Who are we kidding? Of course it’s Netflix vs. cable (Dinosaur Media DeathWatch™)

Gigaom ^ | June 14, 2011 | Janko Roettgers

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Ask Netflix about cord cutting, and it’ll tell you: “It’s not happening, it’s not anything we are causing, cable and Netflix are complementary.” Then take a look at the actions of service operators, cable networks, consumers and even Netflix itself, and you’re going to see a decidedly different picture: Cable and Netflix are competing for the same eyeballs, the same money and the same TV real estate, and the fight is getting tougher by the day.

Not convinced yet? Then consider this evidence:

Consumers are ready to jump ship. Netflix users that stream the company’s videos to connected devices are twice as likely to at least downgrade, if not outright cancel their cable TV subscription than they were just a year ago, according to a new study from The Diffusion Group (TDG). Thirty-two percent of these Netflix users are thinking about calling their cable company. “Despite its rhetorical positioning, both Netflix and Pay TV operators have long been aware that there will come a point at which its services are not only dilutive to regular TV viewing, but antithetical to Pay TV subscription levels,” said TDG’s Michael Greeson. In other words: In the long run, Netflix will inevitably lead to cord cutting.

Content licensing is getting more competitive. Netflix Chief Content Officer Ted Sarandos revealed recently that Netflix is now at the table for pretty much any TV licensing deal. So why aren’t Netflix customers buying more content? Because some of the networks simply don’t like to share. Netflix would prefer cheaper, non-exclusive licensing deals, which would make it possible to get more bang for its buck. However, HBO and increasingly Showtime are insisting on exclusive content to prevent subscribers from jumping ship.

Many observers thought Netflix wanted in on this game when the company bought the rights to its first-ever exclusive show House of Cards this spring. Sarandos, however, said that it was exactly the other way around: Netflix was getting concerned that it would get shut out of too many deals for attractive serialized content, which is increasingly going exclusively to programmers like HBO, so it saw itself forced to act.

Cable companies castrate their TiVos. A number of cable companies now offer their customers TiVo-branded DVRs that offer access to all kinds of additional online content. But TiVo users who buy their devices at retail will be able to watch videos from Netflix and Hulu Plus with these machines, while customers who rent the same DVR from their cable company won’t have access to these two services. The logic? Netflix could get people to ditch their premium channels and ignore cable VOD.

Netflix is dominating every screen. Network operators are trying to bring TV everywhere, but they often must feel like the hare racing the porcupine: Wherever they look, Netflix is already there. The company’s service is now available on more than 250 devices, and Netflix is getting more aggressive about dominating every single screen. The latest ploy is a dedicated Netflix button on your remote control, which puts it in direct competition with your cable guide. That raises the question: Do you want to browse through thousands of channels, or simply access Netflix?

Incumbents are putting a cap on it. If you’re a network operator, how do you keep your customers from canceling premium pay TV services to watch everything online? Canadian ISPs seem to think that bandwidth caps are the answer, and they’ve been enforcing strict data diets for years. ISPs that charge consumers up to $2.50 per GB once they exceed caps as little as 2 GB per month have been a real problem for Netflix north of the border, forcing the company to default to SD-quality streaming for all Canadian customers.

There’s been some movement with regards to bandwidth pricing in Canada in recent months, but the conditions are telling: Shaw recently introduced generous 1TB caps and even unlimited data plans, but those are reserved for customers who have a pay TV subscription as well. Bandwidth caps in the U.S. are generally higher, but not really that generous either, especially if you’re a heavy Netflix user.

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Of interest to our group.

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ping

[Grunthor]

Getting rid of dish this week. Going with internet, radio, netflix and video games for the kid.

TV is just throwing money down the toilet.

[Dilbert San Diego]

Well, if you have a life, and you have to go to work everyday, and you want to spend time with the family and friends, and attend church, and social events, etc., you realize there is only so much time in the day that you can devote to watching TV shows or movies.

There is only so much time you can spend watching something, no matter how you access the movies or TV shows. There are only 24 hours in a day, and something’s got to give. I can understand if you are heavily into something like Netflix that you would cancel out HBO or Showtime, or other cable/satellite services.

[ctdonath2]

Good move. Our kids only see what we want, when we want - and here’s the biggie - with NO COMMERCIALS.

[Steely Tom]

I've had Netflix for about three years. I "cut the cord" to Cable about twelve years ago.

Netflix isn't that great. Their on-line delivery is nice, but the content they have to deliver is pretty poor, at least for my demographic.

It's kind of like a combination of 'lifetime' and 'Starz' (well, a lot of it actually is Starz). Lot of bummer "movies" you wouldn't want to watch. Their on-line "classics" are second-rate. Once in a while they put up a worthwhile movie or two. Maybe once a month.

Probably about the same frequency that HBO puts up something worth watching.

Of course, it's a lot cheaper than cable.

[abb]

http://www.nypost.com/p/news/business/kicking_back_at_newsweek_CNN4lvDGdZUdSy5g9drp5I
Kicking back at Newsweek

http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=152396
McGraw-Hill Puts Broadcast Biz Up For Sale

http://www.deadline.com/2011/06/warner-bros-lays-off-50-in-home-entertainment-consumer-products/
Warner Bros Lays Off 50 In Home Entertainment & Consumer Products

http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=152457
FCC Chair: Broadband Critical To Economy

http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=152435&nid=127873
Survey: Sure, We’ll Ditch Cable...Make an Offer!

http://www.broadcastingcable.com/article/469751-The_Cable_Show_2011_Genachowski_Broadband_Adoption_Just_Not_Good_Enough_.php
The Cable Show 2011: Genachowski: Broadband Adoption ‘Just Not Good Enough’

http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=152429
Heavy Streaming Video Viewers Watch Less TV, Nielsen Says

http://www.gazette.com/articles/journal-119806-denver-sales.html
Sales talks break down between owners of The Gazette and Denver Post

http://online.wsj.com/article/SB10001424052702303848104576385490118144756.html
Regional Newspapers’ Merger Talks Break Down

http://online.wsj.com/article/SB10001424052702303848104576385983340864592.html
Cable-TV Executives Say Industry Rolls With Digital Age

http://online.wsj.com/article/SB10001424052702304906004576372573349258348.html
Daily Deals Rescue Local-Ad Market

[HiTech RedNeck]

Netflix may fray the cord, but I can’t see it getting snipped for that reason alone. Traditional cable companies carry a lot of live stuff that Netflix never will have (unless it, too, becomes another traditional cable company).

Now, I hardly watch TV at all, even free off the air, and have no cable service. I get my internet from my phone company. But enough people apparently like their bread and circuses well enough, and the circus part will never be duplicated in full by Netflix in its present conception.

[abb]

Ping. See the two articles about Genachowski’s speech today. He’s not used the term “universal service” yet, but he’s hitting all around it.

[Notary Sojac]

This is what "net neutrality" is about. Cable ISP's are desperate to keep Netflix from poaching their TV cable customers, so they want to make Netflix streaming more difficult/more costly.

In a net neutral world, they would not be able to do so, any more than the phone company can charge you more to call Domino's rather than Papa John's, or the water company can charge you more per gallon for filling your pool than for washing your car.

[Politicalmom]

I cancelled most of my cable tv and went to Netflix. I’m trying to dump phone as well, because it makes me furious that my bill doesn’t go down when I want FEWER services. If I can find a substitute for internet, I’m dumping Comcast completely.

My daughter and I miss the Food Network, though. :)

[GOPJ]

The nice thing about Netflix is you don't have to pay for 500 channels you don't watch... If cable wants to keep my business they need to start charging per channel...

[E. Pluribus Unum]

Let's see, $8 a month to watch year-old cable TV shows I have never seen, or $100 a month to watch them when they are new?

Decisions, decisions.

[Buckeye McFrog]

That bit in there about ISP’s and bandwith caps explains EXACTLY the sort of Net Neutrality one can argue in favor of.

[fantom]

Exactly.

[OpusatFR]

I love Roku. I can choose what I want to watch from Netflix.

TV programming and cable is awful.

[subterfuge]

I dumped Brighthouse and ATT (for my landline) because I was paying about $180 for the phone, cable and internet.

Comcast bundled and I got the same service for $110. Now they say that was a just a promotional service and now my bill is up to...you guessed it, $180. COMCAST will be cancelled at my home this week or next and I might drip the cable altogether.

[Psycho_Bunny]

I joined Netflix when it first opened, and shut off my cable a few months later.

Haven’t missed it at all.

[Skip Ripley]

When netflix gets the NFL, MLB and the NHL...I’ll think about “cutting the cable”...

[E. Pluribus Unum]

The solution to all this is for a "single-payer" communication fee for all communication services to the swells in Washington.

All that matters is that they get their hands on your money.

After that, good luck getting hold of a federal customer service rep.