Wednesday, December 31, 2008

The End of Cable Television

I'm saying it now - cable and satellite television will be the surprise casualties of the economic downturn. 

Local stations are starting to require higher fees in their contracts, which the cable and satellite companies are refusing to pay. In my area, Dish Network no longer carries the ABC affiliate, which will make things interesting when Lost starts airing in a few weeks. Why? Fischer, who owns the affiliates in Yakima, Seattle, and Portland, wants to get as big a piece of the pie as all of the other cable stations, claiming that the downturn has resulted in considerably less advertising revenue (all of those car dealerships going under, for example), and they can only cut staff so much. That means they have to make up the difference somewhere, and if Dish starts charging more for locals people will cut back on their other choices. Belo (which owns several NBC stations around the country, including my local affiliate) had a similar contract dispute with Cox Cable last year, just in time for the Super Bowl. 

Of course, the real issue comes down to advertising as a revenue stream for media in the US, and a huge piece of the pie it is. 26,000 journalists have lost jobs since October, and my local newspaper, The Oregonian, has already tried to cut costs by combining the business, main, and local sections into one section on Mondays, and I fully expect them to do it for the rest of the week within a couple of months as advertising revenue evaporates (they've already lost the classified ad business, the other major economic component, to Craigslist and the Web). 

So what does this mean? I believe that the One Size Fits All model that cable has been able to pioneer, where you get a bundle of channels and can't choose a la carte, is going to die, and with it the cable and satellite companies. What will take it's place is, as you might expect, Internet-delivered programming on a show-by-show basis, paid for by the end user without the middle-man (other than your ISP getting the connection fee for broadband). Suddenly, the Apple TV seems like a good idea... While you won't be able to get network financial assistance up front to put together a program, you will see a shift very similar to what happened with music over the last five years - you'll buy what you want to watch, and watch it when you want to. The biggest issue - it will require you to be computer-savvy enough to get to a web page, and it will require a broadband-speed connection. 

What will happen to the networks? They'll hold on - to a point. The really good stuff will move over to webcasts (and, arguably, they already have - most network shows are viewable on your computer shortly after they are broadcast, and with relatively few ads). The networks will still have programming, but anyone with the ability will simply buy an Apple TV-like product that allows the data to stream to their television (and the good ones will have an input for an HD antenna feed for the on-air stuff) that will allow you to record those programs. With hard disks in the terabyte range at present, and new technology promising to make larger, faster, and sturdier storage available in the very near future, you'll see even DVDs start to fade from sight. 

What's the timetable? I'll be conservative and say that most people will move to pay as you go webcast episodes of programs as well as movies within the next five years. Improved compression algorithms will make this more palatable, as will Wi-Max nets, and you'll only need one box for everything except console games (and if the big players in that market were smart, they'd create plug-in cards that you insert in the box as well, perhaps with a breakout box for controllers, etc). Given how *fast* the economy has tanked, and the enormous effects it's had on business, it could happen even faster. Because the last thing people will dump before their health insurance and the mortgage is the A/V, and they'd rather buy a device now. 

Look me up in five years and see if I'm right.

1 comment:

mgmontague said...

I totally agree you will find the end of cable TV in the very near future. Though I see it happening for different reasons. The internet will spell the end. More and more TV, Radio, Movies and Phone are being used on the net.
Netflix already has a box that delivers streaming movies directly from the web. You will see this technology for everything. TV, Radio etc. No need for cable or traditional television channels.
Everything will be streamed. Plus traditional radio will be gone. With wireless abilities all radio will become internet radio, with a infinity amount of choices.
Even cable may not be able to compete in the internet anymore. With companies like clear wire developing the ability to broadcast the internet wireless to any one, no cables, no wire, plus with satellite radio already working on this concept and clearwire is already utilizing this, it's just a matter of time.