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

Gigaom ^ | June 14, 2011 | Janko Roettgers

[abb]

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.

[GraceG]

Now is the time to strike and deal a crippling blow tot he current TV model (infested by liberals) and help to replace it with one that is conservative or at the very least truly neutral.

[BelegStrongbow]

I only use the cable company for my internet connection. I get basic cable anyway, which is more than I want. My son likes SyFy, I like FOX News and otherwise, we use NetFlix either by disk or streaming (again, piggybacking the internet connection).

[DB]

Well you still need high speed internet access for Netflix and that’s what many cable operators provide. So I don’t see “cable” simply disappearing. They are in time likely to become Internet providers first and foremost without great regard to what actual data services are provided over it.

And if you want Netflix in HD you need lots of bandwidth that most DSL connections can’t provide.

[Arthur McGowan]

I’ve never had cable at all. Can’t afford it. But Netflix’s unlimited DVD/Streaming deal is about $10/month. That I can afford.

[Arthur McGowan]

I’ve never had cable at all. Can’t afford it. But Netflix’s unlimited DVD/Streaming deal is about $10/month. That I can afford.

[HiTech RedNeck]

How come no cable company has said "from now on your monthly payment only entitles you to 120 hours of TV a month"?

Because it's no skin off their established nose to deliver their promised content real-time, all the time. Get a programmable recorder if you want to catch, say, what HBO is showing at a time inconvenient for you.

[dangerdoc]

I agree, the movie selection tends towards the lame but I have found a huge amount of programming on Netflix, so much that I have more saved to watch than I’ll ever have time to see.

Right now, I’ve just started Lock-N-Load with R. Lee Ermy. I’m also watching Pawn stars which to my surprise is both educational and entertaining. I have dozens of TV shows saved that look interesting but I haven’t started yet. I cut the cord a decade ago so all of these shows are new to me.

[DB]

If you pay for 1 DVD at a time service you get 1 streaming video at a time. If you pay for 2 DVDs at a time you are allowed 2 streaming videos at the same time and so on.

Your Internet connection also has limited bandwidth and may not be able support multiple streaming videos at the same time, particularly if one or both are HD.

[Sprite518]

Already did it and do not miss the cable at all. I cut it off 4 months ago.

You can still go on news sites and watch the interviews.

Netflix, Hulu, etc... they are all pretty good.

[erod]

Just bought a Roku hooked that baby up to a 2TB HD. I rent movies from Netflix and RedBox and I burn them to the Roku. I get all the new releases on the market for a buck a piece. I then use Netflix to get premium cable shows from HBO, Showtime, and AMC. We’re saving a bundle, I do miss sports though, thanks Obama. :-/

[jeffc]

Cable/satellite is more than half paid commercial channels selling something anyway, at least it is at night, when I watch it (or not, as is mostly the case). I would not be surprised if the cable/satellite companies make a profit just on those channels, disregarding the monthly subscription they charge.

And they repeat the same shows over and over, ad nauseum. One night, the same Criminal Minds episode was on three different channels, and how many That Metal Show's did they record? 6? I see the same ones listed over and over. They charge highway robbery for sports season passes. It's a mess.

[abb]

http://newsosaur.blogspot.com/2011/06/value-of-journalism-sir-is-not-zero.html#comments
The value of journalism, sir, is not ‘zero’

http://adage.com/article/mediaworks/cable-sees-apple-netflix-biggest-competitor/228182/
Big Cable Sees Apple, Not Netflix, as Biggest Competitor
Time Warner, Comcast, News Corp. Say Interfaces Present the Industry’s Biggest Opportunity, Challenge

[discostu]

You can’t really throttle the TV service. When it’s on it’s on. And given how much they’re forced to charge any kind of limitations would just drive customers away. Internet data throughput is able to be throttled. Eventually either their infrastructure will grow to handle it or the TV business will have shrunk enough to reduce the drag on the bandwidth.

[AnotherUnixGeek]

Netflix is charging you for a service that is increasingly monopolizing the ISPs networks. Either the ISPs can work a deal with Netflix, which will cause Netflix users to pay more for Netflix, OR the government can step in with ‘neutrality’ and the ISPs shift the cost to the end users, so EVERYONE WITH AN INTERNET CONNECTION WILL PAY FOR YOUR DAMN NETFLIX!!!!!!!

Or the ISPs could charge on a metered usage basis, collecting more revenue from users who consume more bandwidth just as the power water utilities charge more for greater usage. But then that would mean the ISPs couldn't charge a flat fee and collect $60 a month from the folks who only use a minute fraction of their allotted bandwidth. Since they stick with the current flat-rate pricing model, it's safe to assume they make a bigger profit this way. And that means you're already paying for Netflix and other high-bandwidth services whether you use them or not.

[ExtremeUnction]

I can choose what I want to watch from Netflix.

I use Netflix. However, I discovered that most older movies must be sent to you in DVD format. Why can't they just stream them to me??

[Two Kids' Dad]

Does Netflix put a little annoying logo in one corner of the screen like all the cable movie channels do?

If not, it’s a big selling point.

[abb]

See here for the latest.

http://arstechnica.com/tech-policy/news/2011/06/1gbps-fiber-for-70in-america-yup.ars
1Gbps fiber for $70—in America? Yup.

http://caivn.org/article/2011/06/13/california-isp-may-render-net-neutrality-laws-unnecessary
California ISP may render “Net Neutrality” laws unnecessary

[abb]

http://www.mediabistro.com/tvnewser/frontline-ep-calls-for-creation-of-journalism-fund_b71394
‘Frontline’ EP calls for creation of (public) Journalism Fund

http://blogs.forbes.com/jeffbercovici/2011/06/14/digital-subscriptions-will-lift-magazines-but-not-newspapers/
Digital Subscriptions Will Lift Magazines But Not Newspapers

http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/06/media-company-chiefs-confront-challenges-facing-the-cable-television-industry.html
Media chiefs confront challenges facing cable TV industry

[antiRepublicrat]

You can shift it around any way you like, but that cost is going to have to be paid by someone.

Netflix already pays Level 3 Communications quite dearly for backbone transport to get the information out. You pay your ISP quite a bit to get the information in. Their payment helps fund the infrastructure for their side on the Internet, your payment helps fund the infrastructure for your side of the Internet. That is how the Internet works. That is where net neutrality operates. This is what cable companies want to kill in order to retain a dying business model.

God forbid the ISP has to build out its infrastructure more to accommodate the information the ISP's paying customers request. That's right, the users. Netflix doesn't force data down the ISP's pipes, the customers of the ISP request it.

If you don't want to pay as much, then get a lower-bandwidth, lower-cost plan, or get a data-capped plan. Let the heavy users buy the more expensive plans. Otherwise, the same two values of bits are used regardless of whether it comes from Netflix, Hulu, P2P, YouTube, gaming, or if Papa John's started digitizing pizzas and sending them over the Internet. I don't want to have a problem ordering a book from Amazon because my ISP made a deal with Barnes & Noble. That is not how the Internet works, that is not the model that made business on the Internet so successful.

[abb]

http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=152448&nid=127873
Estimated 33% of Viewers Multitask While Watching TV

http://www.chicagobusiness.com/section/blogs?blogID=shia-kapos&plckController=Blog&plckScript=blogScript&plckElementId=blogDest&plckBlogPage=BlogViewPost&plckPostId=Blog:32246edb-06fb-4784-9008-b3233e7480b9Post:75547645-edf9-472e-927b-2b697c807453&sid=sitelife.chicagobusiness.com
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