The “Death” of Cable TV : The Internet as your DVR
Monday 28 June 2010 @ 1:36 pm
Cable TV as you know it is on the verge of death. OK, maybe not death – but an unmistakable transformation. Yet if you take a look, it is hard to see any signs of doom. Like the transformation from broadcast to cable, film to digital or LPs to CDs, some technology transitions sneak up on an industry. However, the fault line is starting to break– and the rupture will be “the big one” for the Cable TV industry. What is this all about?
Right now many people send their cable company $25 to $125 a month to have push button access to a wide variety of programming – from local TV to movie channels, weather channels, news, sports, big networks, movies on demand, etc. We all do. Yet although there are zillions of shows being broadcast to our home at any given time, in reality we are only watching one or two shows at a time and maybe recording another show or two. Perhaps we are watching and recording 0.1% of all the content we are subscribing to.
Along comes Hulu, NBC, ABC, etc – all on line. As reported recently (http://www.cnn.com/2010/TECH/web/06/21/net.cable.companies/index.html?hpt=T2) many young people are foregoing the cable company altogether and instead using a cable modem as the “big pipe” to their 15” laptop. The only access they have to movies and television content is on their laptop. Now throw into this mix Alereon’s NoWire™ Laptop-2-HDTV technology, a product that wirelessly connects your laptop to your HDTV and enables your laptop screen to be reproduced on your TV screen. Instead of watching the relatively tiny 15” laptop on your lap or hunched over a coffee table, lean back and watch the show on your big screen HDTV – just like when you were paying $75 a month subscribing to zillions of channels. The difference? You save over $1,000 a year in cable bills. “But I love my DVR” you say. True enough. Hulu and other online sites, including YouTube, etc, have made the Internet the world’s biggest DVR. Watch the shows you want to watch, when you want to watch them.
As an example recently I was watching the US Open on the internet at the same time the Open was on one of the cable channels. On the internet I had four choices; watch the 7th and 17th green, follow the field, follow Phil Michelson and a fourth choice – perhaps Tiger. Phil was having a great round so I watched Phil. Occasionally I flipped over to watch the rest of the field or see something else I was interested in. The Internet simply provided me with more choice for what I wanted to watch.
As another example, recently the last episode of LOST was aired on network TV. I haven’t watched in past years, but decided to watch the final season. Unfortunately I was traveling the Sunday night of the last episode so I had the DVR programmed. When I got home the DVR had happened to be full and hadn’t recorded LOST. No Problem. I turned on Hulu, used my NoWire unit, and watched the last episode in full 720P video on my HDTV. Better yet, it was 45 minutes shorter because the commercials on Hulu were much shorter than on network TV.
OK you say, but Hulu is going to go to a subscription and pay per view model. Fine. Between free streaming content that includes advertisements from the networks and my Netflix account and YouTube and whatever Apple does next . . . the charges for Hulu content will still mean that I am saving tons of money a month versus the current cable subscription model. Perhaps it is this inevitability that helped motivate Comcast to get into the content biz. They didn’t want to become just a big pipe.
This new viewership model of the Internet as your DVR won’t start out like a tsunami. It will begin with 20-somethings first since they are more willing to adopt new technology and deal with some of the early shortcomings. For instance, the variety of on-demand movies on your cable service is pretty broad and may be better for you than what you can find on Netflix or Blockbuster. Likewise, cable companies have aggressive contracts with service providers, so initially services like Hulu, when they add a subscription model, may or may not have “all you can eat” offerings like the cable company. Then there are the inevitable technical issues. In particular, WiFi was not really designed for streaming video. Further the download pipe into most people’s homes is pretty slow. To make the Internet your DVR many people will need to pay an extra $10 a month to the cable company for a bigger pipe into the internet. Further, to make video work well over WiFi for streaming video you can’t be as far away from your access point as you can for simply doing email. None of these short term impediments however change the inevitable that the cable model of content will change over the next five years as the impact of the Internet as your DVR causes more and more people to turn off or turn down their cable subscription services in favor of online content sources and buying a bigger internet pipe.
So what does this all mean for Life without Wires™? It means that as Alereon’s customers come to market with NoWire based Laptop-2-HDTV products, you should buy one and try out this model. If after a month you find you aren’t really using cable as much as you were and are now relying on your laptop and the Internet to be your DVR, then the next month pay for faster cable modem service and cut loose some of your subscription services. You’ll save a ton of money.

