Why Internet Television Isn't Quite Ready To Save Us From Cable TV

smaxp writes "It's no surprise that few people love their pay TV providers. In May, Variety reported that the American Consumer Satisfaction Index ranked cable television providers last in all consumer categories. Pent up frustration with cable and satellite TV providers fuels a steady buzz that Amazon, Apple, Google and Netflix will disrupt TV. These new entrants promise to offer variability in pricing and greater choice fueling notions that Americans have officially cut their proverbial cords. But true disruption is wishful thinking. Data from the PricewaterhouseCooper’s (PwC) global entertainment and media outlook for 2013-2017 doesn’t support a disruptive market scenario. Incumbent cable and satellite pay TV providers and over-the-top (OTT) challengers such as Amazon and Netflix are both forecasted to grow. OTT TV has only reinvented a single part of the TV business, streaming archival movie and television content over the internet replacing physical DVDs and time-shifted DVR replay of TV programs. To displace incumbents, OTT TV has to continue to change TV business models in ways that appeal to consumers and attract content owners. "

Flamebait article

[Camael]

If you read TFA, you will find his claims are contradictory.

First it states the premise:-

To displace incumbents, OTT TV has to continue to change TV business models in ways that appeal to consumers and attract content owners.

So far so good. Then it states the facts relied on to suggest OTT TV doesnt appeal enough to customers :-

In its June 2013 Cross Platform Report, Nielsen reported that the average consumer watched over 157 hours of traditional television per month. Nielsen also reported that the average consumer watched only 3.8 minutes per day of OTT TV or about 2 hours per month. If all 11 original TV series from Amazon and Netflix appealed to the average consumer and he or she watched one hour from each series per week, original OTT television content would amount to 44 hours in an average month. The consumer would be left with 111 hours per month of unsatisfied television viewing appetite without cable or satellite pay TV. OTT TV challengers don’t have the economic scale to create or acquire enough content to replace incumbent pay television providers.

Note the assumptions- It assumes that "average consumers" must watch 157 hours of traditional television every month to be satisfied. The article very carefully never explains why it thinks this is a valid assumption. Do we even have any numbers to show that those who watch 157 hours of traditional television every month are happier with their service than those who watch less?

The irony is that right at the beginning of the article, it admits that

"In May, Variety reported that the American Consumer Satisfaction Index ranked cable television providers last in all consumer categories."

So we do know that customers of cable companies are very unhappy with their cable service. This directly contradicts his assumption that"average consumers" must watch 157 hours of traditional television every month to be satisfied, since on average they are obviously unhappy even after watching that much.

This is a badly written article trolling for hits.

In the Netherlands, they are already streamed

[dutchwhizzman]

In the Netherlands, the main sports people watch on television is soccer. Nothing more. The national soccer bond has their own live streaming of the 2 leagues and all the international games service which you can subscribe on. National television usually broadcasts the national team if they play a match and there is public television that is streamed by the station itself for "other sports". We have a crowd of people watching Formula 1 on any of two or three channels that usually provide the feed on television, but it's the only sport that can be found "free" on cable that isn't streamed "free" on the internet that has a significant of people watch.

It's being done, it's proven commercially viable because we have enough density of high speed internet to satisfy "the fans". The reason it won't work in the USA yet, is because there aren't enough people able to watch these streams. Once broadband gets enough penetration, Cable and satellite TV will be dead as disco, unless they will start providing a-la-carte channels instead of bundles.

Don't forget that Netflix has their own exclusive series now. You can't get those on cable or satellite and this means that people will eventually be going to want both services. Given the netflix pricing schedule, it will be relatively cheap for people to have both and only pay for the netflix stuff they can't get on cable, or not when they want it. Paying cable for expensive upgrades like a DVR feature will happen less and less because of this.

Advertising income from channels will be lower because fewer people will be watching, even if the potential viewer number doesn't change. That means that the channels offering the content and the producers of the content will look for different ways of making money. They could charge the cable companies more, making cable more unattractive for more and more people, or they could go on the internet. They could do both. Regardless which they choose, the cable companies will have to choose to either get more expensive, or cut costs somewhere internally in their organization. The end result will be that they will have to spend more money on marketing to compensate for the lower quality and/or the higher price, again resulting in a less satisfied customer.

It doesn't take much more than what is already happening to trip the balance for the cable and satellite companies. It's already happening and it will be a matter of time until they will start to change their pricing model and offer you to pay per channel. It may take some bankruptcies for this to happen, but it will happen soon enough. That won't be the end, but they'll be around as long as enough people can't get high speed internet in their homes. Cable TV will probably die sooner than Satellite, but in the end, we'll all be watching IP-based streams, or whatever the prevailing technology is by then.

Re:ESPN is the key

[SeaFox]

ESPN is crap i get for FREE in my cable package.. There's no way to not have it and have anything else to watch. (channels i want)

Espn and espn2 are in the garbage tiers like the shopping channels. They cram that stuff onto everyone here.

How are they free if you're paying for a base cable package to get them?

More like "ESPN worked out this sweet deal where the cablecos have to pay them for every subscriber they have regardless of if that subscriber wants ESPN or not, by virture of requiring in their contract the station be on the 'basic' cable package."

That's a lot closer to the truth I bet, and the kind of crap NFL Network I know does. Which is why there are some pay-TV providers that don't carry NFL Network, they wont agree to that type of contract because the demand for the station in their markets is simply not high enough for the cost. ESPN is an easier deal to take because it has a broader appeal than a premium single-sport network and a much longer track record from being an older network.