Welcome to the world of tomorrow. Internet pay TV has been the dream of many Internet service providers for years. It eliminates the need for cable, and sometimes even the requirement to stay with one particular Internet provider. More than that, though, it gives users almost total control over what they watch. Instead of cable companies driving the demand for television, users log on and choose programs to watch based on interest. Because everything is delivered through the Internet, programs could be watched on multiple devices, even without any physical connection to the cable company.
So, for example, you know how you get Internet service through your cellular provider? This same network could be used to deliver T.V. programming to you. There are some challenges to making all of this happen though.
Cable Companies Don’t Want To Die
One of the major problems with offering Internet pay T.V. is that cable companies have a vested interest in keeping things the way they are right now. If there’s an Internet-based T.V., one of the risks to consumers is that it will just be an Internet-ized version of the current system.
Right now, for example, Time Warner and AT&T both offer television subscription packages. But, their services are sent through the same lines that Internet service is sent through. Consumers can only watch T.V. on their television sets, so it’s not like you could fire up your iPhone and watch the next episode of The Walking Dead while you’re out and about. And, the television programming is still driven by the distributor.
So, for example, if you want to watch a particular show, you have to tune in to a specific channel at a specific time But, with Internet television, real Internet television, you would be able to choose when you watched your shows. It would be like a permanent on-demand viewing experience. Imagine that though – no more “prime time” television. Of course, some events could be shown live or at specific times when it made sense – like the ball dropping on New Year’s Eve, for example.
But, by and large, an Internet-based T.V. would do away with the old guard’s monopoly on your time. That’s something cable companies are unwilling to let happen.
A La Carte Problems
Another problem facing early adopters of Internet T.V. is a la carte menus. Consumers are getting more and more used to (or at least warmed up to) the idea of only paying for shows that they want to watch. iTunes, Amazon, and Google Play are major contributors to this phenomenon. But more traditional cable providers may resist this idea. They’ve made money on advertising by subsidizing high-cost channels. For example, ESPN is the highest-cost network per subscriber. To hide the cost, cable providers bundle it with other, less popular channels. That’s the reason why you can’t just buy ABC channel programming. You have to buy ABC and a bunch of other Disney channels too.
For years, premium subscription channels, like HBO and Cinemax, have tried to garner interest in the idea of a la carte programming, but they were stuck for a distribution channel. Now, with HBO GO, they don’t need distributors anymore (although they still use them at the moment).
If companies like Google keep installing Google Fiber lines, however, it may create a revolution in the telecom industry – one that could see users dumping their old providers en masse. YouTube already accounts for a significant portion of Internet traffic. You had better believe Google would allow its YouTube property to benefit from the increased speeds of Google Fiber. And, since it doesn’t operate a network station, it would have no problems allowing Netflix, and other a la carte providers free reign on its network.
Users don’t like to be pushed around and forced to sign multi-year subscription deals, and there’s evidence of it. But, it goes beyond being trapped by the likes of Time Warner.
Users want control over what they watch, and where. Take the popular user-generated site YouTube, for example. Users are able to find, and download, YouTube videos using a video converter like YTD. If you decide to do this yourself, remember to respect intellectual property rights. These programs allow users to selectively choose which copyright-free videos they want to download and watch later without eating up precious cellular bandwidth.
Imagine if Google tried to force users to subscribe to multiple channels on its YouTube property to distribute the cost of advertising and shape the user’s viewing experience. It just wouldn’t work. Users would flee YouTube in droves. Yet, cable companies expect users to continue to pay for bundled packages – it’s a pre-Internet pricing model
Clearly, the winners are content providers. Even under a la carte pricing, companies like Disney would make a fortune charging a slightly higher per-channel fee for specific channels or even individual programs. Users win because they only watch several programs and so their overall bill is lower. The only losers are the old guard – the distributors like Time Warner. They can no longer make money selling content in bulk. Whether they reinvent themselves or slip into the shadows and die a slow, painful, death remains to be seen.
Robert Mancini has one eye on his screen and the other on the television industry. From streaming innovations to cable carriers, he enjoys blogging about the trends and future of television entertainment.