The Strain on Linear TV

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

The Strain on Linear TV

Earlier this year TWC and CBS were in battle over content carriage contracts. It caused blackouts of CBS channels for a while. In 2012, there were 91 blackouts in the US. Congress isn't too happy that the masses are missing prime time because then they just complain about Congress. Rule 1 is to keep the masses entertained so they don't realize how miserable they are or how they are being screwed by the Powers That Be.

So with that said, DISH Network is set to do battle with ABC/Disney over ESPN. ESPN is the most expensive channel to carry for MSO's since the carrier is required to take all 7 ESPN channels now. Seven channels of bowling, NASCAR, Sportscenter, arm wrestling, and poker cost the carrier over $6 per subscriber. You ask why your cable bill is rising? There it is.

Every contract dispute means costs are increasing for content - and each dispute that ends favorably for the content, strengthens the content player. Add in another $5 per subscriber for over-the-air retransmission, which means that the carrier has to pay to carry the local TV stations that used to be free. It was free because most people with cable don't have an antenna too. The local stations were losing viewers and dollars. Now that reasoning has reversed - mainly just because it can.

Content is in a battle with DISH over its Hopper DVR and with Aereo. There is already a strategy in the works to mess with them - dual stream with embedded ads. It will be awesome .

The one thing that all of these idiots - content and carrier - forget is the Consumer. The guy paying all of your bills and making you all rich. You can't pay each star $750K per episode without the consumer, the viewer.

The viewer, who you treat like an after-thought and a pirate, isn't going to put up with your antics much longer. When you are paying out $150 for TV and you can't watch what you want, when you want, well, you will shift.

As less people work at an office (tele-workers), there is less water cooler talk about TV shows. As more people experience TV while on social media, less talk the next day about the show. This kind of limits the peer pressure to Must Watch TV. It undermines the power of TV.

It also means piracy. People get peeved when they are treated as pawns. We live in a society that more and more wants immediate gratification - give it to me now, the way I want to consume it. It's why we have DVRs and On-Demand. People will find a way to get what they want. That's really all piracy is.

Cord cutting is real. As the price increases or they get tired of a 3 week blackout of their favorite shows, people will cut cable TV - long before they cut cell service or Internet access. With the Internet you can watch Netflix, Hulu, and other content online. Over-the-air antenna does still work, too.

What happens to the current model if 15% of the population uses over-the-air antennae, Roku and smart TV's? I remember when DISH didn't have local TV. Google's Chromecast may be the answer that some viewers want.

A la carte channels are supported by Senator McCain (probably because he just wants the 3 channels he has had all his life). However, it will cost a lot more for channels than people think, since most channels are subsidizes by the popular ones in the package.

"What programmers are basically saying is that demand for these niche channels is so meager, they need to be underwritten by people who watch more popular fare."

Content providers like CBS and Disney are stuck in an old model, one that pre-dates the Internet, which is disrupting everything. "Dish Network Chairman Charlie Ergen said a new ad-skipping feature that has infuriated major broadcast TV networks is a "competitively necessary" response to the explosion of cheap Internet video. That Web video threatens the pay-TV ecosystem, he added, and it is partly caused by the TV networks themselves," reports Benton.

"Ergen aims to force the networks to develop "more meaningful" ads, using, for example, demographic targeting of viewers. "Ultimately, broadcasters and advertisers have to change the way they do business or they run the risk of linear TV becoming obsolete," he said. [Benton]

As DISH confronts ESPN, people should take a look at Google Fiber's package - no ESPN. How many viewers really watch sports - and which sports? Personally, I only have cable TV to watch volleyball (college and pro), NFL, college basketball (Go UCONN Huskies!) and some tennis. I can get everything else online. (It is cheaper to pay $1.99 per episode for Newsroom on Amazon than to pay for HBO each month. And I can consumer it as I want - binge or not.

There is certainly a financial model that has to be recognized and realigned for the content companies, but they better start trying stuff fast - while they still have time to fail.

As I see it, cord cutting will escalate as soon as it gets simple enough to do so. If your neighbor cuts the cord and can set it up for you for under $200, BAM!! It's all over but the crying.

A lot of industries - newspapers, bookstores, music, movies - did not adjust to the Internet-Smartphone Age before it ran them down. Will TV be next?

Related Articles to 'The Strain on Linear TV'
Featured Events