Online Experiment: Losing the Remote
I just paid a $300 cable bill (three months). This is partly because I’ve had little time for bills, but also because my monthly bill is over $100. That includes basic cable channels plus the $40 package that bundles HBO. HBO is the only thing I watch in that package so essentially I’m paying $40 per month to watch “Entourage” once per week.
Stepping back, the only other thing I really watch is “The Daily Show,” whose full episodes can be viewed on NBC Universal’s Hulu for free. Looking at Hulu’s entire library, I realize there isn’t anything I watch on cable that I couldn’t watch instead for free online. There are in some cases more options on Hulu than cable, such as new episodes of “The Office”, which my cable provider charges $0.99 to watch on demand.
The Wall Street Journal reports Forrester data that claim 90 percent of network shows and 20 percent of cable shows are available for free online (holdouts include Americal Idol and Entourage — at least for new episodes). On top of this, my $20 Netflix membership allows me to watch lots of movies and TV series online in high-quality full screen format.
So why am I paying $100 per month for four episodes of “Entourage”? As I paid my latest cable bill, this question forced me into thinking about all the options above. After realizing that I can easily plug my laptop into my television and watch all these shows on my couch, rather than propped up at my desk, the decision was easy (Netflix also offers an interface device).
I already knew about all these options but was essentially driven to the realization that it’s something I can and should do. In the current economic environment, I imagine many others are thinking the same. In families where there are savvy teens and tweens running about, in-house technicians already exist. Many in these younger generations already view TV shows online — having nothing to do with cost containment.
I’m Not Alone
Overall online viewing is also on the rise. TNS Media Intelligence reports that 16 percent of households watch broadcast TV shows online (see chart below). Meanwhile, more than half of viewers that saw recent SNL Skits of Tina Fey spoofing Sarah Palin did so online according to Solutions Research Group.
This should be more of a call to act than a doomsday message to cable companies. There could be some lost business over consumer cost cutting in the short term, but the bigger challenge is on the horizon. Both generational factors and the roll out of competitive IPTV service like AT&T’s U-verse should force cable companies to both innovate and reduce prices.
They’re already doing this in some ways. One retention hook that will prevent many consumers from bailing is HD. Once you go HD, it’s hard to go back. Watching online offers a full, clear picture — but it’s no HD. This factor will gain strength as cable providers roll out more HD channels and as more consumers get flat screens (as prices continue to drop). We could see a bump this holiday season, depending on the economy.
But for now, I’m going to continue my experiment to see what it’s like to slum it and consume all my video online (effective after next Tuesday of course). I’ll report back periodically on what I find, as well as thoughts about the viability of such a plan for average consumers and the implications for advertising models, both online and off.
In the meantime, you can e-mail me to tell me how the “Entourage” season ends.
Source: TNS Media Intelligence