Tuesday, January 13, 2009

Cable-Ready vs. Internet-Ready TVs

Just a few years ago, all the talk was about cable ready TV sets and cablecards to bypass set top boxes and get direct connections from TV to cable programming. But today, those conversations are barely heard; instead, the talk is around TV manufacturers building sets that connect directly to the web. And while they don't bypass cable programming in the process, they certainly minimize their value and exclusivity, enabling content off the web to be sen on the big screen. Today, most of that content (UGC mainly) is poor, but the rise of Hulu, and other sites with broadcast and professional content, bypasses the linear channel and VOD for what I guess can be called WOD (web on demand). And that will change the business model - "Once the average living-room TV can tune in those sites as easily as NBC or Comedy Central, viewers may be hard-pressed to justify paying $80 a month for the few shows or networks they can't stream for free from the Net. And cable and satellite operators may find themselves having to cut rates after having increased them steadily for years."

The other discussion that has been proposed for years by the FCC has been a la carte pricing, enabling the consumer to purchase individual networks, rather than bundles of programming. "The good thing is technology may soon make this debate obsolete. While channels may not be offered a la carte anytime soon, in many cases, the programming on these channels already is. Take TNT—episodes of its original shows The Closer, Saving Grace, Leverage, and the soon-to-premiere Trust Me can all be seen on TNT's website. Other broadcast and cable networks also offer much of their content for free either on their own sites or other sites." The rise of "WOD" programming and networks (Next New Networks, My Damn Channel, etc.) would indicate that any channel can escape the clutches of poor positioning or bundling on a higher priced tier of networks to connect directly to their viewer via a web network.

The biggest obstacle facing a full blown access of networks on the web, whether streaming or on demand, remains the current cable model of subscription. While the niche and newer networks see access as more important than subscriber fees, the mainstay networks would be hard pressed to lose that substantial revenue source. Viacom and Time Warner just renegotiated their agreement for fees at the beginning of the year. And cable operators, seeing more broadband usage from their customers, will most certainly raise their fees to offset a loss in cable revenue.

Web access is a trend that is not going away. What cable nets did to the broadcast model, web nets will certainly do to the cable model. Remember, early cable programming wasn't strong either, but it did get better. So too will web programming.

1 comment:

  1. What are your thoughts on Boxee?