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The Future of Internet Cable, Part III

The Near Future

Recap

Though cable TV in one form or another is here to stay, younger consumers’ switch to streaming video is giving rise to a growing number of bundled and individual subscription entertainment options. For example, Dish is among companies that have been offering so-called ‘skinny bundles’ to this rising demographic.

A high-stakes contest is only now beginning among major entertainment conglomerates and ISPs for long-term competitive advantage/profit. –Most analysts predict a period of deconstruction will morph into an eventual ‘rebundling’ of TV transmission across yet-to-be-developed internet platforms. But whether cable or ISPs will have the upper hand in that equation probably won’t be decided in the courts for many years. —A list of forces on both sides of the issue is at the end of this Insights installment.

A greater range of offerings

Newer ‘over-the-top’ (OTT) streaming platforms include HBO, Showtime/Starz and other premium choices. Within the coming year, Amazon and YouTube (owned by Google) and Hulu (Disney, Fox and NBC Universal) are planning to offer expanded live TV packages via OTT transmission. The expected price for these bundles will be in the range of $40-$50 a month, about half the current average cost of Cable. These larger OTT services will record and store program options using new cloud-based DVR technology.

In the short term, media companies with less popular programming like Viacom will fall behind. Other losers will be low-audience independent channels now bundled with cable and satellite packages. The winners will be media companies that offer popular standard and premium networks without the typical glut of ‘junk’ channels. –In that mix, cable firms are already crossing the boundary from cable into streaming TV content.

Among the downsides of OTT services has been a lower quality of transmission than with cable. Also, for example., NBC Universal is owned by Comcast, creating uncertainty about the Hulu’s planned new offering later this year in the years ahead.

The new packages will cost more overtime

Entertainment analysts predict that the current, highly unpopular cable convenience charges will reemerge with these new, larger OTT bundles. This should come as no surprise because today’s OTT services require multiple installations, multiple logins and coping with multiple customer service departments. Many, perhaps most consumers will be willing to pay to avoid this hassle.

The pig picture

It’s important to understand that different economic and political forces have organized into two competing camps–one fighting to give ISPs greater control over TV transmission, the other fighting to give cable companies a continued monopoly.

Proponent of ISP OTT TV Transmission

  • Name of Alliance–Consumer Video Choice
  • Corporate Supporters–Google, Netflix, TiVo, Amazon, Netflix, Vizio, AOL, Microsoft, Yahoo
  • Nonprofit Supporters — Consumer Action, New America Foundation, Public Knowledge
  • Political supporters–Mixed; only now beginning to coalesce

Defenders of Cable Industry Monopoly

  • Name of Alliance–TheFutureOfTV
  • Corporate Supporters– Comcast, AT&T, Charter, Dish, Time Warner Cable, Vme Media + most other cable companies and equipment manufacturers
  • Nonprofits/Political Action Committees include– The Motion Picture Association of America + numerous Hispanic and Black alliances.
  • Political supporters–Mixed; only now beginning to coalesce

More Insights