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August 15 2012

20:28

The newsonomics of breakthrough digital TV, from Aereo to Dyle and MundoFox to Google Fiber

In 1998, when Rupert Murdoch’s News Corp. bought the Los Angeles Dodgers, the storied franchise was worth $380 million. News Corp. sold the team in 2003 for $430 million. After winning the ability to negotiate a new multi-billion sports TV contract this fall, they sold earlier this year for $2 billion, blowing the lid off sports property values.

In 1994, the San Diego Padres were worth $80 million. After recently signing a 20-year deal with Fox Sports for $1.2 billion, they sold (pending league approval) for $800 million.

Meanwhile, in 2000, the Los Angeles Times was worth at least $1.5 billion when it was sold as part of Times Mirror to Tribune Company. Today, as it is newly readied for market out of the Tribune bankruptcy, it would go for something less than $250 million. The San Diego Union-Tribune, once valued near a billion dollars, sold for about $35 million in 2009 and about $110 million in 2011.

It’s a reversal of fortune: Newspaper franchises that once outvalued baseball teams by 3-1 or 5-1 or 10-1 now see the inverse of that ratio. Why?

Two letters: TV.

Those numbers tell us a lot about the continuing power of television, in worth, in value creation, and in the news business itself. If we look just at recent events in the ongoing transformation of broadcast and cable to digital, we now see multiple breakthroughs on their path to digital. They give us indications of what the news business, video and text, will look like in the coming years. While we can argue endlessly about the relative virtues and vices of print and TV news, we must acknowledge the relative ascendance of TV and think about what that means for the news business overall.

TV’s revenues are holding up far better than newspaper companies’, and TV is better positioned to survive the great digital disruption.

TV has continued to have great audience. Nearly three in four Americans tune in to local TV news at least weekly, surpassing newspaper penetration, even as Pew Research points out they mainly do it for three topics: breaking news, weather, and traffic. Further, it retains great ad strength — 42 percent of national ad spending, matching the actual number of minutes Americans spend with the medium and making it the only medium still ahead of digital spending as digital has surpassed print (newspapers + magazines this year, both in the U.S. and globally). Yes, TV remains a gorilla. While Netflix won headlines when it announced it had streamed one billion hours of TV and movies in a single month, that huge number compared to about 43 billion hours of U.S. TV consumption, according to Nielsen’s 4Q 2011 Cross-Platform report.

In a nutshell, that’s the difference between TV and video, circa 2012. Video is the next wave — incorporating TV perhaps, but still the very young kid on the block.

Today, TV is no longer a box. Sure, even with all the Rokus, Boxees, and Apple TVs, it seems like TV isn’t yet an out-of-the-box experience. But with Hulu, Netflix, and Comcast’s Xfinity, it’s emerging quickly, escaping our fixed idea of what it once was — the boob tube in the living room. If it’s not just a box anymore, it’s a platform. From that platform, we see both the disruptors and the incumbents doubling down their bets. As in most things digital, few of these launches will be huge winners — but some will drive big breakthroughs. Some of the iconic legacy companies we’ve long known will be absorbed in the woodwork as new brands supplant them. Consider the spate of recent innovation, as we quickly assess the newsonomics going forward:

  • NBC, bashed up and down Twitter, nonetheless proved out a new business model with its multi-platform approach to Olympics coverage. Whatever you think of the tape delays or the suspended reality of Bob Costas’ gaze, NBC made the economics work, surprising itself and others. Its live streaming has ratified the development of cable- and satellite-authenticated, all-access digital delivery. That reinforces cable/satellite value. Further, it whetted prime-time viewing appetites, boosting ratings and earning NBC more ad revenue than it had projected. That’s icing on the cake for NBC, which, under Comcast ownership, has rocketed forward in digital strategy. The network has made a number of moves to transform itself into a global, video-forward, digital news company, joining the Digital Dozen global news pack. Recently, it bought out Microsoft’s share of msnbc.com, a leading Internet news portal. It immediately rechristened it NBCNews.com. In short order, it appointed Patricia Fili-Krushel as the new head of NBCUniversal News Group, an entity made up of NBC News, CNBC, MSNBC, and the Weather Channel. A former president of ABC, with 10 years of experience at Time Warner, she heads a growing news operation. Earlier this year, NBC combined its sports properties into a unified NBC Sports Group, merging NBC’s broadcast sports unit and Comcast’s regional sports networks. NBC is growing out of its digital adolescence. (See “One year after she was hired, Vivian Schiller’s ‘wild ride’ at NBC is just beginning.”)
  • Aereo, the TV startup funded by media magnate Barry Diller, is expanding its footprint from its current New York City base, and starting to offer multiple promotional deals. Diller’s in-your-face challenge to over-the-air broadcasters (CBS, NBC, Fox, ABC, CW, PBS) takes their signals and delivers that programming via the Internet. It charges consumers $12 a month, or as little as a dollar a day. They can then watch those TV stations on up to five devices; in addition, they can deliver these signals to a TV via Apple TV or Roku. Aereo also offers DVR capability, with 40 hours of storage. It’s classic disruption, with Aereo upping the pressure on the cable bundle and messing with the “retrans” fees that broadcasters get from cable companies to run their programming. Is it really legal, as a court recently found? It may be as legal as Google presenting snippets from every publisher and directory provider.
  • Local broadcasters — representing a broad swath of ownership groups organized in a newer company called Pearl — are bringing local TV to our mobile devices themselves. Just a week ago, Metro PCS started selling a Samsung Galaxy S phone with a TV receiver chip in 12 markets. That’s just the first push of Mobile Content Ventures, a collection of Pearl, NBC, Fox, and others. Expect mobile TV, marketed as Dyle, to be available for other phones and tablets, either with built-in chips or after-market accessories — although price points are an issue, with $100-plus premiums likely over the next year. So what does this innovation mean? Simply, that broadcasters are going direct to mobile consumers — no Internet needed, no data charges applying, and maybe providing more consistent video connectivity — with live programming; whatever is on TV at that moment is also on your phone or tablet. Broadcasters just use part of their digital signal to, uh, broadcast to us on our phones. It’s that antenna, and its cost, that’s the issue. Business questions abound. Given the timing of the launch, Dyle seems like an aspiring Aereo killer, and certainly broadcasters would like to see it do that, if further court action doesn’t. More deeply, though, broadcasters want to maintain their direct-to-consumer brand identity as they do a balancing act and try to keep those retrans fees from cable and satellite companies. They don’t want to be left out of the digital party.
  • Social TV pulls up a chair. First it was startup Second Screen, matching tablet ads to real-time TV viewing. Now ConnecTV, partnered with Pearl, is trying to corner the activity as it takes off. Its promise: “synchronization of local news, weather, sports, and entertainment programming along with social polls.” Ah, synchronicity, a Holy Grail of our digital aspirations. Last week, Cory Bergman (a man of at least three full-time digital lives, with MSNBC, Next Door Media, and Lost Remote) sold his Last Remote social-TV site to Mediabistro.
  • Then there’s the disruptor of everything on planet Earth, Google. The company recently announced it is putting another $200 million into YouTube Channels, building on its initial $150 million investment. The move emphasizes how quickly YouTube is growing beyond its homegrown, user-generated roots. Now partnering with dozens of prime video producers, creating more than 100 new channels, it is trying to establish itself in viewers’ lives as a go-to video aggregation source. Major video producers are still wary of Google getting between them and their customers, both ad and viewer, but many others are signed on. Meanwhile, in Kansas City, Google Fiber TV (TV that’s healthier for you?) launches. It’s a rocket shot at the cable, telco, and satellite incumbents. It’s also a demonstration project: providing more, cheaper. The more: interactive search for TV that combs your DVR and third-party services such as Netflix. (Yes, The Singularity ["The newsonomics of Google ad singularity"] marches on.) Google Fiber TV combines DVR and third-party (Netflix-plus) search. Its DVR holds 500 hours of storage of shows in 1080p and the ability to record eight TV shows simultaneously. Bandwidthpalooza. Google’s goal: Toss a hand grenade among the TV-as-usual business models, and pick up some of the pieces, adding new significant revenue lines.
  • CNN moves to break out of its identity funk, figuring out what that powerful global brand means in this fast-changing digital news world. CNN President Jim Walton recently stepped down, clearly acknowledging that his 10-year run had reached an end. “CNN needs new thinking,” he said in a farewell note. On TV, CNN has been beaten up badly both both Fox News and MSNBC. In 2Q, CNN showed its worst numbers in 20 years, down 35 percent year-over-year. On the web, it’a a top-three news player. But overall, it’s become the Rodney Dangerfield of news entities, getting little respect. Its cable fees — the strength of its revenues — could be challenged by low ratings. Going forward and competing against other global news brands — many of which are transitioning their own businesses to gain far greater digital reader revenue — it is, at this moment, caught betwixt and between. How it brings together a single — and global — digital/TV identity is at the core of its continuing journalistic importance and financial performance.

That’s a short list. We could easily add HuffPo’s streaming initiative and The Wall Street Journal’s wider video embrace. Or Les Moonves’ digital moves at CBS. And Fox’s new MundoFox, Spanish-language TV network, taking on Telemundo and Impremedia. The new network, at birth, offers a strong digital component, working at launch with advertisers along those lines. Let’s note some quick takeaways here, all of which we’ll be talking about in 2013:

  • Note how much you see the names News Corp. and Fox here. While segregating its text assets (and liabilities), News Corp. is investing greatly in the video future.
  • Cable bundling’s longevity is uncertain. There’s a lot of residual power here, but we know how quickly that can fade in legacy media. Yes, the unbundling of cable and satellite has been overestimated by some, as Peter Kafka pointed out recently. Yet, these multiple digital strategies may still push a tipping point. Clearly, legacy TV media, despite their public protestations, sees that potential and is acting in multiple ways to prepare for it.
  • Though broadcasters are making major digital pushes, they start from a lowly digital position. Many broadcasters can count no more than 5 percent of their total revenues coming from digital. That compares to 15-20 percent or more for newspaper companies. While there are other sources of revenue have been more stable than those of newspapers, they need to grow digital revenues quickly to make up for inevitable erosion of older money streams.
  • TV ≠ newspapers. Much of broadcasters’ revenues are made on non-news programming, as much as one-half to two-thirds for most local broadcasters. While learning from TV experience here is useful, given lots of differences, the learnings must be smartly applied. As news consumers and advertisers move increasingly digital, though, that thick line that separate local TV from local newspapers thins by the day.

The all-access, news-anywhere, entertainment-everywhere era has created a new massive business competition. Which brands will be top of mind? Who will consumers pay? How valuable is news itself in this contest?

Comcast, Time Warner, Verizon, AT&T — pipes companies — are in one corner. CNN, NBC, CBS, ABC, Fox, HBO, Showtime, and other known-to-consumer brands in another. Aggregators like Netflix and Hulu over there. Media marketers like Amazon and Apple holding court. Google. The local broadcasters fighting for their place in this digital ring. This new battle of brands, in and around “TV,” is now joined.

December 13 2010

17:40

Why I Want a Hulu for Sports (And Why It Won't Happen Soon)

When it comes to television shows and events, we the people have been taking more and more control of what we see and on what medium. The rise of everything from DVRs to streaming Netflix to mobile TV means that we get to decide when we want to watch our favorite shows. More people have taken the plunge and cut the cord to expensive cable and satellite TV services in order to watch shows exclusively online or on services such as Roku, Boxee or Google TV.

boxee_box_by_dlink_white.jpg

But one of the big hurdles to getting people to cut the cord is sports. While you can watch many local sports teams play by accessing free digital broadcast signals (which includes the major broadcast networks), there's very limited selection online when it comes to watching major sports teams play. (Note: There are a variety of overseas gray market sites that offer streams of big games for a price, but their legality is muddy, at best.)

What sports fans need to cut the cord is a potential new service that I call "Hulu for Sports," a way for us to watch the games we want online or streamed to our TV. Hulu currently offers TV shows, movies and some sports highlight shows, with some provided advertising-supported and free, and others coming in a premium offering called Hulu Plus. Why not add in live sporting events, with the less prominent games at the free level (e.g. the Minnesota Timberwolves vs. Milwaukee Bucks) and higher interest games at the premium level (e.g. the Miami Heat vs. the Los Angeles Lakers)?

Below is a breakdown of what I'd like to have in a Hulu for Sports, and below that is the inevitable reality check from new media strategist Seth Shapiro, who explains in gory detail why my fantasy will not be realized anytime soon.

What I Want

All Sports, All the Time
I want to have access online to all the major sports from around the world, from real football (a.k.a. soccer) to cricket to basketball to extreme sports. Maybe some of the major leagues could create a joint venture, similar to Hulu, where they each would get a cut of the revenues generated. They would make sure in all future TV contracts to allow this new site to stream sporting events as well.

Freemium Model
So how would this site make money? It would use all the current online video ad formats, from overlays to pre-roll ads to surround-ads that go around the video player. The vast majority of sporting events would be shown for free. A minority of sporting events would be available in a premium offering where you pay a monthly fee. And an even smaller minority of events would be available as pay-per-view streams. So these events might be broken down like so:

> College women's volleyball game: free
> Major league baseball game in May: free

> Regular season NBA game between top teams: premium

> Super Bowl: pay-per-view

Interactive Experience
If I'm going to watch most of my sports online or on my TV through streaming, I want to have more interactive features. I want to chat with others online during the game, share feeds with friends through social media, forward along highlight clips, pick camera angles, and more. Once sporting events are shifted online, the possibilities are endless for features like instant polls, live chats with experts, and a stream of star athletes' tweets (before or after games when allowed).

Play on Demand on All Platforms
Now that I'm used to having a DVR, I want to be able to watch sporting events on my own time, fast-forward through slow parts, replay the best parts and generally decide when to watch what. That means giving me replay controls similar to TV but online. And not only do I want to be able to watch the games on the web in my browser -- I want to see them on all my devices, including smartphone, iPad or Internet-enabled TV. Hulu for Sports needs to be multi-platform and on demand.

Great Archives
Gosh, I'd really like to see a replay of the Giants/Rangers World Series. Or maybe a college football game I missed earlier this year, such as when the Missouri Tigers beat the Oklahoma Sooners? Or maybe a string of old boxing matches when Mike Tyson knocked out various opponents in the first round? The Hulu for Sports service would need to have a robust series of archives available, supported by ads or pay-per-view depending on the popularity of the event.

Why It Won't Happen

Now that I've envisioned the perfect sports-on-demand online service, I'll pull my head out of the clouds for a reality check. Not surprisingly, my bubble is easily burst in a world where massive TV sports contracts restrict leagues from offering up all these games online. In a few cases, such as CBS March Madness on Demand during the NCAA basketball tournament, the networks are able to show full games online supported by ads. But with TV contracts in leagues like the National Football League, the chance for watching games online is severely limited.

nfl game rewind.jpg

With the NFL's online offerings, you can watch NFL games in HD online with full DVR functionality, but you have to live outside the U.S. If you want to watch games inside the U.S., you can do so after the game is long over. Watching live games online isn't possible, even for a price.

Seth Shapiro, the digital media strategist at New Amsterdam Media, has worked with Comcast, DirecTV, Universal, Showtime and Disney in the past. He explained why a Hulu for Sports is highly unlikely at this time.

"The sports leagues have been the biggest defenders and exploiters of rights, period," Shapiro told me. "When looking at sports licensing fees [paid by cable providers], they really explode. Sports is really expensive to the consumer and the distributor ... And they have a pretty good deal as it is. In the case of Apple doing a [possible] subscriber service for Apple TV at a $30 price point, once you factor into account that ESPN is $4 per month per subscriber, that's a lot of money. It's hard to picture a situation where the premier stuff -- NFL, NBA and MLB -- giving their games away for free. Even as a loss-leader to build a new service."

Seth_ShapiroBB.jpg

Shapiro explains that the pricey TV contracts with leagues put them under pressure to restrict what they can offer online. Any move to cable-cutting by sports enthusiasts would hurt TV viewership and by extension those multi-billion-dollar contracts with the leagues.

"The place it comes to roost is the master affiliation deals between league and distributor," Shapiro said. "The rights over who can put things online become very contentious. The distributor can say they don't like the idea of a league offering the same content elsewhere, undercutting their exclusivity. The home games are available in market. But out-of-market rights, the argument is, 'Look we're paying you a lot for these games, so you can't sell it to anyone else.' That's where Hulu finds itself. You can put some things there, but not sports, which is the most expensive stuff and the least likely to be offered there. If there's a game on Monday Night Football, ESPN would say, 'that's our game! You're not going to give that away!'"

Fair enough. But what if the leagues got together to form a joint venture, the same way that TV networks got together to form Hulu? Couldn't their combined power force the networks to let them put games online too? Shapiro is doubtful.

"If you've got a Comcast with 26 million households or a DirecTV with 20 million households, that's direct revenue to whoever owns those rights," Shapiro said. "If you're a league it's very hard to figure out how you're going to come up with that kind of money by going direct to the consumer. If the ad market were really strong, then maybe you could do it ... You're forgoing a real and predictable revenue stream for something that might be a lot bigger but no one has really cracked yet."

And yet, I still hold out hope for my vision of Hulu for Sports. Perhaps when a big TV contract is up next time a league will consider holding some rights for online distribution and new models. And perhaps, just perhaps, the cord-cutters will have an option to watch the sports they want on their own time on the platforms they enjoy most.

*****

What do you think? Would you cut the cable TV cord if you could watch sporting events live online? How would your own Hulu for Sports work? Share your thoughts in the comments below.

Mark Glaser is executive editor of MediaShift and Idea Lab. He also writes the bi-weekly OPA Intelligence Report email newsletter for the Online Publishers Association. He lives in San Francisco with his son Julian. You can follow him on Twitter @mediatwit.

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March 22 2010

19:53

Why 'TV Everywhere' Will Fail

A few years ago, while TV networks were happily setting up Hulu as a place for people to watch shows online for free, the cable companies were fretting. If cable customers could watch shows online for free on Hulu, or through cheap subscription services such as Netflix, who was going to pay for cable service? Sure, the cable companies would still get you for Internet access, but they'd lose one part of their "triple play" package -- usually the most expensive and lucrative part.

So they dreamed up the idea of "TV Everywhere." It came mainly from the minds of Comcast and Time Warner Cable, who didn't like the notion of their cable content getting out into the wilds of the digital world. As a recent cover story on BusinessWeek magazine points out, TV Everywhere is the "Revenge of the Cable Guys" who didn't want to see their industry downsized in the same way the music industry was hit with file-sharing.

businessweek cover image.jpg

But who are the cable companies getting their revenge on? Is it the array of tech startups that want to help people cut the cord? No, the real revenge is on cable customers who were considering cutting the cord. Rather than allow them to go online to customize their TV viewing and pay only for the content and channels they want, Big Cable wanted to lock them into the old routine of paying for 500 channels while watching about eight of them. TV Everywhere is a solution for Big Cable -- not for its customers. Just look at the image that BusinessWeek chose to show cable's revenge: A customer wrapped up in a cable like a prisoner (see image at left).

While cable companies say they are not seeing widespread reductions in customer subscriptions as a result of people cutting the cord, my Guide to Cutting the Cable TV Cord story at MediaShift has been the 3rd most popular story on the site over the past 12 months (even though it was only published two months ago). I've heard from scores of people who have happily cut the cord or are considering doing so.

The cable companies believe that their method of paying for all those channels of content and then collecting huge (and rising) premiums from customers is the only way studios and content creators can be paid to produce high-quality shows. But how long will the old way be the only way? Aren't those content creation costs a bit inflated when you consider that the tools and distribution are being democratized online? Yes, online video sites have not become huge money makers for independent web productions yet. But that doesn't mean a shift isn't coming down the line.

Reasons for Failure

Here's a rundown of why I think the TV Everywhere concept -- and Comcast's beta of Fancast Xfinity TV -- are doomed to failure over the long term.

  • Taking away choice.
    While Comcast pitches Xfinity as giving users more control over content by being able to watch what they want when they want, the reality is that Comcast is locking people into their menu of offerings for cable TV. And, most importantly, they are giving people the chance to watch content on other platforms -- laptops, smartphones, etc. -- only if they keep paying their cable bills. There is still no choice for people who want to pay less for just the shows they want. The ultimate in customization comes from the Internet, where you watch what you want and aren't usually forced into bundles of content and channels.
  • Propping up old technology.
    The TV Everywhere push has absolutely nothing to do with promotion of new content platforms and everything to do with propping up the old one. The perfect analogy is newspaper publishers (the latest being Cablevision with its acquisition of Newsday) who think they can get people to pay for print newspaper subscriptions in order to get free web access to their content. The customer wants to get access to the content online, so the publisher's reaction is to say, "OK, you can have that, but you'll need to pay for this other thing that you no longer want." You can only prop up the old model for so long before someone figures out a way to make the new one work without it.
  • No plan to charge people for online-only access.
    The cable companies have no plan to give people the option to access Xfinity or other TV Everywhere services for a fee instead of forcing them to pay for cable TV. That means this is not a strategy for working out an online business model (either through advertising or paid content, or a mix of those or something new). Instead, the cable companies have one aim: Protect the old business model. Again, this is not a strategy born from innovation or smart thinking about new platforms. This is survival mode and all about protecting the old, broken way of doing business.
boxee box
  • Google TV on the horizon.
    It's true that the earlier entrants in web-TV convergence (including WebTV) were failures because the technology wasn't quite there yet. And when you consider the multiple steps required to get your TV hooked up to the Net properly, it makes sense that most people won't cut the cord to cable. But more TV sets are being built with easier web integration. And what happens if Google, Intel and Sony band together for Google TV, as rumored in the New York Times recently? And with the Boxee Box due out this year, the web-TV setup without cable gets even easier. That makes low cost alternatives enticing vs. the TV Everywhere promise that you'll be paying your cable bill forever.
  • People don't trust Big Cable.
    In survey after survey, people say they have poor customer service from cable and satellite companies. They would likely jump at the chance to get a service that gives them any kind of friendly help, or can portray itself as even slightly responsive to their needs. You rarely hear people complain about the service they get from Netflix, for instance, so the upstarts have a chance to show they can do better.
  • Not delivering on its promise.
    Worst of all for TV Everywhere is a failure to deliver on its initial promise. The promise was that you could watch all your cable shows and channels on your laptop and mobile phone. But as PC World's Mark Sullivan points out in a review, you can't get all the content you expect. "After all the hype from Comcast about the new service, I'm surprised at how little subscription-only and premium video -- especially movies -- is actually available on Fancast Xfinity TV," he wrote. That could change over time, but first impressions can make a difference with word of mouth.

I am convinced that this early trial for Xfinity and TV Everywhere is doomed to failure because they are a way to prop up a legacy media in transition. But there are ways that the cable companies could change course. They could come up with a fair payment for online access for people who don't want to pay for cable. They could offer more customization for cable, allowing people to buy just the channels they watch.

But, at the moment, the cable companies are content to sit high on the hog, charging huge sums for cable TV services that continue to defy gravity, and the recession, by going up, up, up.

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What do you think about Xfinity and TV Everywhere? Will they keep you happy paying for cable TV? Or have you quit cable and cut the cord? Share your thoughts in the comments below. And don't forget to vote in our poll about your satisfaction with your cable or satellite service:




What do you think about your cable or satellite TV service?polls

Mark Glaser is executive editor of MediaShift and Idea Lab. He also writes the bi-weekly OPA Intelligence Report email newsletter for the Online Publishers Association. He lives in San Francisco with his son Julian. You can follow him on Twitter @mediatwit.

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February 03 2010

20:07

Three Key Video Trends to Watch This Year, According to Online Video Analyst Will Richmond

Keep an eye on how the growth in online video will shift this year into the mobile world via smartphones like Google's Android and Apple's iPhone, said Will Richmond, the publisher of daily news site VideoNuze.

Will and I host the podcast The VideoNuze Report each week, and I sat down with him at the recent NATPE conference in Las Vegas to get his take on key trends in 2010 in online video.

Other trends to watch this year include TV Everywhere rollouts and the consumer adoption of convergence devices such as Roku, Boxee and Xbox, he said. Richmond also gives his take on the challenges Hulu faces giving the rollouts of TV Everywhere and the Comcast acquisition of Hulu parent NBC Universal

Daisy Whitney, Senior Producer

January 08 2010

17:48

Your Guide to Cutting the Cord to Cable TV

From time to time, I'll give an overview of one broad MediaShift topic, annotated with online resources and plenty of tips. The idea is to help you understand the topic, learn the jargon, and take action. I previously covered Twitter, citizen journalism, and alternative models for newspapers, among other topics. This week I look at cutting the cord to cable (or satellite) TV and watching TV content online.

Background

Anyone who gets cable TV or satellite in the U.S. has noticed a pronounced trend over the years: their monthly bill keeps going up. Sure, you can get lots of channels, plus HD channels and DVR functions, but those usually cost extra. According to research from Centris (PDF), the average digital cable bill was nearly $75 last year, and the average monthly satellite TV bill was $69.

What's causing those bills to skyrocket? A lack of competition among cable and satellite providers, and the rising costs of programming. The most recent programming dustup happened when News Corp. demanded carriage fees from Time Warner Cable, and settled before any channels were dropped. Time Warner is planning an upcoming rate hike. Like other traditional media, TV networks (both cable and broadcast) are being squeezed by lower advertising income, and think they can just keep raising the cable bills indefinitely.

Unfortunately for the cable TV industry, they've picked a bad time to raise their rates. Centris found in a separate report (PDF) that due to the economic meltdown, eight percent of U.S. households were likely to cancel their pay TV in the third quarter of '09, and nearly half of households contacted TV providers for discounts or cheaper packages.

Thanks to the rise of Netflix, Hulu and hardware like the Roku box and Apple TV, cutting the cord to cable TV doesn't mean cutting yourself off from your favorite shows and channels. While past experiments at bringing together the web and TV (such as WebTV) have failed, the recent recession has pushed people to pursue their own convergence projects that enable them to watch web content on their TV. Depending on various living room setups and viewing habits, making the changeover from cable to online TV can be complex and maddening. But you're sure to save a bundle of money.

Hardware and Services

The first thing to do when cutting the cord is list the shows you watch regularly, and your favorite TV channels. Next, do a little online research to find out whether those shows appear on the channel's streaming sites (such as NBC.com, CBS.com, etc.) or on Hulu or YouTube. Many shows on pay channels such as HBO don't appear until much later, and usually must be bought via a service such as iTunes.

In addition to what's available online, you might be surprised at the quality of over-the-air broadcast channels since the digital switch-over last year. Many newer TVs only require an antenna to get local broadcast channels, while older TVs need a converter box, which runs from $40 to $80. Plus, some of the programming includes HD content. To find out which digital channels you can get over the airwaves, input your location at the AntennaWeb site.

(Note: Broadcasters recently announced at CES that they would be offering "mobile DTV" so that people could pick up digital broadcast TV on laptops, smartphones and tablets.)

Below is a rundown of some of the more important elements to enjoying TV content via the web. You won't need to get all of them but you can mix and match those that will get you what you need. Most cable quitters find they can get about 95 percent of the TV content they used to watch on cable via the various services below.

Hardware

Roku
This is the box most cable quitters seem to like. It connects to your TV and your computer network, let's you watch Netflix streaming movies, and offers some free and pay options for additional content. It costs $79.99 for SD and $99.99 for an HD model.

AppleTV
It's basically a front-end device to iTunes, letting you download movies and music and play them through your TV. Problem: No TV tuner or DVR functionality.

Digital converter box
If you want to get the digital over-the-air stations in your area, you'll likely need an antenna for newer TVs or this box for older TVs. Cost: $40 to $80.

wdtv.jpg

WD TV
This small box connects your TV to an external hard drive, letting you play movies, TV shows, photos or music you have downloaded. The standard WD TV is about $79, while the WD TV Live that lets you watch Net content is $119.

eyeTV hybrid
It's a TV tuner for a Mac, letting you watch digital over-the-air channels on your Mac, or even on your iPhone with an extra $4.99 app. Cost: $149.95.

Game consoles
Netflix will let you play movies through your XBox 360 or PlayStation 3. There are also a wide variety of TV tuners and other devices that can turn game consoles into home entertainment systems.

Note: If you prefer simply connecting your computer directly to your TV set without any other hardware, you can do that, too. Here's a great video explaining how:

Services and Sites

Netflix
The granddaddy of the DVD-by-mail services, Netflix has also become a huge entryway for people who want to dump cable and get TV shows later when they're available on DVD. Netflix also offers unlimited streaming of some movies and TV shows, which works well with a Roku box or other Netflix-ready devices. Cost: $8.99/month for 1 DVD plus unlimited streaming, with various higher cost plans for more DVDs.

Hulu
The free U.S.-only TV show service is a joint venture between NBC Universal, Fox, and Disney. You are forced to watch commercials before and during TV shows and movies. While it has been an especially popular service for those dumping cable, there has been chatter that Hulu might charge for content at some point. Cost: Free (for now).

iTunes
Apple's poorly named digital media buying service started out selling music downloads. Then it added a podcast directory, and now sells TV shows and rents/sells movies. Downloading TV shows at $1.99 per episode can get pricey, though there are discounted "Season Passes" and some limited free TV show offers.

YouTube
The most popular video site on the web also can be accessed through various devices in order to view its content on your TV. These devices include the Nintendo Wii, PlayStation 3 and TiVo.

amazon on demand.jpg

Amazon on Demand
Trying to compete with Netflix and iTunes, Amazon offers quick downloads of various TV shows at similar prices to iTunes. They are playable on Macs or PCs, or on devices that connect your computer to your TV.

Boxee
Free software that helps you organize TV and movie content on your computer. Currently in beta, the Boxee software will soon come on a special Boxee Box from D-Link for under $200.

PlayOn
Windows software that lets you play Netflix, Hulu, YouTube, etc. from your computer on your TV via a PlayStation 3, Wii or XBox 360. Cost: $39.99 after 14-day free trial.

BitTorrent
Popular free file-sharing software for people who trade TV show and movie files. You'll need to search your own conscience to decide whether to download copyrighted material from sites that utilize the torrent system.

Sample Setups

Here are a few sample setups of people who get TV content without subscribing to cable.

Roku + Netflix and Amazon

Who: CancelCable.com bloggers

Setup: Roku box that plays Netflix and Amazon content; digital TV converter box.

Quote: "Since we need to be more proactive and select shows from Netflix or Hulu, we read a lot more reviews and tend to sit down and watch complete movies rather than just switching around hundreds of channels."

eyetv setup.JPG

eyeTV + Mac Mini

Who: Dan Milbrath, product manager, San Francisco

Setup: eyeTV hybrid to get broadcast channels on a Mac Mini; projector for movies; Netflix.

Quote: "I'm intrigued by on-demand, online TV options like those being offered by Amazon and iTunes but I think the pricing is still a bit too steep. $1.99 for a one hour episode of 'Mad Men' is about double what I think they should charge."

AppleTV + PlayStation 3

Who: Leo Prieto, founder of online community BetaZeta.com, Santiego, Chile

Setup: AppleTV with iTunes and Boxee; PlayStation 3 playing BitTorrent content, podcasts.

Quote: "I spend less than $30 a month on content, and it's all stuff I decided to watch (and not just 'what was on' or 'what I remembered to record on my DVR'). I also have Boxee on the Apple TV installed, which lets me access lots of public and free podcasts or web shows that aren't available on Apple TV (all free and legal)."

Hulu + laptop

Who: Carla King, author and tech editor, Pt. Richmond, Calif.

Setup: Laptop watching Hulu; uses projector for some movies on Netflix or iTunes.

Quote: "The availability of content of all kinds on the Internet is a terrible distraction for me from tasks at hand and health in general. Whereas before I could cancel my magazine subscriptions and choose not to buy cable TV to keep myself on task with personal and professional goals, I find that today I need to develop my willpower to the utmost."

What's Missing

For many people, the biggest barrier to canceling cable is the loss of live sports. While MLB.com has a package of games you can stream online, and CBS has offered a popular March Madness on Demand stream, many other leagues have been slow on the uptake. Plus, there are often restrictions and blackouts with some online season pass deals. For example, the NBA League Pass Broadband does not include nationally or locally televised games. So if you're living in Boston, you won't be able to see Celtics games online if they are also on TV at the same time (whether they are home or away).

Leo Prieto.jpg

The same goes for other live events, such as awards shows. "Mainly, live TV content is impossible," said Leo Prieto, who gave up cable in 2005. "And most of that live TV content isn't available to download on iTunes later. For example, the Oscars or some sports event. In that case I have to go to BitTorrent and get the show afterwards. I would love iTunes or YouTube to offer live content."

Multimedia reporter Sean Mussenden is also living the cable-free life, and says he believes TVs will eventually come with direct Internet capabilities. He had an interesting take on how his discovery of programs changed without cable.

"When you rely on cable, the easy access to thousands of shows tends to limit your willingness to explore further," he said. "But there are far more options for informative and/or entertaining content beyond cable. Not having having cable has made me more willing to explore. For example, at the moment I'm really enjoying watching talks on Ted.com and MIT's OpenCourseWare. I don't think I'd have discovered either of them if I still had cable."

In many cases, people who have canceled cable still get to see their favorite TV shows, but often much later than those with cable. If they can deal with being a bit behind, and don't mind the tech hassle of setting up a Net-to-TV connection with gear, they're often happy to save money and watch what they want.

More Reading

If you want to read more about cutting the cable TV cord, check out these sites and stories:

CancelCable.com

Cable Freedom Is a Click Away at NY Times

You Don't Need Satellite TV When Times Get Tough at News.com

Cancel Cable and Save with Free Internet TV at Digital Trends

Ways To Watch TV Without Paying An Arm And A Leg For Cable Or Satellite at Bible Money Matters

Turn On, Tune Out, Click Here at WSJ (paid subscription required)

Cancel Cable TV by Paul Kedrosky

Cable TV's Big Worry: Taming the Web at NY Times

Who Will Win the Cable Wars? Not You. at Slate

Broadcast TV Networks Want Your Money at The Atlantic

More Fees For Broadcasters Could Hurt Cable Networks' Growth at Dow Jones

Why the Roku Netflix Player Is the First Shot of the Revolution at NY Times

Netflix Agrees To Warner's New Release Delay In Exchange For More Streaming Rights at PaidContent

*****

Have I missed any important elements to cutting the cord? Have you cut the cord and if so, what's your setup? Share your thoughts in the comments below, and I'll update my story with any gear or services I missed.

Mark Glaser is executive editor of MediaShift and Idea Lab. He also writes the bi-weekly OPA Intelligence Report email newsletter for the Online Publishers Association. He lives in San Francisco with his son Julian. You can follow him on Twitter @mediatwit.

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