TV cable providers may soon find themselves going the same way as non-digital broadcasts (Photo credit: hjl)New York City is the latest battleground for revenue between TV giants: While large broadcasters have recently been setback by their loss to Aereo, the company that provides legal stream of over the air broadcast signals on the internet, giants Time-Warner Cable and CBS have been fighting, leaving their customers without programming from CBS.
But as cable companies and TV broadcasters are battling to increase the amount of dollars each gets from anyone who purchases a cable service subscription, companies like Apple Apple and Google Google are quietly moving in to replace the old system.
Apple took the first tentative steps with the AppleTV, a small device that allow users to stream content from certain apps on iOS-enabled phones and tablets directly to their TV screens. Priced at $99, the device essentially turns your TV screen into a second screen for the content you consume on mobile devices.
Google has decided to enter the space with Chromecast, a device priced at $35 that allows anyone to stream content from Chrome web browsers (available on PC and mac), Netflix Netflix, and YouTube. For less than going out to movies, a couple can essentially internet-enable their TV screen and use any mobile device (iOS, Android) or computer running Google Chrome (Windows or OSX) to stream internet content.
Both AppleTV and Chromecast are relatively simple to set up for anyone and the controls are simple enough that anyone who understand the basics of using a web browser, tablet, or smartphone can easily send video to the screen. Because of how easy and cheap they are to setup, the two devices point to a world where cable TV subscription will no longer be as relevant as it is today, with internet connectivity becoming the dominant data stream into the house.
If you look at the recent effort on programming from Netflix, it is clear that today’s successful TV channels do not need to have a physical programming grid that ties them to a rigid schedule, nor do they need to be distributed as part of a cable TV package. Netflix today, from a product offering, is getting increasingly hard to distinguish from HBO, except for the fact that its subscribers get to choose what they watch and when they watch it.
As has long been my contention, there are very few types of programming that justify real-time broadcasting: news, sports, and award events represent the exception and here, companies like Al-Jazeera have proven that you can build a following by doing live streaming over the internet (unfortunately, upon its purchase of the Current.TV cable channel, Al-Jazeera has decided to abandon its pioneering ways, attaching itself to the dying traditional model instead).
With some of the most expensive cable TV channel representing almost $5 in a consumer’s bill (whether they watch it or not), there is room for a very different model, one where individual channels could offer their content online (many already do) for a fee within subscription apps that could be send to the TV with AppleTV or Chromecast.
Aereo, for example, already offers the over-the-air broadcasts (about 20-30 channels) as an app that runs on iPhone and iPads and can beam to AppleTV and it is safe to assume that they will be offering something similar on Android and Chromecast in the not too distant future.
If individual TV channels were to charge a membership fee similar to that offered by Netflix ($8), they could increase their overall revenue while leaving cable TV providers behind. Infrastructure costs have been rapidly dropping and companies can now purchase such turnkey infrastructures from third party companies like Brightcove or MLBAM, the digital arm of the MLB, for relatively small per-user prices. Channels aggregating streams over the internet would then have substantially more information about what their viewers are watching and when, giving them the ability to decide what to fund and what to kill, and whether to charge higher advertising rates for one show versus another.
Such a breakdown will happen and one can assume that it will happen relatively soon if incumbents do not want to be defeated by newcomers. In the 1980s and 1990s, large companies like Turner Broadcasting, Hearst Hearst TV, HBO, Starz, and Cinemax were built on the new technology of cable TV, displacing traditional broadcasters as the leaders in the TV space. It is only a question of time before such thing happen again but with the Internet as the distribution network instead of the regular cable aggregators consumers have gotten used to.
And when that happens, the incumbents may find themselves with little choice than to join the newcomers.
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