After Verizon CEO Ivan Seidenberg’s recent remarks about cord-cutting and the big uptick in over-the-top tech for consumers, there was a spate of gloom-and-doom articles about the future of cable. On the other hand, according to a research report, pay TV revenues are the linchpin of showbiz finances (Daily Variety, Oct. 6). Is cable essential? Doomed? Both?
The answer depends who you ask. Even within Variety’s newsroom.
Cynthia Littleton: I am very skeptical of how much actual cord-cutting there is.
Even with Hulu and iTunes and Netflix et al, you can’t get everything that’s on cable on alternative platforms – not by a long shot. If you want ‘True Blood’ or ‘Boardwalk Empire,’ you either subscribe to HBO thru a cable/satellite/telco provider or you wait until the homevideo window hits months after the season ends.
The studios rely on the cable/satellite operators to pay them big fat carriage fees. They don’t want cable to go to a la carte channel model so they can keep shoving their minor channels onto bundled packages. They certainly don’t want it to go the a la carte show model.
There’s a lot of lofty talk about them doing direct-to-consumer applications but let’s get real. That’s still a marketing challenge and what consumer wants to manage 50 bills from different services. Remember Disney’s Moviebeam? Never got out of trial stage because it was a bust with consumers.
Also, cable operators are by far the largest broadband providers. It makes no sense that tons of people will want to dump their video services from the cable operators they rely on for Internet access.
David Cohen: Seidenberg compared cable to wireline telephone service, which implies over-the-top will be as popular as mobile phones. I don’t buy it. But there’s a more alarming analogy. What if the cable companies are the record labels, and over-the-top is iTunes?
Cable sells bundles of far more content than anyone could possibly consume: hundreds of channels, many of them on 24/7, sold in pre-packaged tiers. But over-the-top services disaggregate content, so the main retail unit is the episode. In music, consumers have proven they prefer buying individual songs instead of entire albums. I can see a consumer migration from massive cable subscriptions to targeted purchases. What am I missing?
Brian Lowry: What you’re missing is nobody really knows anything at this point. Eventually it makes sense for video content to come through the web directly into the TV, without wires or dishes on top of roofs. But that’s going to be a while — and nobody really knows how long. Meanwhile, a lot of the stuff that was supposed to cannibalize cable is still additive; people download episodes they miss, but most don’t cancel their cable.