I don’t have a TV. When my roommate and I got the Comcast broadband connection, we fell for the up-sell and got the basic cable connection assuming we’ll buy a cheap TV at some indeterminate point in the future. A year later, that hasn’t happened. Of course, after about six months of paying for the cable connection, but not using it, I made the mistake of calling Comcast customer service and tried to cancel it. I’ll need a PhD in cable TV rate plan economics to fully understand why, but it turned out that cancelling the cable connection would not change the total amount we would pay by even a single cent. So, I just gave up. With the World Cup going on, we’re finally getting something out of it.
I came across ESPN3 as I was trying to find out where I can watch the World Cup matches online. It works for someone who’s not obsessed with the game. When I started watching the games on ESPN3, I didn’t realize that it was accessible only because I had a cable connection from Comcast. Then I came across a post on NewTeeVee which explained the ESPN3 model. I went back to read a post by Bill Gurley that I had bookmarked on Instapaper but hadn’t got to (Instapaper is turning out to be another Google Reader. I can never keep up). It is a fantastic explanation of the economics of the TV business and why the vision of “free TV on the net” may never materialize. To summarize, the cable companies are the biggest customers of the content creators. The $32 billion of affiliate fees that cable companies shell out is what allows a lot of the content to be created in the first place and they are extremely wary of losing their customers to free online video. Their basic argument is – if the content creators don’t expect services like Hulu to pay any affiliate fees, why should they? This is why there are rumours of Hulu going behind a pay wall soon.
With the TV Everywhere initiative, which BusinessWeek has covered well, it looks like people will have to continue paying the cable companies irrespective of the device / connection from which they access video. I don’t mind paying somebody every month, but where is the innovation that the internet allows?Â Hopefully, Google and Apple can bring about the disruption that smaller players like Boxee and Roku haven’t been able to.