Live Internet Television

According to PaidContent.org, The Wall Street Journal is planning some new ways of delivering content. And they sound like the future of cable TV.

Micropayments: Pay-as-you go billing. A small fee per article, premium rates for specialist content. What WSJ is really offering is a way for people to pay less than $100/year for WSJ content if they consume it at a limited rate.

Cable companies, long slandered for charging consumers for shows they don’t watch, are no doubt looking at the viability of this kind of model in combination with monetizing online offerings. Should someone who likes to watch shows like “House Hunters” or ongoing programming on CSPAN have to pay $3-$60/month for the full cable lineup? (How much longer will people tolerate this model? CNet)

ReadWriteWeb points out that Google and Apple have already entered micropayment terrain for commercial video content:

So what about charging small amounts for high quality, downloadable versions of commercial content on YouTube as a way to bring in money? Sure, Google already tried that with Google Video, and shut that service down citing an “effort to improve all Google services.” But Apple has had a lot of success selling TV shows and movies (they sold a million of them in the first 20 days, and move tens of millions of video downloads per year through iTunes), so the model is sustainable.

All-device, all-platform online access for subscribers to the traditional format. Once a consumer pays for content, they should be able to read/watch it wherever and whenever they want. That is the new standard.

CNet reports that Comcast has plans in the works to meet this standard (for a price!):

What is known is that Comcast expects to offer the service free of charge to its existing cable TV customers. In a recent interview with PC World, Karin Gilford, the Comcast Interactive executive in charge of the cable provider’s Fancast video site, said with a user name and password, subscribers will be able to access any standard or premium cable content that their cable subscription entitles them to watch.

The service will let users watch TV on their laptops or computers, and eventually it might even be available on cell phones. What will make the service different from other online video sites, such as Hulu.com or TV.com (which is owned by CBS, publisher of CNET News), is that it will feature premium cable content from sources like HBO, ESPN, and CNN. This content has largely been off-limits to free online video aggregators.

These new models are not limited to content — Microsoft is developing its products to conform to online delivery and new monetization models.

While consumers have enjoyed Web-based applications such as e-mail for several years, there’s a growing business movement toward the Web. In addition to using the Internet as a primary way to interact with customers, corporate technology managers are running more of their applications online — “cloud computing,” as it’s called — to save money and be flexible.

As every industry struggles to keep ahold of profitability as their users move online and expect more flexible service models, strategists are watching each other closely and keeping an open mind.

Business Week has published a very comprehensive look at the TV landscape — cable, network, online — and it’s an interesting read for anyone interested in this kind of thing.

For those who love TV but might not want to get into the weeds, here are a couple of trends that may not be so fun:

Blurring the line further between ads and programming

Programs will be tailored to audiences, and increasingly advertisers will show up in the programs instead of just the commercials.

There’s a good round up examples here, but one of the most obvious examples of they missed is The Apprentice/Celebrity Apprentice. Thanks to Mr. Trump and his producers, I have the original AND fictional Chicken of the Sea jingles running through my head days after the last episode, and I am aware of all the selling points of the darn stuff. And that’s just this week. Maybe next week’s blatant product promotion will replace this week’s in my consciousness?

Off-message tangent: I also learned that I really like Jesse James, that I pretty much detest Clint Black, that the show is hella frustrating (Why choose Clint Black as the Project Manager when you can manage the project effectively and use him write the jingle? Why did no-one give Jesse James credit for the great creative he consistently contributed, which was not taken up by the team?)

A Web-like experience with interactive ads and a next-generation remote

Cable companies are hard at work rushing to market with ways to integrate the social, user-driven, and integrated experience of the Web with their programming.

Beyond improving the viewing experience, the technology also will allow the cable companies to offer interactive commercials. For example, viewers will be able to request more information about a sponsor’s product and, at some point, even buy it through their televisions.

Naturally, for [this functionality] to reach its potential, the remote control will have to change, too. Despite a proliferation of buttons, remotes typically lack a keyboard, which would make searching for shows easier. Time Warner Cable is testing a prototype with a touchscreen. Built by Panasonic, the remote includes an iPhone-like keyboard that makes searching for programs more simple.

This direction is a way of moving into the future without jeopardizing the current business model which works just fine for cable companies (Expect a lot more legal and strategic wrangling by Cable distributors to keep cable content producers from putting their content online for free).

I’m not sold.

What we already know

One of the big questions looming over the cable industry is whether Americans will cancel their subscriptions. Some are cutting the cord to save money; more and more are watching shows online. In a recent survey by research firm GFK-Roper Consulting, 40% of respondents said they would consider canceling their pay-TV subscriptions.

The cable guys profess to be unfazed. Of course they would say that. But so far significant numbers of people aren’t ditching pay TV. “People love to complain about their cable bill,” says Craig Moffett, an analyst at Sanford C. Bernstein. “But it’s hard to find a better bargain in entertainment.”

Online video remains a minnow next to TV. The average viewer watches 151 hours of TV a month vs. three hours of video online, according to Nielsen. And for now the range of offerings online is paltry compared with what is available on cable. Hulu, for example, doesn’t offer recent-run movies, live sports, or many of the most popular shows on cable. That helps explain why 1.7 million people signed up for cable, satellite, and phone TV last year.

Subscribers also have a powerful incentive to keep their pay TV. It’s called the triple play, wherein a customer pays about $29 a month each for basic cable, broadband, and phone. Cancel cable, and the price for the other two services can rise substantially.

Great discussion about the Hulu-Disney deal over at NewTeeVee. Liz Gannes and  Chris Albrecht do a fabulous job of teasing apart the interesting issues.

The bottom line is that wrangling over control of content is not going to stop anytime soon, and that — despite strong earnings in this difficult climate — cable companies are working hard to find a an evolution path that keeps them in the game.

Comcast and other cable companies are seeing their core paid distribution businesses get more and more threatened by Hulu, as it starts to fully become the TV receiver for the Internet age. Will the cable companies head to court, like in the UK, where broadcasters’ joint venture Project Kangaroo was deemed to be anti-competitive? You can be sure the giant is no longer sleeping.

Comcast knows the value of its customers forking over $140 per month for a bundle of channels including many they don’t even want, and the ability to record, rewind, fast-forward, etc.

They also know how to save money! In my area, a single Walmart-embedded retail location that is only open on weekdays serves a quarter of a million people spread over 566 sq miles — with lots of inconvenient waterways.

Basically, I broke my remote control and the Comcast SD DVR cable box doesn’t have a manual control panel; so, no TV until a new remote can be had.

Comcast doesn’t publish a phone number on their site. Via live chat that only really became live chat after my topic was “not found,” Comcast offered to schedule an appointment for a technician to come by in 4 days. Or, I could spend 2 hours and gas money driving to the retail location tomorrow.

I figured this poor set of solutions was as good an excuse as any to cut the cord and go all-internet for TV, and said as much. I think the words were, “In that case, I’ll find a phone number for customer service and cancel service today. No more $140 per month for Comcast.”

Magic! Suddenly, a “higher department” was contacted and a technician is scheduled to come by in a few hours and to things right. Then the technician showed up in a half hour.

The bottom line: Comcast hasn’t upped their customer support/service to reflect the value of their no-longer taken-for-granted customers. But they are willing to bust a move when a customer threatens to bail.

They’d do better to support customers very, very well BEFORE they threaten to cut the cord.

Comcast COO Steve Burke Burke sat down with TechFlash yesterday for a 25-minute interview that included his explanation of why a-la-carte pricing for television won’t work.

Why doesn’t Comcast go to an a-la-carte pricing model?

“The easiest answer is that the programmers wouldn’t let us. If you are ESPN and you have all of those football games and all of that greats sports content, you want to be in every home and you want to get paid for being in every home. So there has been a big debate about a-la-carte and flexibility. The fact of the matter is the business model we have all grown up with assumes that you get broad distribution….

This model of having a broad basket of products has really worked and has caused niche channels like Home and Garden or the Golf Channel or other channels – that may live on half a rating point or a rating point — to really thrive. If a-la-carte consumption came along, then all of a sudden those channels were only viewed by 10 or 20 million people, they couldn’t make it. Programmers have demanded that cable companies and satellite companies carry all of their channels for all of their customers.”

Do you see it headed toward a-la-carte with the verticalization of the Internet?

“I don’t. I think the broadcasters and content companies couldn’t survive doing it. As a cable company, since we are so increasingly dependent on high-speed Internet and telephone for our growth, it might not be a bad thing for us. But for the content companies, it would be a terrible thing. They wouldn’t do it. And they would do whatever they could to avoid it.”

What’s interesting about his comments is that they address the question entirely from a provider point of view.

No word on what customers want.

Basically, Burke is saying content producers don’t want to change their model because they don’t trust their content to be able to survive on its own merits. If content producers are depending on cable companies to force-sell their programming to people  who are not actually watching it, isn’t that a model in need of repair?

Burke did a nice job of not discussing Comcast’s interest in maintaining overlapping revenue streams, and of glossing over unfavorable trends in cable subscriptions. According to Home Media, Time Warner Cable CEO Glenn Britt is a little more forthcoming (bold emphasis is mine):

Time Warner Cable CEO Glenn Britt summed up the fears of cable operators this month during the company’s fourth-quarter earnings report.

“As cable networks put more and more content online for free, that will over time start eroding the subscription revenue source. There isn’t a whole lot that we can do about that,” he said, as Time Warner reported a fourth-quarter loss of 119,000 basic cable subscribers. “The reality is we are starting to see the beginnings of core cutting where people, typically young people, are saying, ‘All I need is broadband.’”

Britt echoed the thoughts of most every cable and satellite operator, who are worried about seeing their services cut out of customers’ budgets during this recession. Comcast reported losing almost half a million net subscribers during the fourth quarter. Charter Communications reported losing a net of about 75,000 basic cable subscribers during the same period. Dish Network — which reports its fourth-quarter results March 2 — reported it lost about 10,000 net subscribers in the third quarter of 2008. Cablevision reported losing about 4,000 during the fourth quarter.

As a viewer, left out of this whole discussion, would you welcome a la carte cable model?