More and more people are turning to the internet for television entertainment, rather than paying high prices for cable television packages. In the age of Netflix, Hulu and a number of other internet content providers, cable companies are forced to make changes or else. Drexel’s Andrew Susskind, associate teaching professor and program director of the undergraduate TV Production & Media Management major at the Westphal College of Media Arts & Design, recently commented in this CNBC article about this growing trend and why cable needs to adapt.
DrexelNow checked in with Susskind to learn more about the fate of cable television and how it can compete against the big internet players that allow viewers to watch what they want, when they want.
In light of this trend, what do you believe is the fate of cable television?
Cable television is well-positioned to be a dominant player in the emerging landscape of TV Everywhere. The two major cable providers, Comcast and Time-Warner, are both also major content producers. And they have become important aggregators of content with their video-on-demand (VOD) services.
Their two most important challenges are to improve their streaming delivery capabilities to compete with Netflix and Hulu and to find an acceptable alternative financial model to their traditional tiered-priced bundling of channels.
People are tired of paying for channels they don’t watch, and they want to watch whatever they want, whenever they want, on any device they want. Cable has to adapt to that.
Who are the major players as far as providing television content on the internet?
Right now, the major subscription players are Netflix and Hulu, who dominate because of their vast catalogues of content, their superior delivery capabilities, more user-friendly viewer experiences, and branding that makes them “cooler” to younger demographics. And, of course, there’s YouTube, which is planning several new pay channels, and Amazon, which not only has highly advanced delivery capabilities (they actually provide much of the server infrastructure for Netflix) but just announced their first slate of original series production.
Up to now, they’ve all had to rely predominantly on content owned by competitors, and that’s a treacherous place to be. That’s why they’re all committed to creating original content. It’s also why Comcast and Time-Warner need to overhaul their online pricing and accessibility strategies.
As a Netflix senior executive succinctly framed the challenge, “Netflix has to become HBO before HBO becomes Netflix.”
The CNBC article mentions a new kid on the internet block, Aereo. What exactly is Aereo? Is it different from Netflix or Hulu?
Aereo provides a technology that takes all over-the-air broadcast signals within a given market and converts them, for a fee, into high-definition internet signals delivered to whatever devices you choose, without the need for cables, wires or boxes.
However, the deep-pocketed broadcast signal providers, primarily the Big Four networks and major station groups, are fighting this new service very aggressively through the courts, claiming Aereo should pay for their signals. The litigation is likely to wind up in the Supreme Court.
Netflix and Hulu, on the other hand, are exclusively streaming content providers, although Netflix does maintain its ever-shrinking DVD mailing service.
What do you believe are the big reasons people are turning to the internet for television entertainment?
Very simply, the issues are choice and price—and it’s not just the internet. People want what they want, when and where they want it, on any device they choose, and at a fair and competitive price. Cable companies have operated as monopolies, slow to respond to consumer demands and technological advances. The internet has essentially enabled television viewers—especially younger viewers—to become their own programmers.
Do you think this trend will encourage cable providers to make changes and/ or lower prices to keep a strong customer base?
Absolutely. It’s inevitable. Look at what happened to the record industry. Music consumers—predominantly young people—wanted songs, and the industry kept insisting on high-priced cd’s. A new technology (file-sharing) emerged that gave consumers another, albeit copyright-infringing, choice. Rather than adapt, the industry allowed the technology to destroy their business. Steve Jobs and Apple bailed them out with 99-cent songs on iTunes, but the record business has never recovered.
Whatever the financial and political complexities, if cable companies don’t ultimately unbundle and make their content more readily accessible and fairly-priced, they’ll face a similar cannibalizing of their business. As Cameron Yuill, CEO of AdGent Digital recently said, “Bundling is dead man walking.”