I find wired.com to be a great source for up-to-date (if not up-to-the-minute) discussions of all things digital, and this morning did not disappoint.
And the topic is something I’ve run into head-on in the past.
The conclusion I draw from today’s wired.com article is that the cable industry we know and love (or not) might well be in for a not so smooth ride when their current contracts with content providers expire.
I think it is a true statement that today’s cable operators continue to thrive (as the article puts it) “largely because they operate as natural monopolies — the upfront capital costs of laying new cable keep potential competitors at bay. The satellite services don’t fare much better in terms of consumer love, and they too enjoy similar barriers to entry (satellites!).”
“But get ready for a sea change.” The article continues. “Even if you’re tied to a subscription television service today, there’s a great chance you’ll become a cord-cutter in short order.
“Every wall crumbles given enough time. And that’s what’s happening right now.”
There is really only one sport that I follow: football. And by football, I mean European football, i.e., soccer (which, by the way, is an abbreviation of “Association Football” as it was originally know when it was brought to our shores — it went from Association Football to Assoc Football to Soccer).
The two networks that cover soccer these days are ESPN and Fox Sports.
Up until two years ago, ESPN had the exclusive U.S. rights to the European Champions League, arguably the best and most competitive soccer tournament on the planet — well, consider this: the best players in the world play in Europe (because that’s where the ridiculous amounts of money are); and these teams play together every day of every week, and so fuse as a brilliant football machine (in contrast to national teams that only practice together sporadically — meaning that, say Barcelona will easily beat the Brazilian or any national team, most likely even with a man down).
When it gets to the final couple of months of the Champions League (April, May) you (if you’re a soccer fan) simply cannot miss the matches.
Okay, back to cable: up until last year, ESPN would broadcast these matches on ESPN or ESPN2, and — for those who had cable subscriptions that included the ESPN Extra package — it was also streamed online on ESPN3 or its forerunners.
Now, I subscribed to Time-Warner’s Road Runner Internet service, premium package, but since I did not have a television, and I did not subscribe to cable channels (ESPN included) I could not view the games online, although I could access the site, of course. Any attempt to watch a match, though, and I was told “Your cable subscription does not incluce ESPN.”
I called everyone I could think of to somehow let me pay for the matches if it came that, just let me watch them. No such luck. Even if I did not have a television, I would have to buy the basic cable package with premium sport in order to watch two games a week — close to $100 a month.
I proposed that Time-Warner bundle their high-speed Internet with ESPN3 access, but I no such luck. It was all or nothing.
I actually felt that I was talking to something glacial, very slow-moving and very hard to budge. There was just no way, I was told. I needed a cable subscription to access the stream.
I gave up.
The following year Fox Sports picked up the Champions League, and they actually offered online access without cable subscription, so sign up I did, and watch that year’s finals I did. Happily.
All or Nothing
But it’s the principle of “all or nothing” that really gets to me. The cable companies have you cornered. If you want three channels, or even just three programs, you have to buy a hundred (or two hundred or three hundred or a thousand).
Say you want to watch HBO original programming online: only if you have cable (or satellite) and subscribe to HBO.
Now, according to the article, HBO is trying a new model in Europe, where they will allow you to subscribe to HBO Online only; and if that model works out well for them, I wonder what they will do when contracts with the cable companies are up for re-negotiation.
Writing and Wall
If I were a cable company I’d see the writing on the wall. Programming is — perhaps not this year, or next, but in the next five-ten years, surely — going to become an a la carte affair and it’s going to be delivered online rather than through cable.
How I would interpret that writing, were I a cable company, is to focus all of my efforts on Internet delivery, improved, enhanced, 100 MB perhaps, to all of their current customers, and so reap the rewards for having a good delivery network in place now that programming is switching from cable to online.