extra layers, and it’ll be painful, and we have to come out the other side with content creators still happy.
But it must be done, even if it means decoupling production from distribution.
Comment by Brian -
Hey Mark,
Great post, Mark. Getting to read your take and also Avner Ronen’s (Boxee CEO) opinion — really good stuff.
As a consumer, I frequently watch HDNet (MMA fights) through my DirectTV subscription and have been using Boxee for about six months now. I know it seems to bother you that people watch tv through the internet and slow down text-based surfing, but I find myself turning to Boxee more and more. It’s just so convenient.
And as the recession deepens and more people find themselves out of work,it seems to make sense that people would dump their cable and turn to their broadband pipe and Boxee for entertainment.
Bottom line — in the hierarchy of utilities in today’s society, high speed internet is more of a necessity than cable. If I’m out of work, I’m going to keep my internet to hunt for jobs and stay informed. The cable’s gonna go. I’ll be using that $1200/year to eat.
From MC> Cant argue with you DJ. People will look to save money in this economy. But hopefully thats a short term issue. Thanks for watching HDNet !
Comment by DJ -
Mark,
I have no numbers on who is doing what. So I can only speak to my own experience.
What I don’t see mentioned here is the loss of trust. I have not had “tv” for 4 years now, I see no need to again. I don’t like how I am treated. Its that simple. It’s always been about a la cart. Always. Whats new is that I have better choices now. I CAN do what I always wanted to do, and always did before. Watch the content I want to watch. Its just that before, i HAD to choose some package that had a bunch of other things i didn’t want to get the one SHOW that I wanted. Not channel, but show. Now I can just buy the show I want, and I get to keep it. I get to watch it over and over if I want. I can play it for friends when they come over.
Sure, we can start making people pay extra to have it anywhere, but I am done with that. The hate of being forced into packages I dont want has grown to great, and I have seen a better way. I won’t go back. I will buy the dvd(s) after the fact if I must.
People have changed and are changing, thats the real issue. I have left behind tether of subsriptions, and embraced the freedom of owning an interacting.
P.s. As a computer scientist. I dont believe the claim of insufficient in-home bandwidth. Not saying it isn’t true, just neef a little more proof that the internet connection isn’t still the bottleneck.
Comment by Jeff -
Pingback: boxee blog » a lively debate with mark cuban
@Justin – Your point would have more weight if you don’t resortd to name calling. MC has a different point-of-view. Isn’t your disagreement enough?
Comment by Richard -
Mark,
I think you’re right about having the price of shows increase if the cable side went away. That is, I think the price for shows that have a limited audience, one that is currently subsidized by cable subscribers that have never watched any content on that channel, will increase. For people that really enjoy some obscure topic they will either have to pay more, or the content creators will have to become more creative and cut their production costs. Other shows with larger audience could continue to price themselves at their current iTunes prices.
The switch from paying to subsidize a lot of cable choices that are not watched to paying for what you actually use is a generational shift that will happen over the coming decade. The telco’s are feeling this now as their landline business dries up and younger generation moves strictly to mobile. The telco’s, well the larger ones, managed to offer another product to replace a dying one.
With declining viewership, and falling ad revenues the cable providers, and networks, will need to adapt their business model to meet changing consumer tastes. Bumping up my cable costs so that I can now watch TV on my cellphone is not one that will sell in my opinion.
I used to think the idea of the cable companies being able to offer me everything I want all the time anywhere was great. Remember those Qwest commercials? But, my options and behaviors have changed. Additionally I will never give a dime to another cable company for the simple reason that their customer service is atrocious. As long as they continue to treat their customers like cattle their business will slowly erode. Frankly, I am shocked at the horrible way they treat consumers considering that subscriber penetration has remained more or less static for 15 or 20 years. I guess when you have a monopoly you can get away with murder. Shame that whole Internet thing has given hints to a better way.
Comment by Anthony -
MC, you sir are a retard. You say that in all honesty I (the consumer) do not actually WANT choice, just the idea that I somehow have a choice. Well crap, I never knew! So basically you know whats best for me then? Why stop at my television programming? What should I eat for breakfast tomorrow? What stocks should I invest in? ….The idea that anyone could tell me what’s in my best interest besides me is pathetic. Hulu is a great example of next gen entertainment. My choice, on my time. Short ad’s and great content. True, if more people use it the service slows and therefore more bandwidth is needed, but the money you save (roughly $50/month) is more than enough to bump up to the next tier of internet access and still pocket the rest. Sounds like win-win for the consumers. Unfortunately, you have to watch your stocks drop. Oh woe is you, instead of millions of millions of millions…you’ll just have millions of dollars. How will you ever deal??!?
Comment by Justin -
Both internet service and TV distribution models are like an all you can eat buffet.
The TV distribution model lets me see the ribs at the end of the buffet line, but I have to patiently wait behind a person who has to get a little bit of everything and has a t-shirt which flashes random facts about vagisil.
The internet distribution lets me go straight to the ribs and maybe see the vagisil shirt out of the corner of my eye.
I do not think anyone would have a problem paying for the all-you-can-eat subscription if we were able to have more control over *when* we were able to watch the content. DVRs have been a major boost in this arena as have the video on demand option(though to my knowledge VOD has been restricted to premium movie channels). I think the “internet people” that all the content providers are bitching about merely want instant gratification.
An example: “Is that beer you are about to drink carcinogenic?”
TV Model: Sit through an entire barrage of ads and stories about puppies instead of enjoying that tasty brew for an hour.
Internet Model: Go to Google, search headlines for carcinogenic beer, see some beer ads on the right side of the page, Toss or Enjoy.
In addition, use what we have gleaned from the internet models (social networks, user ratings, etc) and apply it to the television medium. This would help account for the “discovery factor” by having viewer ranking of shows in the DVR software instead of using Nielson, which only supports a mob mentality and advertisers.
Comment by mxstone -
IMHO, one should have the option to subscribe to the specific channels they like rather than a bundled package of a gazillion channels. I’d actually pay extra for not having to sort through the hundreds I never watch.
Comment by Rags -
We don’t think you’re stupid.
We do think though, that you are a deer caught in headlights, and can’t see the forest through the trees… you can’t stop content, it’s digital. The social masses will dictate your services and brand going forward.
You can stop creating the content if you want… but hey, its your business so you decide.
Comment by Lethality -
mark,
re your “anything the Internet can do, Cable can do better” argument:
the issue is not switches and hard-drives. the issue is the open
nature of the Internet eco-system. the Cable companies can come up
with Tru2way, EBIF or any other catchy name, but as long as they
decide what innovation gets through to the consumers’ screen it has
FAIL written all over it. i guess they can try re-inventing the
Internet. good luck.
re your “the Internet just can’t handle it” argument: the Internet is
not ready for live HD streaming events to millions of households, yet.
but i would not make a long term bet against the underlying
technology. in the meantime there is over-the-air digital broadcast
that delivers higher quality HD streams than Cable and costs nothing.
the combination of broadband video and OTA will be good enough for
most consumers.
re your “people will turn off wired broadband for 3G” argument: people
don’t care how they get their broadband, whether its DSL, Cable, FTTx,
WiMax, 3G or super-fast-pigeons. what people care about is a fast and
uninterrupted connection. what i don’t think we’ll see is people
downgrading to slower bandwidth.
re your “people prefer easy over choice” argument: i don’t think these
are conflicting needs. people want an easy way to get the content
they’d like to watch. the arrival of cable meant more choice for
consumers and as the ratings prove the availability of more channels
on Cable did reduce the ratings of the major networks. the Internet is
the next evolution. more niche content means viewers will be able to
find more content that they are really interested in watching. finding
content online is getting better, faster and easier. the fact that
anybody can post a video to YouTube means millions of videos don’t get
watched, so what? i think it’s beautiful.
re your “TV Everywhere is the best thing ever” argument: i also think
it’s great. and we would love to have it on boxee. but to try and
force it as the only viable option to get content is an artificial
attempt to save an old business model. TV Everywhere as an exclusive
option is not that great for ESPN, HBO, Showtime, CNN, or any other
channel that has great content and delivers great value to the
consumer.
re HDNet: syndicating shows and movies is not a differentiated
offering in an on-demand world. you will live or die by the quality of
the content you produce. Dan Rather is great, but the other shows of
girls in bikinis and guys beating up each other can easily be replaced
by amateurs with Flip cameras taking videos of girls in smaller
bikinis and guys in backyards trying to kill each other. get ready for
the cesspool. sorry.
avner
Comment by avner ronen -
I really don’t think the internet people are stupid, They don’t get the complicated economics involved with content creation and distribution.
I suspect if you asked most consumers how networks make their money, they would tell you it was by airing commercials. They don’t know about the payments the cable/satellite companies paying per subscriber.
I also suspect that few people know how much bundling is really done. If you asked them what shows they watched and what networks they were on, they’d find that they likely watch the majors and a half dozen others. Then work out the match for the networks to get the same payment on an a la cart plan those half dozen channels would cost them the as their basic package does today. There’s a reason premium channels are $10-$15/month.
Then add the fact that a la carte pricing would make it very difficult for the channels with fewer viewers to stay in business. They are currently subsidized by being bundled with the more popular channels. Many people are fine with losing the lower audience channels when they think it isn’t one of the ones they watch.
It’s easy to look at the world today and say “My favourite shows are available for free online.” The problem is that the online version has fewer ads so there’s less revenue there. The online version requires distribution which adds cost. The only reason the show is online is that it is subsidized by the cable/satellite subscribers. It is a perk for subscribers to see shows they missed. If too many people stop paying for satellite/cable the networks will have no choice but to stop making them available online.
Once you remove the subsidies, a la carte pricing of channels or shows would raise the price that most viewers pay for their content.
Comment by daryll -
The argument that download speed and of horsepower stand in the way of streaming content is incorrect. Speed and power are the one thing the consumer has going for them. Here in fly-over country I can easily pull 7MB down and watch Hulu or Boxee on an old P4 running Ubuntu. The only reason I need cable is for sports and now NCAA.com has proven that they can provide a much richer experance so I think we are witnessing the death of the middle man so to speak. Not that it will cost me much less. Cable bills are about $100 buy $50 of that is Internet. If I dropped cable they have a surcharge of like $10 to keep Internet access plus if I bump it up to 10MB DL it’s another $15 so I save about $25.
Comment by Larty the Internet guy -
Hi Mark,
I don’t think you are stupid. In fact I am very impressed with HDNet. I have been a loyal customer of yours for years.
But this TV Everywhere idea? Well, I remember that Qwest (remember Qwest?) was pitching something similar 10 years ago (anyone else remember the ad where the dude checks into the motel in the middle of nowhere and is informed that all rooms have every movie ever made in all languages on demand?).
Ten years, and it is still fantasy. Ten years!?!
I still cannot buy TV Everywhere. It is taking too long. I am impatient and I am frustrated. And many of the things I am saying are borne out of that frustration. You want to deliver me something as fantastic as TV Everywhere? I say great!
I am done holding my breath, and while your business partners at Time Warner (or any of the other distribution companies out there) continue to move at the glacial pace where a 10 year old idea is still largely vapor and unavailable to the vast majority of us. (Anyone else think that it seems overly optimistic to call a product “TV Everywhere”, even as it is only available to a small fraction of the public in a small fraction of locations?)
In short, I don’t think you are stupid… I think that you are slow.
Comment by Vincent A Engler -
I havnt read through all the comments so someone may have said this, but I wish I could pay for the 2 TV channels I want instead of the entire cable offering. I’d be much happier if I could only pay for the 2-6 HD channels I want instead of the 120 SD channels I have zero interest in. When that happens I’ll consider letting them force that on me in the place I’d rather have wide open.
Comment by travis m -
Mark – you do make a good point that it would be very hard for content producers to build an audience if all shows/channels are sold a la carte.
However, you’re mixing metaphors when you compare a la carte TV to the Internet. We all pay a monthly fee to support the infrastructure of the Internet, but many of us *also* pay for content that travels over that infrastructure: music from iTunes & Amazon, movies streaming from Netflix, news from the Wall Street Journal, etc.
As a boxee user, I’d be happy with a combination of Hulu-style streaming content with short ads and iTunes-style paid downloads for premium content. But if cable companies really want to compete with that, they need to offer something more compelling: a true on-demand service with a low monthly fee (to support the infrastructure) and access to content from any/all networks for a small per-episode fee.
Cable companies and content producers may not like that model, but I think that’s the way it’ll have to go eventually.
Comment by andreslucero -
Who cares what the producers want? Producers are the service and the viewers are the customers. THE CUSTOMER IS ALWAYS RIGHT. I don’t want to wait for programming. I shouldn’t have to pay for it AND I wont pay for it.
Comment by a -
There are two points that I’d really like to see addressed in this argument. These both boil down to customer dissatisfaction, but in different ways.
1. I cannot get HDNet with my cable provider. More importantly, my news choices are limited to CNN, MSNBC, and FOX (with CNBC and Headline News pretending to be news.) I cannot get Al Jazeera, for example, from any content aggregator in the United States.
2. I am dissatisfied with what I am presented for my television choices. I admit, I am a niche market, but content providers on youtube, as an example, have been willing to fill a niche for people like me that cable will never touch. For all the talk of “discovery,” I join many educated individuals in finding the options provided to me as… lacking. These are niches that the internet is reaching.
Some of us remember when the Discovery channel wasn’t dumbed down, for example. 🙂 I’m dying for a true history channel that doesn’t stick to “Mysteries of the Bible part 251.” and World War 2.
In many cases, the internet is giving this to us. http://webcast.berkeley.edu/course_details.php?seriesid=1906978348 is only going to be offered via the internet for a long time, I’d presume. An on-demand world would allow people to develop for niches that are ignored due to concerns of bandwidth.
In what world do you think the cable providers are going to do as well as new media is doing in presenting material to underserved markets?
Comment by Eric Biesterfeld -
Pingback: Better Watching Productions
Apple TV? Isn’t that content álà carte? Is this discussion about subscription vs. álà carte, or really just about ‘free’ vs. ‘pay’?
I only subscribe to cable because it is (currently) the only distribution medium for some of the content I am still interested in; but I have to admit, even with my (cable co. provided) DVR, I find it more satisfying to pay $2/episode to have just the programs I want on my Apple TV, available for me to watch when and as often as I want, rather than try to remember to program my DVR, make sure there is space on it, and oh yeah, manually fast-forward through the commercials.
As for the kajillion channels on my cable, by the time I could search through them to find something I’d actually like to watch, the show will be over. Shoving more dreck down the pipe to me does not make me feel like my monthly bill is more worth it.
I’d be happy to pay a subscription fee, if I felt I was getting a good value. If my subscription meant I could download the content I want, without commercials, to watch on my own schedule, you might keep me as a subscriber. Until then, álà carte is the way for me.
Comment by P T Withington -
Paying only for the 14 sites you use will disable you from “using” a site like Google, no? You couldn’t click any of the results you wanted unless you had subscribed to them. So if you are a Mav’s fan watching on TV and you google Mark Cuban you get this site – which is great. If you subscribe.
Let’s say you subscribe to wiki too. That means you get the top two links. But I’m not going to subscribe to businessweek.com to read one article about you. Nor will I subscribe to the *VAST* majority of the Internet, thus making content providers who provide content other than video go away.
I don’t see why anyone would purposely pay for 3/4 of the stuff we use the net for in a day. ESPN, Wiki, our specific sites that we use yes. But one of the great things about the net is how you can “find” anything. That would change if you had to pay for any content you used. Then it becomes EXACTLY like traditional business (same reason I don’t subscribe to Business Week magazine for ONE issue). You choose your mag subscriptions and eventually decide you can live without a few of those.
So paying for different bandwidth uses? I’m all about that. That’d be fine. I don’t p2p very often although I do use a lot of online video through Youtube and Hulu. But pay for the sites themselves to view anything online? Negative outcome. Not good.
Comment by pictureinfinity -
First, let me say that HDNet is awesome. Dan Rather has the best news show on television, plain and simple.
But Avner is right. I worked for a telephone company (AT&T) for 15 years and a cable company (Charter) for 7 years. My biggest shock at Charter was that consumers hated cable companies even more than they hate telephone companies. I’ve been using boxee for about a year now, and it is the future. As consumers get used to time shifting, via a DVR for example, they will become used to having control over the content they’re watching, rather than passively sitting through whatever happens to be on. I find with a DVR and boxee, I watch about as much TV as I watched before, but I watch what I want 100% of the time.
Content providers need to realize that they can either embrace the shift in delivery mechanism from cable channels to media devices such as boxee, or they can fight it. Right now, they want to fight the shift, because the revenue is smaller on Internet delivery and they have an embedded distribution system (cable companies) to protect. But the shift will happen.
Content providers that embrace the shift can increase their revenue through mechanisms such as targeted advertising. Instead of asking advertisers to pay x cents per view for a commercial, in which most consumers are either ignoring or going to the bathroom during, they can ask advertisers for 10x for commercial that consumers watch because it interests them.
For example, why should Lexis advertise to people who can’t afford their cars? Wouldn’t they pay more to advertise to just those people whose household income is > $50,000? With an intelligent media delivery system such as boxee, they could do that someday. If they find through market research that a high percent of people who watch both “Gillmore Girls” and “Battlestar Galactica” buy their cars, wouldn’t they pay more to specifically target those consumers? This may seem like science fiction, but look what Google is doing with ads targeted to run next to the email they deliver.
Again, the change is inevitable, and content providers can either benefit from it, or suffer from it. It’s your choice.
Comment by Jon -
Mark,
I respectfully disagree.
I watch 4 TV shows. The Office, It’s Always Sunny in Philadelphia, Top Chef, and the AMA Supercross Series. I’m not going to pay $2,000 a year to watch these shows no matter how many devices I can watch the content on. Unless I am misunderstanding TV Everywhere, it just gives you access to the same crappy 800 channels online and on your mobile devices. I don’t think people care about that. At least I don’t.
I feel if I pay for internet and I pay for TV I am paying for the same content twice (and the second time at 4 times the original).
The American public used to watch hours of television every night. Primetime was truly primetime. Television was still the new medium then, but that has changed. The new american growing up isn’t going to come home and watch the 6 o’clock local news, then the 6:30 evening news, and then 2 hours of game shows and sitcoms. That generation is getting older and that model just doesn’t fit with today’s young adult.
Whether downloading content online is moral/ethical/legal doesn’t matter. It is the way things are going. You can either figure why people prefer this and create a model that fits in with this mentality, or companies can just keep saying “no, no you really do want to pay $150 a month for 800 channels most of which have terrible content.
From MC> Brad, what you may not realize is that if the cable side goes away, your cost to watch those 4 shows probably goes up to about 9.95 per episode. Maybe 4.95 over time. The cable bill pays for the shows, and allows them to make them available after they have aired, inexpensively. The day that changes, so does your cost.
if you find yourself paying $40 per week for your favorite shows, or $50 dollars per month for annual subscriptions for those 4 shows, would your viewpoint be different ? I think for most people it would be. Those shows are not going to be available for free or some minimal amount on Itunes if their main source of revenue disappears
Comment by Bradly Feeley -
I must be in the minority, but I’d love to cut my cable channels down to about 10 or so if it would reduce my cable bill. I don’t use the 95% of the channels I get.
Comment by Joe -
I agree the Internet is ala carte but it too is just like phones only one connection at a time. Computers/gateways/routers can multitask, i.e., split the connection more finely than traditional phones and so it appears that they are multiplexing while phones duplex. Long distance is a red herring as argument since most of us do not pay any premium with our phone companies. It is a VoIP world. Even POTS connects to VoIP as the intermediary between the terminals.
Traditional cable which is most common is a huge pipe, like a water main, with everything flowing one-way all the time at the homeowner.
Comment by Richard -
mark,
bundled offering is not going away. what is going away is the
traditional concept of a “channel” and the idea that the cable company
is the one deciding what content is included in the bundle. the user
should and will be the one making the decisions on what he is going to
pay for. while it may be bad news for some incumbents it is overall a
great positive for the content industry and the consumer.
as a cable channel your primary concern is your ability to negotiate
your way into the basic cable package with as many cable operators,
and to get the highest fee for it. in an Internet/on-demand world your
primary concern is the quality of your content, since you are held
accountable by the consumer. if consumers want your content they will
be willing to pay for it either with cash or with their time (watching
ads).
in the same way that in the Internet age printing a newspaper is an
inefficient way to deliver news, building a channel and programming a
24hr schedule is an inefficient way to offer video content. i
understand it is a lucrative business. you invest in 1-3 originally
produced (or exclusively licensed) core programs, come up with 5-7
cheap to produce shows, license a bunch of syndicated content, get
cable companies to carry it and voila! you’ve got a great business.
but this model breaks in an on-demand world, and while it may take a
few years the change is inevitable.
it may be that the biggest risk you will face is that things are too
good for you living off the cable model, and while you are trying to
protect your profitable (yet future challenged) business, some
talented, hungry, motivated guys on the Internet will produce better
content for your audience and eat your lunch.
btw, i don’t know much about HDNet. ironically my cable provider (CableVision) does not
carry your channel..
avner ronen
http://twitter.com/boxee
From MC> Avner, your argument has no merit. None. I can understand why you hope it ends up this way, but it wont for a variety of reasons. The least of which is that cable and telco networks are not static. There is nothing the internet can do technically that your local Cablevision, Time Warner, Verizon, Charter, etc cant currently or in the next few years be able to do. Unlimited VOD in a switched environment, Just a matter of switches and hard drives. Networked DVRs, so that there is no need for a device in the home at all, just a legal issue. You pick the feature you like on the net. If youtube can do it, so can your local cable/telco.
BUT things are not getting more flexibile for video on the net, its getting worse. You just dont want to face it. The amount of bandwidth in the home, not to the home, in the home is a huge limiting factor that no one seems to want to talk about. You want to download from an internet source to your laptop, while you are wathing your favorite show on Hulu, probably not a problem. Except that your wife/daughter/brother/son/father/mother, etc want to do the same thing at the same time. In HD. So rather than your 10mbs or 20mbs downstream being just fine, the 5 HD streams you are always trying to download at your house is killing your ability to hang out on facebook or upload pictures to Flickr.
But wait there is more. Go to netflix and ask their users about how the quality of the streams are lately ? And how are users in your al a carte internet video universe going to feel when they have to pay more for a show because more people are watching it ? Thats going to make sense to them wont it ? They wont care that more users increase bandwidth costs. On EVERY video distribution network, NO EXCEPTIONS there is more than 30x the bandwidth allocated to the traditional delivery of content vs the open contention internet delivery of content.
Then there is the risk of PCs going smaller with less horsepower to run multiple video streams and the real killer, those same people who might turn off cable to save money might just be the same people who turn off their wired broadband to the home and just use their mobile devices with 3G. Some percentage, maybe a large pct of your “over the top” , price sensitive market is at risk of going small. mobile small.
The concept of “users always want choice” really really sounds nice. It makes for a great panel argument. But the reality is that its not true. Ultimate choice requires work. Consumers like to think they have choice, but their consumption habits say they prefer easy. Youtube is the perfect example. Millions upon millions of choices that never get seen. The videos that get posted and expected to be seen are the ones from traditional media and providers that already have an audience, ala jon stewart. The rest have to fight for an audience.
Look at whats happening on youtube. Youtube is paying to get the best content. Everyone else who is trying to make a living is giving shit away in order to build their subscriber numbers. All the young, talented and hungry, whore out their product with lame “subscribe now, please” or “subscribe now and you can win…”
The TV Anywhere solution is the best solution out there. Its the best of both worlds , you just have to subscribe to cable/sat/telco video to get it. Which in fact most people already do. So for most of the US, broadband consuming world, it will be the path of least resistance. They can have ultimate choice, via VOD, or they can watch TV the traditional way. Their call. Content creators will easily fulfill users demands, whichever way they want. Thats the ultimate choice isnt it ? Give me all the content I want on demand, on my tv, or let me watch channels that package the type of content i want to get, with out me having to do the work of searching for it. I can put together my favorites on my remote and stay there, or venture out easily when Im bored. Thats the way it will work
Get ready for the deadpool. Sorry
Comment by avner ronen -
From MC> Avner, your argument has no merit. None. I can understand why you hope it ends up this way, but it wont for a variety of reasons. The least of which is that cable and telco networks are not static. There is nothing the internet can do technically that your local Cablevision, Time Warner, Verizon, Charter, etc cant currently or in the next few years be able to do. Unlimited VOD in a switched environment, Just a matter of switches and hard drives. Networked DVRs, so that there is no need for a device in the home at all, just a legal issue. You pick the feature you like on the net. If youtube can do it, so can your local cable/telco.
BUT things are not getting more flexibile for video on the net, its getting worse. You just dont want to face it. The amount of bandwidth in the home, not to the home, in the home is a huge limiting factor that no one seems to want to talk about. You want to download from an internet source to your laptop, while you are wathing your favorite show on Hulu, probably not a problem. Except that your wife/daughter/brother/son/father/mother, etc want to do the same thing at the same time. In HD. So rather than your 10mbs or 20mbs downstream being just fine, the 5 HD streams you are always trying to download at your house is killing your ability to hang out on facebook or upload pictures to Flickr.
But wait there is more. Go to netflix and ask their users about how the quality of the streams are lately ? And how are users in your al a carte internet video universe going to feel when they have to pay more for a show because more people are watching it ? Thats going to make sense to them wont it ? They wont care that more users increase bandwidth costs. On EVERY video distribution network, NO EXCEPTIONS there is more than 30x the bandwidth allocated to the traditional delivery of content vs the open contention internet delivery of content.
Then there is the risk of PCs going smaller with less horsepower to run multiple video streams and the real killer, those same people who might turn off cable to save money might just be the same people who turn off their wired broadband to the home and just use their mobile devices with 3G. Some percentage, maybe a large pct of your “over the top” , price sensitive market is at risk of going small. mobile small.
The concept of “users always want choice” really really sounds nice. It makes for a great panel argument. But the reality is that its not true. Ultimate choice requires work. Consumers like to think they have choice, but their consumption habits say they prefer easy. Youtube is the perfect example. Millions upon millions of choices that never get seen. The videos that get posted and expected to be seen are the ones from traditional media and providers that already have an audience, ala jon stewart. The rest have to fight for an audience.
Look at whats happening on youtube. Youtube is paying to get the best content. Everyone else who is trying to make a living is giving shit away in order to build their subscriber numbers. All the young, talented and hungry, whore out their product with lame “subscribe now, please” or “subscribe now and you can win…”
The TV Anywhere solution is the best solution out there. Its the best of both worlds , you just have to subscribe to cable/sat/telco video to get it. Which in fact most people already do. So for most of the US, broadband consuming world, it will be the path of least resistance. They can have ultimate choice, via VOD, or they can watch TV the traditional way. Their call.
Content creators will easily fulfill users demands, whichever way they want. Thats the ultimate choice isnt it ? Give me all the content I want on demand, on my tv, or let me watch channels that package the type of content i want to get, with out me having to do the work of searching for it. I can put together my favorites on my remote and stay there, or venture out easily when Im bored. Thats the way it will work
Get ready for the deadpool. Sorry
M
Comment by markcuban -
Pingback: Internet as Infrastructure: Why Pay for What You Aren’t Using? « The Silicon Angle
I think your analogy of comparing Internet bandwidth with cable TV is a poor analogy. Rather, Internet access is like traditional phone access. If I dial the number I can call anyone. Internet and phone are two-way communication systems. Cable TV is one-way.
From MC> Actually you have it wrong. Every phone call takes the same amount of bandwidth and every home connection requires pretty much the same equipment and allows for connection to anyone by anyone, with a premium paid for long distance. One call per line at a time. Thats as ala carte as it comes.
Comment by Richard -
no offense, dude. but, the problem comes in for people like you — the middle men. we don’t need you anymore. it’s you who’s going away.
you’re not “content people.”
you don’t create anything.
you just move crap from point-a to point-b.
be pissed about it all you want, but nobody but middle men and artists care about what’s good for content creators. you can make the most awesome, absolutely perfect thing for content creators the world has ever seen!
… but if nobody wants to buy content from it? you fail. you know. that whole “starving artist” thing?
you can create all the content you want, but if nobody wants to consume it? well. the world needs garbage men and restaurant employees too.
and as to content creators going extinct? we had music and art for thousands of years before the invention of copyright. period. art/content isn’t going away. with the invention of the internet, the opposite has been true. there’s more content now than the total in the history of the world.
in fact, there’s prolly a reason why summer movies are schlock and the mona lisa is universally declared a masterpiece, eh?
this is your problem. not artists’. not consumers’.
and, as to your silliness trying to prove internet is not ala carte?
wtf?
dude. nobody is saying that subscriptions are a dead model. you’re confusing content with distribution. people don’t want distribution ala carte, they want content ala carte.
on the internet, they have it.
can you imagine the stupidness of only paying for websites you use? like, if you had a fee for netflix AND a fee for flickr AND a fee for your hosting, etc.? that would be lunacy!
…
oh.
wait.
that’s how it works.
you, my friend, are lucky you were in the right place at the right time. because you could not (and obviously haven’t been able to since you’re a one-hit-wonder no matter how much money you dump into it) compete in today’s market.
because, sir. you don’t get it.
m3mnoch.
From MC> Hey dude. For all your dudeness, you didnt say a single thing based on fact. Feel free to post nothing of consequence again.
Comment by m3mnoch -
MARK – WHAT IS YOUR TAKE ON HULU IN ALL OF THIS? HOW DO THEY FIT IN? HOW DOES YOUR VIEW CHANGE IF ABC OR CBS OR BOTH SIGN ON WITH THEM?
MY TAKE: THE NETWORKS ARE PAYING HULU TO KILL THEM.
From MC> i see hulu going to the TV Anywhere model. Just like they can limit international, they will be able to limit access to individual content based on whether the user is a subscriber to their content on a video service, whether its sat./cable/telco. Most broadband users wouldnt know the difference since they subscribe to both. Those that dont subscribe to tv services would have to make a choice to pay or not
Comment by Sam -
Mark,
I just found out that my cable bill (for TV + internet) is going up from from $105 to over $150 per month immediately, as the initial incentive packages wear off.
And I’m thinking of cutting the cable. I will miss a few networks (including HDNet Movies) and some sports (including my Mavs). But paying $100 extra for just a few extra television programs I watch each month is too much right now.
A few years ago, I wouldn’t blink at paying $100 for cable to get (1) better picture quality here in Austin, (2) constant access to news coverage, and (3) access to movies when I wanted to watch them.
But all of those parts of the cable bill have been substituted out. The bulk of my news is now internet. The bulk of my television is actually OTA HD that’s equivalent quality to my cable affiliate. I record shows on a Tivo HD, so the cable box features are not missed (I don’t even have one). I’m also a Netflix customer ($9/month), and my movies tend to come from Netflix (by mail or “watch now”) or by on-demand download rental.
What’s left for cable? With the exception of a few mainstream channels, cable is selling the long tail of obscure channels — bundled into an unattractive take-it-or-leave-it package.
As cable’s usefulness to its customers has gone down, its price has gone up. I’ve been on the fence, but I’m about to turn it off. If the gap continues to widen and others follow suit, then perhaps the big distributors will offer packages more appealing to me (at some point in the market dynamic, the behavior you call stupid may become rational). If not, someone else will step into the fray to take advantage of this new market.
I read elsewhere that Netflix was surveying customers about whether they would pay roughly $10/month to get HBO programming sent across their internet connection to a Netflix-enabled box (a Roku, the Tivo HD that I have, or something similar). I remember growing up when my parents had a tiny cable box that got them HBO — HBO in my young eyes *was* cable. If HBO pioneers the move to direct internet delivery, other premium channels may follow.
Comment by Don -
It’s a value to price proposition. As an end user I am looking for the highest value (utility) for the money I spend.
I don’t have cable. I gave up my local newspaper subscription because the paper carried more reprints from the AP, NYT, Washington Post etc. than original local news. I quit buying albums because I’m not going to pay for 15 tracks of crappy music when I only want 1 good one.
For cable, 100 channels of crap for 2 good ones doesn’t interest me, and I can’t get access to additional desirable ones without spending even more. For the internet, because it’s not a walled garden, I get access to many more places for a similar fee. The value to cost ratio for me is much higher. I have Netflix, use Hulu, Joost, Megavideo, and watch documentaries on free sites. For about the cost of cable I get access to variety of content I choose from (not a channel programmer) that I can watch when I want, and I don’t have 50 channels of infomercials when I do have time to sit down and watch something.
The business models for cable and news don’t support the way I consume content. This extends to the album concept for music as well. In the world where control of distribution was the key, and they could dictate how and when I consumed the content (because they controlled the access) their business model was very lucrative. In the world where distribution is no longer the lock on the door the model starts to break down. This is what’s happening. I don’t think content people are stupid but I do think they are insisting on sticking to a business model that depends on control they no longer have, and can never get back no matter how many DRM schemes they float.
The TVeverywhere model is a move in the right direction. But it also has to offer the end user the right value model – not just the content producer.
Comment by jobo -
Pingback: Digital Media Bulletin » What I’m Reading Today
@Ralf
You point about disintermediation with music, newspapers, and TV is easy to follow. Will you please expand on what you mean by “Interestingly enough it might even hit the internet (or internet services) itself…”
Comment by Richard -
Pingback: HipMojo.com » Why Content Gets No Respect From Techies and Why It’s Changing
I agree with Jim’s view. Certainly I have a more European perspective on this topic but in essence the trends are the same.
The underlying reason for the current developments is the unbundling effect that Jim describes and which is valid for nearly all of the traditional media segments. First music was hit, next came newspapers and now it will be Cable TV.
Interestingly enough it might even hit the internet (or internet services) itself…
Comment by Ralf Schremper -
Provabative, as usual. If Internet models payed for content like other models, the distribution method would be neutral. I am in “content” production, and it’s too expensive a hobby to support without pay and too time-consuming to count on ameteurs to keep the pipelines flowing with the variety peple want. There are pickup
Basketball games everywhere, but a limitednumber of NBA games.
Comment by Paul R -
Mark:
In thinking about your blog post’s title question I wonder if the answer is, “because they have not demonstrated they aren’t, so far.”
The list of their missteps, suggesting they may be stupid, is numerous. They take their customers for granted. The mistreatment of consumers by the RIAA and MPAA. DRM. Over-priced and getting ever more expensive cable and satellite subscription models, lousy content, short seasons, constant reruns, loud, obnoxious commercials, too many commercials…
Did you know that the first season of “Have Gun – Will Travel” had 39 episodes? If you liked Richard Boone, back in the 1950’s, you had something new to watch each week three quarters of the year. Today an HBO program’s season may be six shows. It is often years between seasons of many TV shows. No wonder viewers are looking for a different model and moving elsewhere.
The list that suggests they are not stupid? I will leave that to you to enumerate.
Comment by Richard -
Mark,
I respect your standpoint an actually supported the the bundling of cable channels. But now with the success of people watching what they want and ONLY what they want on broadband platforms, the game has changed.
I realize that you personally have a lot at stake as the owner of an NBA franchise and cable networks. Is it fair to say that pro and college sports in the US are subsidized by non-sports fans who are forced to pay for ESPN and other cable networks they don’t ever watch because THEY ARE NOT SPORTS FANS? The early adopters have successfully mastered a workaround by aggregating the free, full screen, full length content on their TVs using Boxee and other applications, or by simply connecting a computer to their TV and pointing their browsers at Hulu. Broadband has made a la carte real in a way that would have never worked with the subscription cable model.
If a la carte, as aided by broadband, really takes off, the sports industry would be in huge trouble. ESPN, Turner, etc would no longer be able to afford the high rights fees that the leagues currently enjoy. Less subscribers to ESPN would lead to less subscription revenue and lower ad rates. Of course you are against that!
I am a sports fan and Time Warner subscriber in NY. I LOVE the Yankees, and subscribe to cable mainly because of live sports. If I wasn’t as passionate about sports, I wouldn’t be paying $100+ for video AND broadband.
From MC>thx for the post, but you must not have read the TV Everywhere link. Because you sub to Time Warner, (and you hopefully get HDNet and HDNet Movies too !), you would have access to more tv where and when you want it. Because your subscription would give you tv how and where you want it, is precisely why content providers wont be provide it a la Carte to those w out subscriptions
Comment by Ian -
What all TV networks need to do right now, is start encoding their shows and getting them ready for on-demand viewing. Either on the web, TV or mobile. Lots of smaller TV networks don’t even try to put videos on the web.
In the future, using an intermediary like a Cable, Satellite or Telco TV (IPTV) company, won’t be an option. Content owners will deliver their programming directly to consumers. And they’ll need some technology folk to deliver their programming, so I guess there will be some kind of intermediary. But not like what we know as TV Service Providers today.
From MC> You couldn’t be more wrong. You might want to look at the economics of content and the technology of telco/cable/sat video distribution. Everything that can be offered on demand on the internet can be offered the same way through cable and telco video subscriptions. The same cheap hard drives that make it easy to support on demand on the net are available to everyone, including cable and telco video providers. The difference is that video providers have a ton more bandwidth and better delivery systems available.
Comment by Jose Alvear -
The problem is that increasing amounts of the quality content is available for free on pirate networks. You are already starting to see set top boxes that connect directly to the internet so people won’t actually need cable at all.
If the video content owners are too intransigent they will find themselves following the example of the music industry with revenues dropping 10%+ every year. That should get their attention.
Comment by Robleh -
Our real TV world is only a few channels. Our affinity is for the programming, not the distribution method. If IP-based VOD is comparable, which in many cases it is today, why would I want or need a cable or IPTV subscription? Truth is I don’t.
I have been toying with killing my cable TV bill, but keeping Internet and VoIP with my cable company. I believe I would save over $1,000/yr. If I go this way, will I substitute an IPTV subscription for the canceled cable TV? Unlikely. Will I pay for programs, individually? Sure.
Comment by Richard -
Not Stupid, I think, they’re ‘Passionate’ – ambitious, determined – maybe ‘Addicted’
Comment by ilaxi -
Someone in this game is stupid and they will be see it in time. The future is programs like Boxee and if someone cant see that, then they are STUPID.
Comment by Shane Burgess -
Once upon a time there was a professional class called Scribes. Scribes were a professional class because the base upon which to learn to write – books – were expensive. Books were purchased by the elites only, and they were purchased by the foot.
Then the printing press happened, and suddenly we had an explosion in writing. The professional class of scribes disappeared as everyone learned to write. This change heralded many other changes, including democracy.
The current change, where in the professional class of “content creators” is being dismantled by the elimination of the monopoly of content distribution, will again change the world. Everyone is going to be “creating content.” In fact they already are. Looked at YouTube lately? Or the Blogosphere? Twitter? Digg? Hacker News?
As an internet person, I don’t think content people are stupid. I just think you guys are in the middle of the traumatic realisation that business as usual isn’t going to cut it any more.
On the upside, with the explosion in content, there is money to be made in being purveyors of quality content. I will willingly pay for content delivered to my laptop that suites my tastes. Probably more than the old networks used to pay for my eyeballs, to boot.
Comment by Brett Morgan -
This shift has happened. Ride the wave out of the trough or drown with the others.
Personally, I watch 2 shows every week, thats it (on the TV, and cant stand Internet video). And one of them just had their season and show finale tonight. Like the other commenter said, time is limited and there are more options now. If I cant get my entertainment via an RSS feed or 2hrs per week from my Tivo I don’t have the time for it (nor want it because most of it is crap).
Jose is spot on!
Comment by Marc -
Bandwidth is coming from fiber. Or at least it should. Except it’s taking a long time connecting everyone.
On the other hand, WIMAX or some other disruptive wireless broadband technology might come along and make fiber look like a turtle race.
I think the a la carte idea has merit. Look at iTunes. Apple is hugely successful selling individual songs. Also look at the App store, where you can shell out $30 a month on just a few cool games. Sure, music and TV (or movies) are consumed differently.
But the new iPhone 3.0 subscription model will certainly allow content providers to sell directly to consumers. Which network will be the first to introduce their own iPhone app with their shows delivered on-demand?
The world is going a la carte, and on-demand. People want content anytime and anywhere. But it won’t be easy. The shift is happening right now.
Jose Alvear
Comment by Jose Alvear -
The fact of the matter is: the package deals we get are bogus. If I want HBO, why should I also have to subscribe to Movie Central? If I like the time shifting idea that Shaw gave me, but only for Global, why should I have to pay for CTV? If I don’t understand french or like the foreign shows, I shouldn’t have to pay to receive TVI or Omni. I should be able to pick exactly which channels I want and pay for them. The reason cable companies force package deals at us is that they know we’ll buy them for the two channels we like, and if we are allowed ala-carte options, they will lose money. Fortunately, in the States, with online options such as Boxee and Hulu, users now have options and many can drop cable completely.
Unfortunately, in Canada, we aren’t that lucky. Thanks to a mix of copyright laws and CRTC Canadian content regulations, sites like Hulu won’t broadcast to us without work-arounds such as Hot Spot Shield (which slows the internet down to a crawl), but that doesn’t stop many people from using illegal methods to obtain these shows. Quite simply, we are all sick of package “deals” and content will have to go ala-carte or cable companies will end up failing. The Big Three thought making SUVs and forcing them on customers (as cable does with package deals) would work and look what happened to them.
Comment by Travis -
I know this sounds like a weird analogy, but this whole battle reminds me of Hannibal of Carthage when he tried to bring Rome to it’s knees. He was able to draw out some Roman commanders and beat them one-on-one which he did due to expert strategies, but ultimately his force was too small to actually attack Rome itself, so he was forced to turn around and head home. All Rome had to do was simply ignore him.
All of these so-called internet experts seem to think the content landscape is changing, and their new product is the reason for this huge movement. Sure, there may be some “one hit wonders” gaining momentum, but the truth of it is that the cable and network TV industry is simply too big to take head on – it’s a losing battle. They control the content you are trying to distribute onto the net with your “innovative” product. Why would anyone think they are that stupid to let the content they produce, and model be changed so that they would lose everything they have worked hard to establish.
As for a lot of the comments above, when will people start realizing that it takes money to produce the content they are viewing? If you start taking away ads, producing content that is ala carte and ultimately piece away the system, you will be left with nothing worth watching…
In response to Jim Louderback – keep in mind that the reason why these cable and satellite providers have so many channels is simple: competition. Trendsetters will always move to the fastest internet providers, or to the cable provider that offers the most content. You seem to think that people do not want 48 channels, only 5, and the truth is that you are speaking for the minority. If that was the case, everyone would be on basic cable, or dare I say it, over the air which is free. Everyone complains about high cable prices, but I don’t see anyone canceling their service, do you?
What if I said that I was willing to pay only $5/mo for an internet service that only provided access to 10 websites of my choice? Revision 3 would probably be out of business because the process of discovery was just eliminated. You have to know who is out there first before you make them a top 5 on your list. Consider that…
Personally, I am willing to pay $50/mo to watch quality content on TV instead of the alternative which consists of low budget webisodes and people blowing mentos out their ass on YouTube.
Comment by Ian Bell -
man.. where is all this bandwidth going to come from !
Comment by savednoteguy -
hey mark, I was on the same panel as Avner where he said this, and I was pretty down on cable too, and here’s why (btw, as you know, I’m a content person, but also an internet person, with of course no guarantees that I’m not stupid).
I always go back to what customers want. The average consumer watches something like 15 different channels. they don’t want, nor do they need, all the other 485 channels that are delivered to them in a multi-channel world. At $50 a month, that works out to more than $3 a channel.
$3, interestingly enough, is about what ESPN gets for every household that gets its channel – which is just about everyone. I love ESPN, but I really don’t need Hallmark, FoxNews, Animal Planet, or many, many other channels I currently support via affiliate fees.
Many of my customers, and employees, are the RipCord generation – they have cancelled cable and use a combination of legal and illegal services to get the programming they want. And they want traditional media
(along with our stuff, but web-only isn’t going to dominate the video-viewing world anytime soon – it’s a good adjunct and expansion… but I digress).
I often ask these cable cutters what they would pay for an internet-delivered service that gave them 15 of the top channels that THEY want, and it is usually around $10 to $15 a month. That pays to eliminate the hassles, and also to let them watch those specials and other programs that aren’t always on Torrent, at least not regularly.
So forget 500 channels for $50. What if we could deliver them 15 channels. ANY 15 channels, for $10-$15 a month. They pick. ESPN would eat up $3, but I’ll bet most of the others would be far, far less.
It’s still a “bundled” world, but the consumer chooses the bundle. Want a movie bundle? Another $5 gets you Starz, etc. or maybe you give them another $5 and they can pick and choose ANYTHING they want, drag and drop channels into their TV window, until they hit the $5 number.
AND, here’s where it gets interesting. Give them the ability to swap out any or all of their channels each month. Food getting boring? Replace it with Discovery. Current no longer, well, relevant? Replace with OLN.
Bundles are nice. But they are nice for the established way we do business now, which is a technology constrained world – ie there are only so many channels that can fit in a 750mhz pipe, or on a 24-transponder satellite.
The internet eliminates those constraints. And thus business models built on the artificial scarcity will have to change.
jim
Comment by Jim Louderback -
I haven’t had tv service for six years now. Perhaps you’d like to know why?
For one, I can’t stand the ads. When I’m at someones house who does have them, it really surprises me to see just how loud, frequent, and long, the ads are. I have a limited amount of free time, and I don’t want to spend it watching so many ads. Second, scheduled times. Content producers love this, customers hate it. Again, this interferes with free time.
Third, there is just more to do these days. The internet has become my primary source for news and also a form of entertainment. The content is there when I want it, and I don’t have to read or see things I don’t want to. Meanwhile, I get access to everything without having to pay for things I don’t want.
There is still some good content on TV though, and to get it I just buy shows on DVD. This way I get only the shows I want, no ads, and no scheduled times. It’s not the content people don’t like, it’s the media companies that control it.
Comment by Alex -
The old adage is that the “Customer is always right”, not the seller. Your posts make it sound like you have it backwards. We all understand that for so long, your description of the situation was correct. In media, it is/was about who you know. That’s where the stories of actresses blowing producers comes from. Popular opinion isn’t that the best quality rises to the top, but instead issues like “natural monopoly” have led to a much less-than-ideal marketplace. Some of us are crazy enough to think that the internet can help to eliminate some of those roadblocks and actually make the market more free, as in speech not beer. At least that is where I come from.
Comment by wjmaggos -
I completely understand the economics and position of the content industry, but I better understand my own economics and how I want to consume content!
I don’t want to pay insane amount of money to watch only a few hours of TV a week, so I use the Internet and it’s free (LCD TV connected to Mac Mini). I get to watch what I want when I want and oh yeah again it’s FREE! THough I do have to pay the $40 a month for Internet but that’s fine by me!
I guess you think more people wont seek the same or similar alternative because they are lazy? You maybe right there and thus consumers remain getting screwed – yet that leaves the door open for us Internet entrepreneurs!
Comment by Internet CEO -
Yeah… and I think an open source social network is an answer to facebook. But…
Stop talking (Boxee CEO), and prove it!
Comment by Dan -
Mark:
I don’t think content people are stupid, just greedy.
I’m concerned that a company like Time Warner (which has been my cable provider for the past 12 years, unfortunately) will feel like they can raise my rates because they are offering me content online in addition to my television, whether I want it or not.
This is the same argument I had with your newspaper idea: I don’t want to pay for things I don’t want. When a company like Time Warner has any control over content access, they will take advantage.
Look, I don’t expect to get things for free. My hope is that the internet will bring some competition into this market. As a consumer, I would like to be able to choose not just content, but who delivers that content.
I don’t think cable companies are as nice to the “people who are paying the bills” as you believe, simply because competition is limited.
Comment by Kevin -
this is so true as are the rest of your posts on this blog…..i enjoy reading your posts. i think you are spot on ‘most’ of the time. thanks for sharing
Comment by Don Bailey -