Cable vs. Internet

It's no secret that the introduction of a new medium can be threatening to those whose interests are tied to an older medium. Harold Innis explained that groups that control in some way access to a medium or its content can gain a monopoly of knowledge, and that monopoly may only be broken when other, marginalized groups develop or adopt an alternate form of communication.  The well known example is how that the printing press, in making texts and information more widely available to individuals, broke the monopoly of knowledge of the Church of Rome, leading to the Protestant Reformation, and the monopoly of knowledge of monarchies, leading to democratic revolutions.

So, as more and more people are getting their video entertainment from the internet, older media such as cable television are threatened, and look for ways to respond. This came up in a news item last month that appeared in the E-Commerce Times, in an article entitled Time Warner May Erect a Walled Content Garden by Erikia Brophy. The article appeared on June 13 and, yeah, you guessed it, I've got a quoted in it.

It begins with the following blurb:

There may be insurmountable challenges to the idea of keeping certain entertainment content off the Internet permanently, but that's apparently how Time Warner intends to fight cord-cutting, which has become a growing scourge for the pay-TV industry. For one thing, "television programming is simply not valuable enough to restrict it to a single screen," said journalism prof Rich Hanley.

Brophy then goes on to provide the basic background information:

Time Warner Cable appears to have come up with a strategy to help stem the flow of cord-cutters -- that is, people abandoning pay-TV for the free or lower-price content available on the Internet. The company is offering incentives to content providers to withhold certain properties from online entertainment platforms, according to a Bloomberg report citing unnamed sources.

Other pay-TV operators are offering similar incentives, according to the report.

Time Warner Cable reportedly has since acknowledged the incentives, noting that exclusivity is a regular practice in the entertainment industry.

Limited distribution is clearly an entrenched practice in the entertainment industry, but TWC appears to be trying to keep some content off the Internet permanently.

This is followed by a section entitled Delaying the Inevitable: 

TWC's tactic may succeed in delaying the inevitable -- at best.

This initiative is reminiscent of Kodak's attempts to stave off the digitization of photography, said Paul Schneider, chairman of the Boston University Department of Film and Television.

TWC "needs to find the best business model possible that accepts the fact that most, if not all, content will eventually end up on the Internet," he told the E-Commerce Times.

"Time Warner is swimming against the tide of television history and demographics with this move to wall off content from Internet distribution," said Rich Hanley, associate professor and director of the graduate journalism program at Quinnipiac University.

"Television programming is simply not valuable enough to restrict it to a single screen that limits viewership," he told the E-Commerce Times.

The rumored TNW plan doesn't appear to be a winning idea from a practical perspective, either.

The incentives Time Warner provides would have to be greater than what the content producer could get on its own through broad, free distribution via YouTube, iTunes and Amazon, noted Brad Morehead, CEO of LiveWatch.

"Distribution alone from Time Warner isn't enough anymore to entice a content provider into a deal," he told the E-Commerce Times. "Even with Time Warner's distribution as the second largest cable provider in the country, you are still only accessing a small portion of the market."

Content providers face a serious disadvantage when considering an exclusive deal with a cable company, continued Morehead. The content provider will get access to fewer eyeballs and may even anger potential audiences. Also, there are some areas where Time Warner just isn't available.

"That makes it challenging to develop a passionate national audience and the viral, word-of-mouth buzz that content producers want," he pointed out. "The only options then for people out of the Time Warner market are to either illegally pirate the content online or find something else to consume."

And at last we come to my little bit, in a new section entitled A Dying Model:

TWC may have bigger concerns than media providers reluctant to grab its incentives.

The pay-TV business model in general is in trouble -- and not just because of content on the Internet, observed Lance Strate professor of communication and media studies at Fordham.

"Packaging a variety of unrelated programs together on one channel has been a matter of convenience for broadcast television, and packaging a variety of unrelated channels together has also been a matter of convenience for cable companies," he told the E-Commerce Times.

"Now that alternatives exist in the form of a la carte services and on-demand programming, it is only a matter of time before a big shakeup occurs in the cable industry," predicted Strate.

That's not to say it's the end of days for the industry or TWC. There is content that people will still pay cable providers for -- starting with sports.

"Live sporting events have always been a key driver for the adoption and retention of programming services," said Chet Fenster, managing partner at MEC Entertainment.

"Sunday Ticket on DirecTV was a huge differentiator when it came into the market," he told the E-Commerce Times. "Original comedies and dramas have been important for HBO and Showtime in driving loyalty, but it's nothing compared to sports."

Time Warner Cable did not respond to our request to comment for this story.

And now, here's the entirety of the comments I provided on this topic, so you can see what was excerpted as a quote, and so that they won't entirely go to waste:

Packaging a variety of unrelated programs together on one channel has been a matter of convenience for broadcast television, and packaging a variety of unrelated channels together has also been a matter of convenience for cable companies. Now that alternatives exist in the form of a la carte services and on demand programming, especially via the internet, it is only a matter of time before a big shake-up occurs in the cable industry. TimeWarner Cable knows that the days are numbered for the subscription-based model that it has been operating on, and is seeking to delay the inevitable. Providing exclusive content is a time-honored strategy, movie theaters still use it via delayed video releases, for example. The kinds of programming that will help to retain subscribers will include live events, especially sports, and the kinds of quality television series that HBO and Showtime have become known for.

Making original cable series available on the internet, for example through Netflix and Hulu, did provide a temporary boost to cable viewership, as individuals who missed earlier episodes or seasons could get caught up and then watch the newest season on cable. But ultimately, the practice proved harmful, in that many found it a more satisfying experience to watch an entire season or series in a concentrated manner, over a shorter period of time, not losing the continuity of episodes as they are spread out over a longer period of time. TimeWarner can provide its customers the best of both worlds if they can get an exclusive deal, and grant their customers exclusive access to the programming online as well as through their cable system. Content producers may be willing to go along with this for the time being, in the interest of short term profits, but in the end I believe there will be too much to be gained from making their content available to larger audiences, and eventually we may all be watching programming through Amazon and iTunes, rather than TimeWarner and Comcast.

One thing is for certain, and that's that our media environment continues to change and evolve, and the full potential of the electronic media remains to be realized.