Todd Spangler on the most recent cable television numbers:
Q1 is historically one of the strongest periods for pay TV providers. But the 176,000 net adds in the most recent quarter came in at less than half the totals for the sector in the previous three years, according to Bazinet’s calculations. The industry added 403,000 in the first quarter of 2012; 483,000 in Q1 2011; and 507,000 in Q1 2010.
Indeed, the four largest publicly held MSOs in the States — Comcast, Time Warner Cable, Charter Communications and Cablevision Systems — collectively lost 208,000 video subscribers in Q1 2013, exactly double the 104,000 they dropped in the year-earlier period.
I sense a trend. And if my math is correct, that trend is not a good one for cable television.
Ted Sarandos, Netflix’s chief content officer, speaking to GQ for a profile of Netflix chief Reed Hastings.
This will go down as the year that HBO either made the right choice or the wrong choice not to go after the stand-alone Netflix model. Netflix is coming out swinging with House of Cards and then Arrested Development. HBO continues to hide behind big cable.
Edmund Lee & Adam Satariano for Bloomberg:
Apple is in negotiations to start carrying Time Warner HBO Go application on Apple TV by mid-2013, according to two people familiar with the plans.
Great, unsurprising news. But:
HBO Go is only available to customers who subscribe to the network through their cable or satellite service, and would be the first app on Apple TV that requires pay-TV authentication. There are currently HBO Go apps for the iPad and iPhone.
Same old, same old. Imagine how powerful it would be if you could buy an HBO subscription without needing the cable subscription as well? How many millions of Apple TVs would Apple sell as a result? I would bet on many millions. Which is exactly why big cable won’t allow it.
Susan Crawford for Bloomberg:
The Internet has taken the place of the telephone as the world’s basic, general-purpose, two-way communication medium. All Americans need high-speed access, just as they need clean water, clean air and electricity. But they have allowed a naive belief in the power and beneficence of the free market to cloud their vision. As things stand, the U.S. has the worst of both worlds: no competition and no regulation.
Such an important and easy-to-understand post. Essentially, the U.S. has fallen behind (and continues to fall farther behind) in high speed internet access because of deregulation gone-bad. It allowed greedy dickbags (the cable companies) to do what they do best (perfect being greedy dickbags).
Just read about how many millions of dollars each of them spend in lobbying to ensure that communities continue to have to pay them (many more) millions for sub-par service. Total. Fucking. Dickbags.
I hope Google (or someone) succeeds in their (insanely expensive) end-around approach. Because it’s pretty clear the government isn’t going to do shit at this point. I wrote this post almost three years ago — what has changed in the meantime? Absolutely nothing. It’s gotten worse. And it will keep getting worse.
My belief is that Apple TV sales numbers will continue to increase as the device is slowly, patiently improved and the ecosystem is enhanced. In a not-too-distant future we’ll see explicit Apple TV apps, similar to those on iPhones and iPads.
And someday, Apple will reach a limited agreement with a carrier such as Comcast. The enhanced experience will create a wedge — and will spur competitors. As a result, TV will at last become “modern” — sitting down in front of your TV set will no longer send you time traveling to 1992.
That’s my guess how this plays out as well. First we’ll get a third-party app SDK for the existing Apple TVs, perhaps next year. That will set the stage for the next generation hardware, which may still be less of a TV and more of a powerful set-top box. Then comes a deal with someone like Comcast, which will Apple will try to use as leverage to get other cable companies in line with their undoubtedly strict terms. And then perhaps actual television hardware.
In other words, the iPhone strategy.
That’s the easiest way I see all this happening, but it won’t be as “easy” as it was with the carriers because the cable guys are all regional and have de-facto monopolies over their regions. In other words, it’s going to be even hard to negotiate with them.
The Time Warner Cable COO said they would be open to giving up control of the user interface to Apple devices but don't want “to give up the customer relationship”. I don't understand. I still pay Verizon to use my iPhone; wouldn't I still pay Time Warner to use my Apple TV? What does he mean by "customer relationship"?
Asked by Anonymous
I believe he means subscriber data. This probably stems from the fact that Apple took control of this from magazine/newspaper publishers with Newsstand and others are worried they’d try to control it elsewhere.
But I think you’re right, it’s more likely Apple will partner with the cable companies as they did with the cellular ones. And if that’s the case, those companies would retain the customer relationship.
Jeremy Toeman responds to my letter to HBO (to let me pay for HBO Go without requiring that I pay for cable). He makes a number of solid points as to why the economics simply will not work right now.
But the keywords are “right now”.
I have no doubt that HBO is in no hurry to walk away from their cable partners who not only send them billions, but handle all the logistics (collecting the money, customer support, etc). But it would be very unwise to think that this model will continue in perpetuity.
The cable model is going to get disrupted. It may not happen next year, it may not even fully happen in five years, but it will happen. And as I said in my original post, HBO has a chance to lead this revolution instead of being run over by it. Right now, they hold the key: killer content.
If they’re actually worrying about things like not having the infrastructure to take payments or handling customer support, they may have already lost. They’re allowing themselves to be held hostage by a middle man that is not aging well (the cable companies). Again, one day he will die. And where does that leave HBO?
Scrambling to figure shit out while new competitors they never considered to be competitors eat their lunch — that’s where.
First and foremost, I love your content. You’ve produced several of my favorite shows over the years, and the hits keep on coming. I’d love to watch Game of Thrones now, but I can’t. You see, the only way to get your service is to be a cable subscriber, and several months ago I cut the cord.
The recent news that you’ve reached agreements with Cablevision and Time Warner Cable to make your iPad app, HBO Go, more widely available has plenty of people all excited. But to me it looks like a big turd sandwich. If I wanted cable, I’d pay for cable. I just want HBO, but you make it impossible.
I realize this is all about money. The cable companies send you a ton of cash and provide you with a great platform on which you are given prime billing to the elite tier customers. But the world is changing. And you need to get in front of it.
Though they’re going through a bit of a rough transformation right now, Netflix is clearly adjusting their cannons to aim right at you. In 2 years, they will be HBO — but better. Because they won’t require a goddamn bullshit cable subscription.
I’d gladly pay you upwards of $19.99 a month for direct access to HBO Go without a cable subscription. Netflix charges $7.99 a month for their streaming service right now, but thanks to your original programming, you’re worth a lot more. But Netflix original programming is coming soon, so your premium buffer won’t last forever. The time to strike is now.
If you could remove your lips from the cable company teat for a minute, you’d find hundreds of thousands — and likely millions — of customers happy to pay a premium for access to HBO Go without the cable requirement right now. That number is only going to grow. And fast.
Content is king, and you have the best content. If you do go cable-optional, a few of the cable companies may try to boycott you. But the ensuing customer relations shitstorm will only prove your value and will hasten the arrival of the post-cable world. You can lead this revolution.
So please HBO, I beg you, take control. Pre-empt Netflix and rise against big cable. Fulfill your destiny. Or I’m going to have to call on ESPN.
Update: Yes, Time Warner owns HBO, but…
So if I’m reading this correctly, Xbox will now be a cable box?
That’s cool, I guess — the interface is much better than any cable box out there (which isn’t really saying anything as cable boxes are huge pieces of shit across the board). But it will still require a full-on cable contract, where you pay for tons of crap you don’t want.
I’d prefer a bit more thinking outside of the box, as it were.