Tag Archives: Cable television

When You Don’t Know What Business You’re In

I started 2019 by buying a new home. When I say new, I mean brand spanking new as in “just built.” As I’m preparing to move in, I did what most folks would do first these days and called my local Cable TV/ISP to come set up the house. The builder did a good job of preparing the house for both cable TV and for wired internet and phone. There is a large junction box in a closet with both coax and Cat 6 wire running to most rooms. The living room and master bedroom both have conduit running into the crawl space for wires to be run easily. Frankly, I thought the hardest part of getting everything set up would be joining the coax and network wires that were hanging out of the side of the house to the main feeder lines. I was so wrong, and the reason why I was is quite instructional for any of us in business.

Hooking the house to the main lines was easy. Then, the tech set up the cable modem and router for my high speed (400MB+) wifi network. So far, so good, The problem came when I asked about connecting the wires that were in the closet to a switch or the router. None of them have caps – the little plugs – on them. “I don’t do that,” he said. But how can I connect the rooms to the network? What about putting the coax wires into a splitter for cable in the various rooms? At least that would help me identify which wires ran to which rooms. No help there either, even though he is the cable installer.

The final bit of laziness came when he informed me that he couldn’t run any cable through the conduits. He said he couldn’t find the conduit opening in the crawl space even though he pushed a long rod down the conduit and then went to look for it in the crawl space. I went down the next morning and found the openings in about 2 minutes. Yes, it was late (4p) on a Friday afternoon and I’m sure he wanted to get out of there, but still.

So here are some things we can all take away. First, the fact that the tech had no idea how to run wired internet tells me that the cable TV companies still think they’re in the cable TV business. Any look at the numbers will show you that people care far more about broadband and their ability to stream than they do traditional cable TV. If you are an Internet Service Provider, that you need to provide the damn service, and that includes wiring houses. I want my smart TV’s wired in, along with my game console. It’s a much better experience than via wifi, even high-speed wifi.

Second, the techs are customer service people along with being technicians. This guy was very nice but did nothing to solve my problem. To make matters worse he never left any paperwork so I have no way to know what exactly he did do. I can’t even tell you what my VOIP phone number is. Any company representative that deals with customers in any way should be trained to do so properly. They must have a focus on solving problems, not on creating them. And they certainly should never lie.

My ISP doesn’t know what business it’s in. They still think they are proving cable TV. They also still don’t understand how the power in all businesses has shifted to the customer. Let’s all agree to start 2019 by rethinking what businesses we’re really in and how we provide it to our customers, shall we?

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What, Me Worry?

If you follow the TV business at all you’ve probably noticed a bunch of recent articles about the acceleration of the cord-cutting phenomenon. This article from Business Insider is typical, as are the results:

In a recent Business Insider survey of 104 teens nationwide, only 2% of Gen Zs said that cable is their most-used choice for video content. Nearly a third said YouTube is their most-used source for video content, and 62% say streaming excluding YouTube, including Netflix or Hulu, is their most-used.

What’s happening is that many younger folks who once purchased a cable TV subscription are no longer doing so, and the pace at which that’s happening is rising quickly. As one piece noted,  “roughly 5.4 million Americans are expected to cut the TV cord this year, thanks largely to the rise in cheaper, more flexible streaming TV alternatives.” Is that significant? Oh yes:

According to eMarketer’s latest figures, the number of cord-cutters—adults who have ever canceled pay-TV service and continue without it—will climb 32.8% this year to 33.0 million. That’s higher than the 22.0% growth rate (27.1 million) projected in July 2017.

That’s a lot of money leaving the building, and yet there doesn’t seem to be widespread panic among the cable providers. Why not? Because they people who are cutting the cable cord are locking themselves into the broadband cord, and that, dead readers, is an even better deal for the cable guys. Why? Well, think about your own situation. I’ve got two options for TV service here – one cable, one satellite. Neither is appreciably different. The satellite is a bit less expensive but service craps out in bad weather so although it has some unique content and 4K, it’s not perfect. If I decide to cut the cord and take some TV over the air and stream the rest, I have only ONE option to get true broadband service, and that’s how most US markets are as well.

How this came to be is laid out in this Techdirt piece and I won’t repeat what they have to say. The short answer is that natural monopolies have developed and they’re not going to go away. Even if some company tries to enter the market (as Google Fiber did), the time to build the service is lengthy. Laws have been passed to prevent municipalities from entering the market and providing competition as well.

Given my druthers, I’d rather be a broadband provider than a cable TV provider. Your programming costs are almost non-existent, you know a lot more about how your customer is using the service (your ISP knows all, your cable TV guy is just figuring out how to track you accurately), your margins are great, and you probably won’t have any competition despite lousy customer service and usage caps. Who are the big broadband providers? Yep, the same cable guys who are “suffering” from cord cutting. You think they’re worried?

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Filed under Huh?, Reality checks, Thinking Aloud

Charging Facebook

I’m a believer in things repeating themselves in business, even if they take slightly altered forms or use up to date technology.  It’s an offshoot of my mantra about not confusing the business with the tools, I guess.  In any event, I got to thinking about a tidbit I picked up while going through my news feeds the other day.  It turns out according to SimpleReach, a distribution analytics company, referral traffic to the top 30 Facebook publishers  plunged 32 percent from January to October. Among the top 10, the drop was 42.7 percent.  The drop was confirmed by other analytics sources as well.  This, of course, got me thinking about cable operators and television networks.

Facebook logo Español: Logotipo de Facebook Fr...

(Photo credit: Wikipedia)

Like a cable system, a social network is a big, empty pipe.  It creates a method for distribution and little else.  All of the innovation at a social network is focused on improving that distribution and not on the content.  Back when the web started, publishers plugged right into the web and promoted like crazy to get “viewership.”  What Facebook and other social networks (read that as gatekeepers) have done is to take over much of the traffic creation.  This is exactly what happened when the world shifted from over the air broadcasting to cable, but there as a big difference.

In two words: affiliate fees.  This is compensation paid by the operators to the program providers.  It can run from pennies per home to $7+.  That’s per home, per month.  It’s a pretty strong reason why most “TV” content is only available with the blessing of a cable carrier (TV Everywhere).  Why would the publishers (content providers, a.k.a. TV nets) want to disrupt that business model, especially when the can supplement those dollars with ad revenues?

Back to Facebook.  Publishers spent several years building content islands on Facebook, only to have Facebook revamp their algorithm and sent less traffic.  The problem is this:

With social media driving over 30 percent of all traffic to publisher websites and Facebook delivering 75 percent of that social traffic, no publisher, from BuzzFeed to The New York Times Company, can afford to skip using Facebook as a means to promote its content.That gives increasing leverage to Facebook, which is able to greatly influence the prominence and visibility of publishers’ articles in the News Feed of its users.

So here is a prediction, one that might not happen for a couple of years, but one that I think, based on the history of cable TV, will occur eventually.  Content providers are going to charge Facebook.  I’m not talking about sharing ad revenues; I mean the digital equivalent of affiliate fees.  Someone will bite the bullet – a big guy like the Times or HuffPo or maybe BuzzFeed – and tell Facebook to pay up.  Maybe they will take technical measures to prevent their content from being shared there but they won’t publish it themselves.  One publisher gone is not a big deal.  Many publishers gone means an empty pipe, and that means fewer users and fewer ads sold for Facebook.

What do you think?

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Filed under digital media, Thinking Aloud

Pro Choice

I never had cable TV until I moved into New York City after college.  You needed the cable there because the big buildings interfered with the over-the-air signal.  Suddenly, a new world opened up, as I had access to several more channels, including HBO.

Cable tv

(Photo credit: Wikipedia)

I had more choice, and I was all for it.  Apparently, I wasn’t the only one either. Cable television contributed to the substantial drop in the broadcast network viewing from 1983 to 1994 when weekly broadcast audience shares dropped from 69 to 52 while basic cable networks’ shares rose from 9 to 26 during the same period according to A. C. Nielsen.  What had been a 6 or 7 channel universe now had almost 40!  100 channels was a dream for down the road and today’s world over several hundred channels seemed impossible.  But of course, as The Boss reminds us, there were 57 channels and nothing on.

Fast forward to today.  Our T/V (television/video) choices are unlimited.  The only real choice we need to make is who is going to do the programming – us or the channel’s programming department.  When we do it, we can watch what we want when we choose to do so.  We can binge on an entire season over a day and we probably won’t have to be interrupted by nearly as much advertising.  Allowing the channel to program our viewing means that those of us who don’t choose to make a decision about programming need not.  We can watch T/V as it traditionally was done – passively.

This changed environment has led to cord-cutters and cord-nevers.  After all, when 75% of people just want a “light” package of channels, paying more for the hundred the cable company chooses to carry seems silly.  As eMarketer predicts:

In 2015, there will be 4.9 million US households that once paid for TV services but no longer do, a jump of 10.9% over last year. And that growth will accelerate in the coming years, with the number of cord-cutting households jumping another 12.5% in 2016. In fact, by the end of next year, the number of US households subscribing to cable and satellite will drop below 100 million…Also noteworthy, the share of viewers who have never subscribed to cable or satellite (“cord-nevers”) is growing as well. This year, the percentage of US adults who have never subscribed to cable or satellite TV will reach 12.9%. That share will grow to 13.8% by 2016.

I have no doubt the cable providers will innovate – allowing you to upgrade your TV, for example, as the wireless carriers do your phone, bundling in streaming music, or changing their business emphasis entirely to being broadband providers (BYO Programming!).  But it’s going to be an interesting transition in the pro-choice video world.  You agree?


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Batman In Half The Time

It’s Monday, and one of my little treats on Monday evenings, prior to football, is watching Gotham.  It’s a prequel to the Batman story with which most of us are familiar.  As a subscriber to the philosophy that one should always be Batman, it’s must-see TV for me.  Unfortunately, last Monday, I was engaged in a client phone call and couldn’t watch the show.  In an on-demand world, that’s really not a big deal.  In addition to the on-demand service my cable provider offers, I am a Hulu subscriber.  Catching up on the missed episode happened the next night, and while I was watching it a little light went on. I’d like to share my thought with you and see what you think.

My former colleagues in television bemoan the shift of viewing to streaming sources.  They think it has to do with convenience or maybe with some cord cutting.  That may be true, but as I was watching Gotham, this is what dawned on me:

Gotham on Fox – 60 minutes. Gotham on Hulu – 33 minutes.

We wonder why people are watching alternative sources?  Its’s the same reason people use ad blockers.  It’s a faster, less cluttered experience.  The thing that drew us to whatever we are doing is constantly being interrupted. Ads are not why we watch.  They’re our part in the attention/value exchange.  Unfortunately, that equation has become unreasonably weighted to broadcast and cable television providers, who are making excessive demands for our attention.  If I can get my Batman fix in half the time, the few bucks a month that it costs is well worth it.

Having been a publisher as well as involved in broadcast programming, I understand the pressures for monetization.  The problem now, however, is that the uniqueness of nearly every channel has been stripped away.  The content that made a channel unique is everywhere, and in general,  consumers will access that content with as few distractions as possible.  Annoyed consumers will seek out channels that are less annoying.

It’s not just TV.  If site A offers me news or scores or stats with a healthy dose of auto-start video, pop-ups, and full-screen takeovers, I can assure you that I’ll find a site that offers that content in a less-monetized environment.   If I can enjoy one of my guilty pleasures in half the time, why wouldn’t I?  Hulu and Fox both show ads, both show promotional spots, and both show the same program.  Fox, obviously, chose to show a lot more non-program material.  That may have paid their bills in the near term, but in the future, I’ll be watching on Hulu, so I guess it ultimately was a bad choice.

Why are people moving to other channels?  Do you really need to ask?

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Never Never Land

I paid my cable TV bill the other day.  It’s a lot of money each month but the fact that the amount also covers my high-speed internet access and office phone mitigates the expenditure, I guess.  I know my kids don’t see it the same way, and from a lot of the numbers that researchers are reporting, neither do their peers. 

Consumers are shutting off their cable and satellite TV connections in droves.  Nearly half a million subscribers did so in the second quarter, according to the folks at  Leichtman Research Group Inc.  The cable guys will tell you that it’s really a drop in the bucket and they’re right.  49 million folks still have those cable connections and another 34 million have satellite dishes.  So what’s the big to-do?  Those drops have the potential to run into a flood if you look inside the numbers and at how people are watching as well.

Take a look at some information put forward by the Forrester folks in their recent study of cord-nevers.  As explained by this piece in Digital Trends:

Based on a recent survey of 32,000 adults conducted by data analysis firm Forrester Research, roughly 18 percent of Americans have never actually subscribed to premium TV service through a cable or satellite company. While the majority of those respondents were at least age 32 and over, about seven percent of ‘cord-never’ Americans are between the ages of 18 and 31; a prime marketing demographic for advertisers.

Furthermore, the growth rate of cord-nevers suggests that roughly 50 percent of Americans under the age of 32 will have never subscribed to a premium TV service by the time we reach 2025. That’s a massive segment of the population that will be turning to digital delivery services rather than calling up their local cable company for a stack of set-top boxes and a hefty monthly bill.

I’ve stated before that I believe the TV distributors we have will trade the program pipes they have today for internet pipes tomorrow.  Rather than spending money paying fees to the program distributors, they’d be far better served spending the money to upgrade their pipes and building better connections to move video to their subscribers.  While today’s college kids (and tomorrow’s consumers) don’t know a world without high-speed internet access, as cord-nevers they won’t miss the cable subscription.  They might also just be the customers today’s marketers think have gone missing unless they rethink their use of traditional TV.

Cable and satellite subscriptions aren’t going away any time soon, but the one size fits all bundle of program services is.  It will have to in order to retain the consumers who now program their own viewing.  With a minority of viewing to entertainment programs happening live, the operative word will be choice and control.  Consumers expect that along with their monthly bill, and it will be interesting to see if the cable and satellite guys are listening.

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Willie Sutton And TV

Let’s start this week with a little history lesson. You probably haven’t heard of Willie Sutton. According to Wikipedia, William Francis “Willie” Sutton, Jr. (June 30, 1901 – November 2, 1980) was a prolific American bank robber. During his forty-year criminal career he stole an estimated $2 million, and eventually spent more than half of his adult life in prison.

English: Willie Sutton (1901-1980) Source http...

(Photo credit: Wikipedia)

There is a famous quote attributed to Sutton (he swore he never said it) who reputedly replied to a reporter’s inquiry as to why he robbed banks by saying “because that’s where the money is.” I’ve always remembered that because it’s a great way to stay focused when shiny new business options emerge.

One shiny new option these days is the plethora of Over The Top video services. You have probably heard about the one forthcoming from Apple, and HBO, CBS, Sony and others are already in the marketplace. The short version of why these things exist is so one can cut the cable cord, freeing oneself from the “bundle” of unwanted but paid for TV networks. If I’m a cable TV provider – most of whom are also internet service providers – I’d welcome these services with open arms and some of them are. Cablevision, for one, is offering the new HBO Now online service to its internet customers, even though the service could persuade more people to drop their cable TV packages.

Keeping the Sutton Rule in mind, where the money lies is in providing high-speed bandwidth at a reasonable price.  It costs the ISP pennies per gigabyte.  Charging a customer $50 a month for something that costs you maybe a tenth of that is a pretty good business.  Compare it with providing cable TV where you’re charging a little more but your margins are much smaller due to having to pay most of the networks you provide a monthly fee per customer.  You still pay ESPN $8 a month for each of those grandmas with cable who never tune it in.

I’m assuming for a moment that the customer service and install/repair costs are a wash.  You’re going to have those techs and phone banks no matter which service you support.  The real question in my mind is when will some cable company get out of the TV business and go ISP only.  Will that kill the content providers?  Nope.  One could argue they will come out ahead too since many of them receive far less on a per user basis from the cable guys than they might charge direct to the consumer albeit to a smaller but more engaged base.

The interesting times keep coming, don’t they?

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Filed under digital media, What's Going On