Piracy isn't eating cable tv's profits because of pricing... it's eating their profits because of convenience. How ridiculous is it that I can get an entire season of X show in high definition with no commercial interruptions streamed to my TV within an hour through torrenting, but the equivalent would take either foreknowledge, or lots of searching for reshowings? People have discovered that not having their TV dictate their schedule is valuable to them, and the providers that realize the value of that convenience are going to win. The only thing holding Netflix/Hulu back from eating Cable TV within a few years is live content (sports) and better selection. Be careful in extrapolating the 2% growth figure... it could easily become much, much faster if they can figure out how to provide the only reasons left to have cable TV.
Normal people will load their computers with malware when they attempt to pirate anything. Cable TV is idiot-proofed. Which is why the ad rates are still so excellent on many channels. You're overestimating the technical competence of most people.
The video quality is also higher for less effort on cable. What I think it will take for the displacement to happen is another large improvement in the internet connectivity to American homes and smartphones. Netflix exploded video rentals already, but cable is not quite the same business.
That's where streaming/torrent/pirate solutions keep failing, and not understanding why. Nirvana nailed it: "here we are now, entertain us." The cheaper the price tag, the more technical know-how is involved. Popcorn Time came close, but still requires geek skillz. We're talking people who don't quite grasp "enter key" or "space bar" (much less "grep"), people who just want a limited linear list of what's available right now, who want to pick a channel generally filled with content they'll like, and who just want it to keep going without involvement.
Netflix is great - when you know what you want and are inclined to find it. When they finally get a consistent flow of new content, and set up "channels" inclined toward specialization with a good mix of shows, with some live content thrown in, then cable TV will have reason to panic.
Drop-dead idiot-proof simple. No wonder it took Steve Jobs to "crack" video, and we still don't know what he figured out (akin to "I found a marvelous proof, but this margin is too small...").
Are you a Netflix subscriber? Their interface is pretty good. It's about as good as you can ask for given the technology we have and the selection that Netflix has.
Things are broken up by genre or new releases just like they used to be in video stores because it's pretty intuitive way to browse movies. "I feel like watching something funny, show me all comedies". Netflix also takes it 1 step further and tries to sort it by relevance based on previous watches.
Their interface for DVD players is quite good too. The search is smart and it only takes seconds to go from the DVD player being off to watching a stream from Netflix.
I rarely load up Netflix knowing exactly what I want to watch. I have ideas based on genre what I want and Netflix lets me browse reasonably. I've been a sub for almost as long as they've been around and I still find good stuff. The only thing that lacks is newer releases on stream but you can blame the media providers for that.
My cable provider sometimes offers free access for a month to their on demand/pay per month movie service and it's a joke. Things are listed alphabetically with 90 pages to go through or it's by genre but you're stuck going through 28 pages of alphabetical results where you see nothing but the movie title and a 1 sentence plot. It's an awful user experience.
I think you're being biased here. Netflix's device interface is ho-hum (eg on the playstation entering text for search strings is painful) and they only have a 1-2 sentence description as well. They do try to sort things by relevance but they frequently get it wrong and I can 't depend on the same genres being there from session to session or having the same names. For example, I used to have a genre called 'horror movies'; after I watched a few different cartoon shows in a row one weekend that went away and instead I got a new genre called 'Scary Movies' with mostly PG-13 rather than R-rated content. Now I wasn't so into horror movies to begin with, but if I was this would be quite annoying. I do like Sci-Fi movies but but my options for curating my own genre selections are very limited, so I wind up thorwing everything into 'my list' in case I can't find again later.
The cable interface is also bad, but things are broken out by genre and broadcast station (eg some people prefer HBO stuff). It's a bit annoying because it's slower and I have to use a remote control, but that hasn't prevented my finding things I want to watch. Neither side is going to win by interface, but on selection; Netflix has fewer hits but more depth, Cable offers more populist and newer stuff.
I never tried accessing it through a console. Only through a fairly modern $40ish DVD player and a web browser, no complaints.
I'd drop them instantly without thinking twice if a better solution existed with equal or better selection, cheaper prices and more promising short term goals.
You still need to think about what you want to watch, and deliberately make it happen. A very large market segment wants no more than a half-dozen choices, pick one, and let it run indefinitely.
For the same reason, the 90 page channel listing, dominated by "your not subscribed to this but we're going to show it to you anyway in hopes you might upgrade to include it" and "here's 37 duplicate channels all showing the same movie at slightly offset timeslots", has got to be driving people away - many staying only because there isn't a brain-dead-easy option hearkening to the days of 4 channels.
The menu I was talking about wasn't the typical channel listing. That's even worse to the point where I never use it. When I goto my friend's house where he has a ton of premium channels you can literally spend 3 hours just looking through that list to find something.
I hope that market segment with half a dozen choices never becomes fully main stream. I like choice in moderation (ie. web frameworks with opinions) but movies are just entirely different.
There's just too many interesting genres and type of movies to filter a list of 100,000 movies down to a handful. It's a very complicated problem to solve and might be unsolvable until we have huge break throughs in how machines process human input.
Example, how would you solve this problem:
Customer A watches 5 comedies in a row then is proposed a choice of 3 movies. 1 comedy, 1 sci-fi and 1 romance.
If customer A picks the sci-fi movie you cannot conclude that he didn't like the comedy or romance choices. He just happened to prefer watching a sci-fi movie that night. You don't even know the outside conditions too. Maybe his friend is over sitting in the room while they pick the movie, you simply cannot know.
This is a great point. The 8 billion channel situation with an unusable guide channel seems like it was put together and maintained by a bunch of cokeheads with no sense of a sane user experience.
I don't disagree that pirating is not a great option to a normal user. I'm simply saying that the reason for the success of Netflix is because they've taken the torrenting model and translated it for ease of use and safety, but they still have a few more hurdles before they can provide all of the features that keep people subscribing to cable TV.
who just want it to keep going without involvement.
Binge-watching happens because Netflix autoplays the next episode each time. They could take it one further by making more content decisions for the user, going beyond proffering recommendations, which still require user action.
You can download The Daily Show (or any show for that matter) in 1080p minutes after its finished airing, with no commercials, or you can wait a day and have to sit through 12-15 ads on Hulu while their player desperately tries to play the proper rendition for your connection.
You first need a computer, a high speed Internet connection, torrent software, a good/reliable/safe torrent site and then the knowledge to install said software and initiate a download. You then may need the proper codec/video player to watch the video and of course the wherewithal to stop seeding so you don't get caught by the piracy police. While these hurdles are easy (obvious) for geeks like me (and most HNers) they are not for the majority of the population.
> You first need a computer, a high speed Internet connection, torrent software, a good/reliable/safe torrent site and then the knowledge to install said software and initiate a download.
So the barrier to entry is free knowledge, if you already have the same requirements to watch Netflix/Hulu.
You still need a high speed internet connection, a computer (or do these streaming sites work on tablets? I don't know) and of course know where to go. Also, when your favorite pirate streaming site gets shut down (they all do eventually), you need to know how to find another (safe) site to keep on. Yes less hassle but still not "Cable TV" easy.
It's pretty trivial to set up AdBlock and watch The Daily Show sans commercials. You're right, it's a day late, and you may have to wait a few seconds to watch Jon Stewart's mug in glorious HD, however it's still more convenient than finding a torrent.
Nothing's more convenient than finding a torrent of a hit show. The process involves typing "daily show" into a search bar, hitting enter, then clicking "download torrent" on the one that looks like what you want (which will normally be at the top of the list.)
You're skipping over the whole part where you have to download and configure a torrent client, and get a video player that reads MKVs and other containers encoded with x264... and probably a few other steps. Compared with hitting the power button a TV and clicking up and down until you find something, the torrenting process is labyrinthine. (Popcorn Time and others, of course, fix this somewhat)
Typing "thedailyshow.com" into a browser and just watching the show and having AdBlock+ remove all the ads is pretty convenient. A large percentage of people are using ad blocking software anyway, so setup once and forget about it.
Yea, for me, I'm only interested in piracy when there isn't a legal way for me to watch without being extorted by cable providers. I use a family HBOGo/Showtime Anytime account (but would pay for my own if it were an option), pay for Netflix, Amazon Prime, Hulu Plus, etc. Piracy only becomes an option if I can't use one of those services (I want to support people who create things I enjoy).
I am really curious about this point of view. Many of my friends and colleagues share it. Do you really see no issue with downloading something for free if it isn't provided to you in a way you can pay for and consume that you prefer? Are you okay that you are not paying for something that really does take a large amount of money to create?
Like I said, I'd prefer to pay for what I consume. I'm not ok with paying cable companies extortionate fees simply because they were able to develop a semi-monopoly on content distribution while they provide painfully poor service and actively work to avoid adapting to the fact that the internet has drastically reduced distribution costs. Shows that are available one day later on Amazon/Hulu or the like, I wait a day and purchase, so it's actually a lot more uncommon than you think that I pirate shows (that said, I'd pay more in some cases to be able to purchase the show when it airs - for events like Breaking Bad). HBOGo, WatchESPN, Showtime anywhere - they built a system that allows shared accounts explicitly, so there is no guilt on my part for not paying for a cable subscription just to get those channels, and if those companies wanted to enforce a policy of individual accounts, I'd happily pay for a subscription to just those channels.
I realize some of this is not perfectly logical and is contradictory. However, I see it as a broken system, with entrenched players acting poorly, and the best way to force adaptation is to pay when they offer me a way to and not pay when they don't. My hope is that this incentivizes the power players to move towards a system where all content is available for purchase should someone want to purchase it (which, given the minimal barriers to uploading copyrighted content, seems like they should have embraced long ago - especially as companies like Netflix and Amazon monitor pirated content to determine their targets).
You can in fact watch lots of hit shows on demand if you're a cable subscriber. there are a couple of TV shows that I like to watch at broadcast time because I enjoy them so much, but if I miss an episode I can just see it later. I've also used this to view shows that I was completely unaware of or uninterested in when they were first broadcast.
These statistics are failing to take into account that young adults that grew up using the internet for entertainment will not subscribe to cable TV. It's not all about the loss of current subscribers, but the loss of potential subscribers as well.
Yeah, I was born in the mid 80s and I have no plans to ever get a TV subscription. It's not the price - I'd be happy to pay for a Sky Sports internet streaming service, if it existed. It's the hassle and the long contracts.
Just out of curiosity, what country are you in? In the US I've had all three current major cable TV providers (and several of their predecessors), and I've never had a long contract (it's always been month-to-month). Is it common to require long commitments in other countries?
In the UK, most TV subscription services that sell you a "package" of channels have long-term contracts (12 months is usually the minimum). They try and sweeten this by providing you with a "free" digital video recorder (not really free) and often combine TV, phone and broadband services into one subscription package.
Streaming-based services such as Amazon, Netflix and Blinkbox (owned by supermarket giant Tesco) let you subscribe on a month-to-month basis or film-by-film basis. These services feel more flexible because they're not trying to sell you a whole bunch of channels, some of which you may not have much interest in.
Interestingly, even the BBC can see where the market is heading for many viewers. Their "youth" channel BBC Three (aimed at 16-34 year olds) will stop broadcasting terrestially and become an online-only channel via their iPlayer service. I guess this reflects how more and more people consume content today - they don't consult a TV schedule, they expect to be able to view content when it suits them.
Predicting the future is hard without great historical and demographic data. I'd be shocked if you weren't right for young, educated, tech-savvy people, but it's too soon to say what will happen on a larger scale, especially not knowing how cable companies adaptations will play out.
Regardless, it is silly to argue right now that Netflix/Hulu are the primary causes.
I have friends who are not into sports and thus may not watch much television, but the vast majority of them are, which means they're going to subscribe to cable because it's the only legal way to watch most sporting events, especially as ESPN continues to grab up more and more programming for its networks.
Until ESPN decides to abandon cable (which won't be happening any time soon as long as they collect 5 dollars /month/subscriber from the providers), there will be a continual pipeline of people who will subscribe to it.
I'd absolutely be a cord cutter if it weren't for cable NFL games and Syracuse Basketball.
This article seems to me to completely misinterpret the Experian study.
My (and HuffPost's) reading of the Experian graph is that 18% of households with Hulu or Netflix have no cable TV service, while cabletv.com reverses it: 'only 18% of “cord cutters” have Netflix OR Hulu.'
I didn't go through the sign-up form to download the study itself, and the graph appears not to have been made by Edward Tufte, so it's hard to say for sure. Anybody read the actual study?
I took a look at the slides/paper and you are completely correct (I thought the same thing).
The plot is essentially saying that if you compare the "average household" to the households of Netflix and Hulu subscribers, customers in the latter are about 2.5-3 times more likely to be "cable cutters". This is what what I would call "Netflix and Hulu killing cable."
The whole premise of their article is flawed on a misreading of a figure. The study they cite contradicts their claims.
> ... about 11% of all Americans subscribe to Netflix.
Netflix's latest numbers show 35.7 million subscribers, but the author is only giving credit for one person per Netflix subscription. With 115 million US households (http://quickfacts.census.gov/qfd/states/00000.html), that gives Netflix access to 31% of households.
My experience with renewing my Internet subscription recently is that cable providers are offering significant incentives to customers to add subscriptions to at least some form of TV service in addition to Internet service.
I'm a Comcast customer in the SF Bay Area. Six months ago I only had Internet service; no TV. I called customer service in search of a better deal, and it turned out I could lower my total bill by adding TV service! In other words, Internet alone is now more expensive than Internet + TV. So they're now /subsidizing/ TV service (or at least discounting Internet service) to inflate their TV subscriber count.
A year or so ago my local cable operator from whom I had only been purchasing Internet service for some years sent a representative ostensibly to check my Internet service. I was a bit puzzled by this as I was not aware of any problems but acquiesced. After a bit of theater somewhat foiled by the fact that I was running Linux and my window manager was xmonad the representative offered me a deal where I would pay less per month for combined TV and Internet services and I was assured that my Internet service would not be impacted in any way. I was very confused and refused the offer based on a general feeling of suspicion.
A few weeks later another representative came to my door and did not bother with claiming to check my service quality. He simply offered me the same deal. I pointed out that it made no sense to me. He then admitted that the cable operator was negotiating a deal with Time Warner Cable to merge with them and they wanted to inflate their subscriber numbers. That at least made some sense to me so I agreed.
Some months later the regional cable operator effectively ceased to exist and I now got bills from TWC. I forget the exact timing but either just before or just after this my monthly billing for cable services increased significantly and I called to cancel the television services I never used which returned the total to approximately the original amount.
Aren't TWC and Comcast in talks currently (I believe the FCC may also be involved)?
That's the only reason I have cable TV, yes. If you wrangle with them, you can get a deal where they just relay you the broadcast channels, otherwise they give you a cheap starter deal and jack the price up after 6 months. The trick is to call the customer retention department and make them talk you out of unsubscribing.
Interestingly, I saw the other day that AT&T is proposing to offer fibre in SF and Oakland/Berkeley, which would be a game changer.
Given a choice between overpriced cable and slow DSL I'm open to other alternatives. The status quo sucks, and it doesn't particularly bother me that AT&T wants to get a good deal.
Yes, over the last couple of years, while making the annual "call-to-comcast-to-avoid-being-ripped-off-completely", I've noticed that their TV/phone bundles get juicier and they are seemingly much more aggressive to bait-and-switch you to those packages.
What I see here is a sign that ultimately, the fate of this industry is to follow the path of record companies towards irrelevance. The only difference being that record companies could only still make a few dimes selling ringtones, while comcast still faces close to zero competition as a decent internet provider in many areas.
Speaking of Hulu/Netflix, make no mistake, they will gradually replace cable companies in terms of being crippled with ads and too expensive and I guarantee you that we will hate them equally.
The numbers may be inaccurate due to some billing tricks by companies like Comcast. For Comcast, it's actually about $5 cheaper for customers to stay a cable subscriber even if they don't use it since there's a discount for 2 for 1 subscriptions. Some may say, yes but cable cutters can bundle VOIP instead. Well if you go that route Comcast forces you to get a crappy Modem Router hybrid and I and probably many others didn't want that so we just kept cable TV. We just don't watch it.
> What about cable without cable TV?
This still doesn't exist yet. Even for HBO GO access, Comcast still forces you to be a basic cable subscriber.
I "pay" for cable TV simply because it's more expensive with Comcast get Internet without TV. The cable box is unopened in the corner of my apartment, and we watch Netflix and Hulu. The numbers the cable industry are showing are a mirage created to deceive their shareholders. Viewers 30 and under want nothing to do with Big Cable.
AT&T did a similar thing when people were going DSL-only. I had AT&T DSL + phone line and called to cancel the phone line, they gave me the phone line for 12 months at $5 a month simply so they could show their shareholders that people weren't cutting the cord. That was cheaper than the VOIP provider I was planning on going with, so I stuck with it another year, didn't really use it though.
Cable's user experience is horrible, it's terribly expensive, it's price grows many times the rate of inflation, users feel screwed because they are forced to buy packages of channels they have no interest in, and feel forced to "bundle" to feel less screwed.
Comcast regularly wins the "Worse Company of the Year" award, and has terrible customer experiences.
None of Cable's deficiencies have anything to do with Netflix or Hulu. In the end, the thing that kills Cable won't be Netflix or Hulu, it will be Cable that kills Cable. The Cable industry are pigs which will soon get slaughtered by their own greedy hands.
Netflix and Hulu are just there to pick up the pieces.
In how many countries is the latest series of Game of Thrones available for purchase? In how many countries are people watching the latest Game of Throne series? There's a huge gap.
Content providers matching their sales model to viewing habits seems to be an inevitable future. It's going to be painful process getting there though.
Are we really “killing” cable – or even cable TV – when we sign up for a cable internet package which includes cable-only TV channels?
Yes, internet delivered services are killing "cable-only TV" when "cable-only TV" starts becoming something else. If HBO is now letting Comcast subscribers watch HBO-Go episodes of Game of Thrones, then HBO is no longer "cable-only TV!" In fact, I'd say that with piracy, many "cable" content producers are no longer in the business of cable-only TV! They are now in the digital content producing business.
If traditional cable subscribers are declining at the same rate that people are dying of old age, then this suggests that young people are not becoming new cable subscribers and this does spell the end.
I think the relevant statistic here is obscured with faulty logic. The important thing is that, of people who subscribe to Hulu or Netflix, almost 50% more are cord cutters than 3 years ago. If you make an assumption that this number will continue to increase at the same rate, in 11 years you will have 75% penetration: 12.7 * (18.1/12.7)^5 (-4). And, in the following 3 years, cable will be completely wiped out.
