Content Providers, Cable Providers, and How the Internet Will Turn Their Greed Against Them
Posted by Anthony
If you live in the northeast tri-state area, chances are you know about the current blackout of WABC 7 on Cablevision.
This is the latest in ongoing feuds between content providers and cable providers. Just earlier in the year, the contract between Time Warner Cable and FOX was to end at midnight on New Year's Day, and negotiations for a new contract were at an impasse. Time Warner subscribers never saw their feed cut off, as the two companies decided to keep the network on the air as negotiations proceeded. Just a couple weeks later, Cablevision and Scripps Network (home of HGTV and Food Network) had similar issues. In that case, Cablevision subscribers saw those two channels completely disappear from their cable lineup for about a month until a new contract was hammered out.
The disputes are pretty standard. Networks will typically ask for more money, citing reasons such as increased viewership of their shows, or equal-standing competitors that are paid more. Cable providers will typically find these rate increases outlandish and balk. And as negotiations (or lack thereof) proceed, the consumer ends up bearing the brunt of the problem by being encouraged to become part of a "movement" they neither have the time or energy to get involved with, and worse, in some cases, completely losing content on their televisions.
But the ironic thing here is that neither side quite understands how childish or downright horrible for business these practices are. On the content provider side, they must know how ridiculous it is to ask for 20+% raises with very little sound reasoning for doing so. In addition, they must know that pulling their stations from the air will garner ill will, loss in overall viewer loyalty, and decreased advertising numbers. On the cable provider side, they must understand that factors such as inflation, increased viewiership and better quality content, should translate to at least a slight raise in fees paid upon entering a new contract period. And just as with content providers, lack of cooperation leads to ill will and decreased loyalty from their subscribers as well.
But what really gets my boat rocking is that neither side seems completely aware of how their feuds mean more than just slight decreases in customer loyalty and business. No, rather, these feuds are slowly leading up to the imminent collapse of the television medium as we know it, and paving way for the internet to change the game once and for all. To illustrate my point, we must look no further than the message Cablevision has been plastering across television screens for the past week, which informs subscribers that ABC's most popular content is available online at both abc.com and hulu.com.
So, let's get this straight -- Cablevision, a provider of cable television, is encouraging customers to shift their habits away from the cable box towards free programming on the internet? Don't they at all wonder what sort of psychological war they are brewing in the mind of a consumer who pays more for cable television than for internet, yet is being encouraged to use the internet to get what was previously available on cable television? On the content provider side, don't they realize how bad this is for business? Despite most content now being available online, we still live in a world where most content-related revenue is made via live transmission (over-the-air, cable, satellite, etc). Many content providers only publish their content to the internet in hopes they will gain/keep viewers who will enjoy the content so much, they will begin/continue watching it via live transmission. In other words, internet content, here in 2010, is a way to complement and enhance live transmission content, not replace it. But being short-sighted, content providers are using a live transmission blackout strategy to extract extra cash from cable providers. In the long-run, what they are really doing is shifting the psychological makeup of a consumer; they are increasing the relevance and the appeal of watching content via the internet.
To make matters worse, watching content over the internet is becoming easier and more seamless than ever before. With products such as Apple TV, Windows Media Center, the Boxee Box, Intel's Wireless Display, connected Blu-Ray players, and many more, there is no longer virtually any separation between the internet and the television. These devices make it dead simple to pull for free from the internet, what many of us pay for via cable, straight from your remote control.
That being said, I realize that internet video content is still in its infancy, and we have a ways to go - both technically- and psychologically- speaking - before we view it as a complete replacement for our cable boxes. But it's getting better every day. And with content & cable providers making their experience worse every day, one has to wonder -- how long before television as we know it becomes irrelevant?
