May 3rd, 2009

MSOs Take Note: I'm Unplugging my Cable

My relationship with TV is starting to remind me a lot of my relationship with AOL around 1999. The applicable buzzword here is “walled garden” – after years of an insane love affair with AOL (because yes, we ALL had one) I found I was only using the browser + AIM and was sick of the other features that mostly served to slow down the browser. I quickly stopped using AOL altogether – though my parents continued to pay for it until 2007.

Lately, I have felt the same way about TV. Perhaps it’s the Social Television class I’m taking at the MIT Media Lab, but I find myself more and more frustrated with my TV. I’m annoyed that I have to settle for whatever is on and I find that the enjoyment I used to get from watching TV is nearly matched online.  I say “nearly” because the internet still lacks the ability to replicate the “lean-back” experience that one gets from watching television.

The relationship between MSOs and content providers is what I like to call “cushy”. MSOs have deals with each network and pay the networks to carry their content. What I’m not quite sure about is if this number is a flat rate or a percentage based on the number of subscribers. If it’s a flat rate, then I think the MSOs will stick around a lot longer and deal with lower profits in exchange for continued market domination. If it’s a percentage of subscribers that’s a better sign for the rest of us – the content providers will start getting less and less cash as people unplug their cable and might choose to entertain options to provide content through other platforms.

I think about trends in technology the same way I think about neighborhood gentrification. There’s a very specific time-line with tangible indicators. Example: my mother, a fourth-generation Flatbush Brooklynite, told me that no one would ever want to live in “the dump” that was Williamsburg. Now it’s almost as expensive as Manhattan. The series of events went something like this: first the artists and musicians moved in because it was cheap, then the young just-graduated-but-still-poor yuppies came for the cool music, art, and coffee shops and they paved the way for the Booz Allen consultants who are now snapping up those fancy new condos.

I believe the same thing will happen with television. Early adopters are sick of the walled garden – they are unplugging their cable and buying Apple TVs, Rokus and are excited for Boxee to come out with its own set-top box.

Once Comcast, TW, Cox, etc. start to see enough of a drop in subscriptions they’ll pick fights with the content providers and some of the stronger content providers could start offering their content a la carte across multiple platforms (and I mean ALL their content – not just what’s currently online).  Content providers with huge followings will be the big winners here – MTV, ESPN, HBO, Food Network, etc. Should they choose to offer their content directly to their customers these networks could potentially rake in even more money than they’re currently getting from the MSOs.

People will get to the point where they will be willing to pay for Hulu. Despite the fact that Gen. Y-ers love “free” we’re also pragmatic enough to know that one has to pay for quality.

For now, though, I am telling Comcast in September that I don’t want cable TV anymore. I’ll probably pay just as much for internet (gotta love bundling) but that’s not the point – it’s symbolic: I’m breaking out of yet another walled garden.