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

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Related: MTV today announced its online destination MTVMusic.com. It will be a free online service, similar to Hulu.

This Post Has 3 Comments

  1. Caitlin G.

    Thank you, Mr. Boland, for your thoughts on the world of online video! As I read your post, I was suddenly struck by the realization that my situation is similar to your own, namely that nearly all of the programs I watch can be viewed on the web; indeed, I have come to prefer watching shows on my laptop as it allows me to access entertainment at my leisure instead of rushing desperately about to make sure that I am in front of the TV at the correct time. In addition, the quality of streaming video seems to be improving and the image is often better than the low reception my television gets on basic channels. While the clarity of picture does not, as you point out, equal that of HD, I am hesitant to agree that this handicap alone will stem the tide of those favoring online viewing over cable. It seems to me to be a small price to pay for fewer interruptions and more flexibility, and I believe that the number of people watching television on the Internet can only increase, especially given the trend of studios making content legally available, like MGM’s recent deal with YouTube. Based on this, I was interested in your thoughts on the future of advertising in this medium. I have read Part II of your post and your discussion of Hulu’s “limited commercial interruption” tactic. Do you think the five-minute ad break on regular TV will eventually become a thing of the past, in favor of these shorter, simpler marketing campaigns? Even if cable television remains active, this seems a likely scenario. Since DVRs make it easy to fast-forward commercials, stations may find it necessary to negotiate for “mandatory” advertising, in a similar fashion to web-based players, which suspend the ability to skip ahead until one thirty-second announcement finishes playing. Also, the practice of one company sponsoring an entire TV show is not an entirely new concept; programming decades ago used to be dedicated to the promotion of one product. Soap operas, for instance, got their start from detergent companies trying to take advantage of a target audience. I find it slightly amusing that the industry seems to have come full circle and is taking a page from the early days of its existence.

  2. Mike Boland

    Hi Caitlin. Thanks for the comments and great points.

  3. Matt Howard

    Hi Mike. Thanks for the excellent post. I actually saw this a while back when you first posted it. However, since then i’ve begun a similar experiement on my own and with my 9 year old daughter. We’ve seen that it’s absolutely possible to save money on one’s cable bill becuase the content there online. I’ve gone ahead and cut the premium package entirely — but the one thing that keeps me paying basic is the combination of HD / sports / DVR. Any idea when is the NFL going to broadcast live on online???

    Matt Howard

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