Why Cable Fears The Internet

If you’re a content distributor, odds are that you and the Internet aren’t really on speaking terms these days. The recording, movie, and publishing industries all blame it for sagging sales, declining revenues, and shuttering up operations, even in cases where it just isn’t so. (I’m looking at you, Hollywood.) The problem is that most of them fear what they don’t understand. For cable, though, they understand perfectly what the Internet is. That’s why they’re so terrified of it.

Ever since cable TV came about to solve problems with reception, we’ve always been trying to find ways to get content on our terms. The introduction of new cable-only networks allowed for increasingly specialized content and made cable more than just a way to ditch the rabbit ears. Cable took another big step forward with pay-per-view. Sure, you were limited in when the programs would air, but it was a lot better than waiting for it to come on TV or run to the video store.

Then came the VCR and later the DVR. Content on your own terms just got a lot more interesting when you can pick a program and have a device automatically record it for you. Cable responded with video on-demand (VOD), but they no longer had the lead. TiVo could record anything that aired on a channel you subscribed to while VOD is still usually limited in its selection and often asks you to pay to watch content that had previously aired for free. This was the beginning of the end for cable’s innovative lead.

Now the Internet has come, and cable is scared. You can watch thousands of TV shows and movies via Hulu, Fancast, or an inexpensive subscription to Netflix. With an XBox or Apple TV combined with some third-party software, you can easily get this content on your TV. My wife is no techie and she loves using XMBC or Boxee to stream the shows she wants to watch with an easy interface and a simple remote. While this gives cable some pause, it’s only a secondary concern, not the real reason they’re scared.

What truly terrifies cable is that their content distribution network is being supplanted by the Internet and they have very little direct control over it. Sure, they can cook up transfer caps or traffic shaping to indirectly try and choke it out, but the network neutrality crowd already stared them down and won. A small consolation for them is that the content producers, the Viacoms and Discovery Networks, still provide them with content that can’t be gotten anywhere else.

They know, however that it won’t last. Remember when Netflix asked its subscribers if they would pay an extra $10 per month to get HBO content? How’s that for scary? Content producers can use the Internet to directly distribute their content to viewers at a lower cost to subscribers and a higher profit margin for themselves. With the Internet, cable TV distribution is no longer a necessity.

Cable operators are desperate to figure out a way to make themselves relevant in this new order. Trying to band together to make the cable version of Hulu doesn’t cut it. Any content producer that wants to can quickly and cheaply set up their own video portal complete with on-demand content and personalized stations a la Pandora. They could probably even team up to make joint portals of their own. Cable wouldn’t provide much value since they can’t give priority to a content producer’s Internet data and don’t have a long-established Internet video product. They can’t even provide bulletproof service and high quality on their existing distribution network. (Seriously, Comcast, the 2-second flashes of black video on KJZZ and muddy YouTube-quality picture on Comedy Central doesn’t make me think that pros are running the show, you know?)

And really, this problem is hitting a wide variety of content distributors. Musicians are directly distributing thier music to listeners and selling it directly on iTunes. Short film producers toss their footage on YouTube and sell DVDs straight from their website. Bloggers are the new journalists and newspapers are suffering for it, unable to figure out how to maintain relevance in a world where everyone can be a reporter. Cable is just the latest to see a threat on the radar and not have any idea what to do.

The answer on staying relevant, though, is obvious: provide the content that people want the way they want it. Start pushing for a la carte pricing for your customers. Integrate more network’s content into a VOD platform. Integrate features long used by Internet radio such as random playlists of favorite content, show suggestions, and friend networks. The chance to be innovative is past. Now it’s time to be agressive about copying the good things that everyone else has already done before you get further behind.

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4 Responses to Why Cable Fears The Internet

  1. dmplus says:

    Well cable companies need to figure out how they want their business plan to change. It’s apparent that comcast will be an ISP. They can choose whether or not they are a content distributer like netflix. They should be looking at ways to provide video (movies/tv) to any broadband customer on any network. They have decent technologies with on demand. they have the support environment and the means to accomplish this. They just need to decide when they will change.

    Speaking of that I am still bewildered as to why comcast (or qwest for that matter) will not offer some (or all of) their services over utopia. They get to:
    A. keep (or gain) customers
    B. no longer responsible for last mile upgrades support or infrastructure costs
    C. keep users from going to competitors

    On top of all this if utopia were to ever get to the point where it was defunct and they were looking for a suitor… Oh look, here’s comcast they already have 65% of the subscribers on utopia and they are a company with the means to take over and run a metropolitan deployment, i guess we can sell it to them for a song.
    And if utopia succeeds at least they still make money from providing services over a new medium.

  2. Small Internet Business says:

    Now I have a fast business? It’s a catchy slogan but comcast knows their not the fastest kid on the block. I’m sure they will continue dumping money into marketing campaigns until they’re slowly forced out of the market.

  3. jasonthe says:

    Thanks for this. Probably the best explanation I’ve read to date. Hope you don’t mind if I quote it often. 🙂

  4. Jesse says:

    Jason: That’s why I put everything under Creative Commons. 🙂

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