How the Cable Guys Are Killing Themselves

• Report this Comment On March 17, 2010, at 4:26 PM, BioBat wrote:

  On Demand content has actually gotten worse over the past couple of years. Now the cable companies have come up with the bright idea of charging customers for old cable rerun movies that used to be free on demand or during broadcast - even though consumers already digital on demand accesss on their monthly cable bills and for the content shown on the networks they subscribe to.

  Sure, grabbing 2.99 for a movie rather than showing it for free makes sense - provided you don't lose your customer in the process and that's something I think the cable companies are all underestimating. With free Hulu and an 8.99 subscription to Netflix, all anyone needs anymore is a good internet connection to get the content when they want it. That sure beats $80-90 for cable plus additional demand rental gouging.

• Report this Comment On March 17, 2010, at 5:11 PM, Burley wrote:

  "It's also tantamount to a suicide note."

  I'm sorry, but I don't see it that way. You love on demand content, I love on demand content, pretty much everyone loves it, and IMO the cable companies couldn't be happier.

  Serving up programming on demand is MUCH more efficient that running linear programming, with start times, channel numbers, etc. I believe Brian Roberts, CEO of Comcast, saw this very early, and made a conscious decision to provide a large portion of CMCSA's on demand content free of charge, basically conditioning his customers to look for content in an on demand format.

  You think it is suicide, but cable still has the pipe that the content uses to get to the house. If you are a cable customer and choose to stream video from Netflix or Amazon, or whoever, it still has to have a way to get from there to your house, so I fail to see how cable is committing suicide.

  The content from Netflix, et al will more than likely be identical to the content the cable companies can provide via their own distribution network (the studios would like to sell the content rights to as many outlets as possible, correct?) so will they lose on that front? Maybe some, but I suspect not much.

  I don't think streaming a la carte video will hurt cable that much either. Right now it is expensive to do linear channel a la carte because each customer would need to have his/her own channel lineup and the back office costs and methods make it prohibitive.

  However, if ALL programming was on demand, a la carte is simple, and would likely make the cable companies more profitable.

  How much video content does the average family watch today? 40 hours a week (I really don't know, I am taking a SWAG rather than looking it up)? For the sake of argument, let's assume that is the case. What would be a good price point for an hour of "standard" fare video? (movies would continue to be charged separately) How about if we mimic the Apple store pricing for ITunes at $0.99 a song, and charge about a dollar for an hour of video.

  40 hours of viewing a week is 160 hours a month, or roughly $160 a month for you to watch your videos. Add to that the cost of movies (maybe subtract the dollar a hour for standard video when you are watching movies), add the price of internet, and you can easily see that at $190 to $200 a month per average customer, streaming a la carte would be a boon to cable companies.

  Foolishly,

  Burle

• Report this Comment On March 17, 2010, at 6:13 PM, rlhoman wrote:

  Or one could say that they are recognizing the inevitable and trying to reinvent themselves before they lose all of their business. Certainly this is much better than burying their heads in the sand and pretending everything is fine.

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