Three Months Without Cable
As was widely reported in the media, the second and third quarter of 2010 show a steady decline in cable subscriptions. This is earth-shaking for the cable companies, who have seen growth in US subscribers over their entire history. It’s a key indicator of not only consumers being more careful with their spending, but the rise of Internet-delivered media as a compelling alternative.
In August of this year I joined the ranks of people “cutting the cord”. I was moving, and when we set up Verizon FiOS at the new house we left off video. Three months later, I’d like to fill you in on how it has gone and what I see in the future of consumer video delivery.
I dropped FiOS television for two reasons: price and customer service. As for the price, paying more than $50 per month for cable television has always seemed excessive to me. Verizon kept edging up the costs, to something like $65 for fairly-basic service. “Fairly basic” is where customer service comes in, it was always difficult to navigate the different offerings, promotional rates, and timeouts.
In comparison, Verizon FiOS internet service is easy to buy, transparently priced, and has had fabulous technical support the few times I have had to use them (they have never asked me to reboot anything). I highly recommend FiOS internet service if it is available to you.
But back to television. Having decided to drop cable but not to suspend all consumption of video media, we replaced it with a few a la carte offerings:
- Netflix Streaming ($16.99 $9.99) – This works great. We’ve been long time Netflix customers. The number of movies and especially television available streaming keeps going up. We’ve hardly used the shipped-DVDs part of our Netflix subscription in months. They just changed around the plans, so we dropped to $10/month which only allows one DVD at a time, but unlimited streaming.
- Hulu Plus ($7.99/month) – We’ve been using Hulu for a long time. The “plus” mostly means you have access to current shows (e.g. Glee) without them aging out. Otherwise you can only play the most recent handful of episodes. Hulu Plus also includes lots of rerun-grade television from the 80s and 90s.
- Amazon Unbox ($2/episode) Some premium shows aren’t on Netflix or Hulu, like Mad Men, but they are available pay-per-episode on Amazon.
- Apple iTunes ($3/episode) Other premium shows (True Blood) are only on iTunes.
All this runs into a Mac Mini we bought a few years ago. I like the Mac because it is an open enough platform to run all the various media services I might want, while not having the maintenance headaches a Windows Media Center or Linux machine would have (I used to run MythTV before I switch to the Mac). There are many other ways to do it, like single purpose set top boxes (Netflix, Apple TV, Google TV, Boxee, etc) or game consoles or TVs with built in streaming media functionality. But I like the lack of lock-in that comes from having a general purpose computer attached to the television.
The total cost of this kind of setup is thus $600 for the hardware (not counting the actual television), under $20 of fixed costs per month, and another $15 of premium content purchases per month. That’s about $30 per month cheaper than the FiOS television I was getting.
What’s the downside? I have missed out on some content. The two things I wanted to watch but could not find online were the Emmy Awards (I could get red carpet and backstage feeds, but not the actual event) and the Macy’s Thanksgiving Day Parade (nice website but no streaming). I also no longer have access to Red Sox games, or other Boston sports. Given the tough season the Red Sox were having, I didn’t really miss it, but that might be a problem next year. MLB.com will sell you video feeds of games, but only outside the home market for the team. I could get around that restriction, but paying $200 for content only to have to violate the license terms seems abusive.
The Future of Television
I’m liking my new media lifestyle, it’s hard to imagine going back. If anything, it seems like more content is coming to me. The question for the content-producers is how are they going to get it to me. There are fortunes to be made in correctly predicting the new media distribution landscape.
One big opening I see is around children’s television. There isn’t a clear leader in this space. Netflix has a lot of children’s content, but doesn’t really offer the Saturday Morning Cartoons experience. Of course, maybe children will be looking for a more interactive media experience on their Saturday mornings. Media companies are still producing a lot of children’s television, and kids consume it. I predict a $10/month service focused on content for children, with optimized catalog and playback.
Another obvious opportunity is in sports. This is likely to be dominated by incumbents. I would happily pay per-game, or buy a reasonably priced subscription. $200 for the season from MLB is kind of high since I don’t come close to watching every game.
Finally, the big question is whether consumers in general will want this kind of a la carte experience, buying a $10 subscription here, a $2 video there, or if they would really rather have the bundled experience that cable offers. Even if someone does put together a bundled service, it’s hard for me to imagine people paying $60-100/month for internet-delivered television. Not with Netflix and Hulu setting price expectations so low.