Tag Archives: Cable television

March 23, 2015 · 10:08 am

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?

Leave a comment

Filed under digital media, What's Going On

Tagged as , , , , ,

March 11, 2015 · 10:33 am

A New Dark Age?

Are you watching less TV than you used to? If the answer to that is “yes” then you’re not alone. Oh sure, you’re probably spending a lot more time in front of a screen, but when I ask that question I’m asking about cable network programming delivered live or watched via DVR within 3 days. That measurement, by the way, is known in the business as C3 ratings and there is not a lot of good news. Michael Nathanson, a senior analyst with MoffettNathanson LLC issued an analysis of recent data and this lede from the International Business Times sums it up nicely:

The biggest American horror story on cable last year, didn’t come from FX — it came from Nielsen. Ratings across national cable television networks tumbled 9 percent in 2014, triple the decline seen in 2013 and more than quadruple the 2 percent decline seen in 2012. To call it a crisis would be an understatement. If the trend continues, TV could be heading for a new dark ages.

Why the dark ages analogy?  You’re seeing it in the news.  Cable operators pay these networks a lot of money each month (OK, you’re right – WE pay…) but if no one is watching maybe losing those networks from their systems isn’t a big deal.  That sort of explains the stories you read about networks going dark on some systems (as I’m writing this Verizon just turned off the Weather Channel and Dish turned off Fox News for a few weeks)over what those fees might be.  Without a hue and cry from consumers who appear to be moving on to alternatives, the networks have no leverage.

While some in the industry are complaining yet again about faulty measurement methods, the reality is that people are shifting their viewing habits away from live, linear programing.  Even sports, which is supposed to be immune to this, suffered a 5% decline. You’re probably aware that HBO, NBC and CBS are launching their own streaming services. That sort of move might hasten the demise of business model that has fed TV networks with licensing fees as the cable and satellite distributors focus more on their broadband ISP businesses and less on TV.  After all, if they can distribute the programming services for free via their internet side, why pay?

Hopefully this is good news for those of us who pay for this stuff.  What do you think?

Leave a comment

Filed under Reality checks, What's Going On

Tagged as , , , , ,

December 4, 2014 · 12:06 pm

Is TV Terminal?

I spent 23 years of my professional life working for TV companies.  I miss them sometimes.  Then again, when I come across some of the information I’ve been seeing over the last couple of days, I wonder if there will be anything left to miss in a few years.  The business model I learned and practiced in my youth is rapidly becoming unworkable and the media landscape that’s emerging calls into question the viability of the entire system.  Let me explain.

Let’s begin with the basic premise.  The TV business is about aggregating eyeballs to sell to advertisers.  Yes I realize that extracting (some might say extorting) payments from cable operators has become almost as important a part of the business as the old ad model, but once the audiences disappear those payments might be jeopardized.  After all, if you pull your signal from a distributor and no one cares, where is your leverage?  The bundled model in which consumers pay for networks they receive whether or not they watch them has been a bit of a safety net for many outlets.  If the system “unbundles”, what happens?

That’s why a few bits of information paint a grim picture for my business alma maters.  This from GigaOm:

TV viewers are abandoning traditional broadcast and cable networks for online streaming services, and new devices in their living rooms are making it easier for them to cut the cord. That’s the gist of two new studies from Nielsen and GfK.

Or the Wall Street Journal:

Viewership of traditional television dropped nearly 4% last quarter, as online video streaming jumped 60%, according to a new report from Nielsen, crystallizing a trend for TV-channel owners amid ratings declines.

What effect does that have?  Business Insider says:

Data from The Standard Media Index — which claims to pull 80% of US advertising agency spend from the booking systems of five of the six global media global media holding groups, as well as some  independent agencies — shows that television ad spending showed a “considerable drop” in October, and was down 9% on the same period last year.

Streaming video viewing was about 4.8% of the time spent on traditional TV.  A year later it’s almost 8%.  Still small, but Nielsen doesn’t measure Netflix viewing (which is by far the greatest source) on anything but PC’s.  Quite a bit is viewed via tablets and over-the-top devices so this number is understated.

Is network and cable TV at the end-times?  No, but it’s not unthinkable anymore that those times could come.  CBS has launched a stand-alone streaming service, as has HBO.  One can’t help but wonder what happens when ISP’s, many of whom own traditional networks, stop (allegedly) throttling services like Netflix or eliminate usage caps.  Add the dawn of the “ala carte” era in cable packages and suddenly the TV world looks very different.

Thoughts?

Leave a comment

Filed under digital media, Reality checks, Thinking Aloud

Tagged as , , ,