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Summary:

The free availability of popular TV shows online could eventually lead to the destruction of one of the main pillars of the TV industry, Dish exec Bruce Eisen said during a panel at Streaming Media West today. His remedy? A 30-day window for Hulu & Co.

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Hulu users would wait a lot longer to catch up on their favorite shows, if Dish Network VP of Online Content Development and Strategy Bruce Eisen had his way. “If I can watch Glee tomorrow morning and I don’t have to pay a pay TV service –- I think that’s bad,” Eisen said during a panel about cord cutting at the Streaming Media West conference this morning.

The model of sites like Hulu that make catchup content available immediately isn’t benefiting the industry, he said, adding that broadcasters should instead reserve catchup episodes for authenticated TV Everywhere services, and only make them available freely after 30 days. “If people decide that they don’t have to pay for pay TV, then one of the pillars (of the TV industry) starts crumbling,” he said.

Greg Kampanis, SVP of Content Strategy and Operations for South Park Digital Studios had a more measured take on the issue. “We would rather be behind an authenticated wall,” he said, adding that the industry was simply too slow to roll out these models, and studios like his had to roll out their own, less restricted offerings.

His own company had a wakeup call a few years ago when it saw a lot of its content getting really popular on pirate sites, with comScore reporting two million people frequenting pirate sites to download South Park episodes. “We were looking at it as a pretty large missed opportunity,” Kampanis said. South Park Studios decided to put all of its content online, and has since not only built what he called “a pretty successful online advertising business,” but also seen its ratings skyrocket, with the most recent South Park season premiere getting higher ratings than any previous premieres. “We know its not hurting our ratings,” said Kampanis.

Panel moderator Jonathan Hurd from Altman Vilandrie & Company shared some of his company’s research about cord cutting, with 3.9 percent of all respondents between the age of 25 and 34 responding to a survey from this June that they had already cut the cord because of the availability of Internet video services. More than 20 percent of people in that age group were considering to cut the cord in the near future because of online video.

Curious what Hulu CEO Jason Kilar is thinking about these accusations? Then come to NewTeeVee Live 2010, coming up on November 10, where he’ll talk to Om Malik about his take on the future of the industry.

And while you’re at it, check out the most recent episode of our new web series Cord Cutters:

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  1. “If I can watch Glee tomorrow morning and I don’t have to pay a pay TV service –- I think that’s bad”

    Interesting choice of examples, considering that Glee is on broadcast TV, and is easily available without a pay-TV subscription already.

    Will Dish Executives try to put a tax on OTA antennas next?

    1. Well, companies figured out that if they put tap water in a bottle, they could sell it for 10,000 times the price!

      1. So free?

        10,000 x $0 = $0

      2. @patrik I don’t know where you live, but in the U.S. tap water is not free — it costs an average of about $3 per gallon.

    2. That was exactly my first thought as well. With fools like this guy, it’s no wonder the #dinomedia doesn’t stand a snowball’s chance in hell. They shoudl figure out how to better monetize the attention they are already getting. That’s it. Not try to erect Pay Walls and/or temporal walls, or whatever.

      “Move The Freeline”, get your share of the Attention Pie, and then monetize that, intelligently. Sorry, but their model of showing random dumb ads against content is no longer working, it is dead or dying. The sooner they realize this, the sooner they can get on with the business of creating new ad and/or monetization models.

    3. “If people decide they don’t have to pay for pay TV then one of the pillars (of the TV industry) starts crumbling.”

      Hmmm… I’ve never had to pay for over-the-air broadcasts. Seems to me that free broadcasts is the biggest pillar of all for the industry! (Do these folks listen to what they’re saying?)

    4. The Dish guy was talking about retransmission fees that pay TV operators pay to TV stations to carry their signal on cable, satellite, or telco. Yes, over-the-air viewers can watch “Glee” for free, but pay TV subscribers actually pay to watch it.

      No question, he could have used a better example to illustrate his point.

  2. No, Hulu isn’t killing TV, it’s the studios.
    Just like the recording industry dug its head in the sand while MP3 sharing was all the rage. Then iTunes came along, and now the majority of music sales are online.
    Today, history is repeating itself, with the TV industry is doing the same head-in-sand moves the recording industry went through back then.

    The 30 day window suggestion is a perfect example of the bass ackwards thinking with the executives. Completely clueless as to what audiences want, as usual.
    The ONLY thing that can save the TV industry from itself, is instant access via subscriptions fees or limited commercials, not pay to play.
    iTunes has tried the pay to play, and it’s moderately successful. Just not enough for the rest of the industry to follow suit.

    The real reason is this:
    All the shows I want to see, regardless of channel they’re on or the time they broadcast, are available online for free, usually within minutes of initial air time. Is it legal? No. Is it convenient? Extremely. I can save on my cable bill and I still watch whatever I want to, whenever I want to – in many cases before they air on the west coast.

    If the studios offered a single source, like a “netflix for tv” if you will, for a flat, reasonable monthly fee, playable instantly on my computer or tv connected device (such as roku, wdtv or boxee), I wouldn’t hesitate to pay for it – even if the amount was close to what I’m paying for cable today.
    Convenience is king. Ignore that at your own peril.

    Also, I agree with T’s comment about Glee. Another perfect example of the complete disconnect from reality these executives exhibit daily.

    1. I couldn’t agree with you more Jack Frost.
      We cut the cord about a year ago and I hate we didn’t do it sooner. There are so many things on Cable TV I feel like are not worth watching and if I really want to watch them, I can go online and watch them on the channel’s website OR download it from iTunes or Amazon.

      1. I am trying to figure out how to cut the cord, but as of yest cant.

        1. Sports – Due to the rise of cable TV, a lot of networks dont carry sprots anymore. Next year ESPN will come to the XBox, so maybe then.

        2. HDTV – Why would I spend $2000 on a entertainment system to watch TV at 480 instead of 1080? Of course local station broadcast in HD. The internet stuff though is not quite there.

        3. Pay as you go is stupid. Apple and other companies are ripping people off with these services. Of course thats the apple model, buy our product and our stuff, but thats for another day. Subsciption services such as netflix and Hulu need to become the norm, before I’ll jump completely in.

        4. The threat of metered internet service could kill this whole thing. Companies are increasing speeds, but at the same time raising prices for use. If this does become the standard as Comcast and AT&T want, then cable will be a lot cheaper.

    2. I very much agree with your thoughts about convenience. One of the reason I haven’t yet dropped cable is that I have dozens of channels and hundreds of shows all in one place. And I pay one flat fee to one company regardless of whether or not I watch one hour a day or 10 hours a day. I don’t want to have to buy shows from multiple sites, or subscribe to multiple services, nor do I want to have to use my PC to find shows to send to another box connected to my TV. I want to sit down on the sofa, pick up a small remote to navigate through a simple program guide and DVR interface to choose the shows I want to watch.

      My big problem with AppleTV and iTunes is pricing. $0.99 a show sounds cheap, but an average of three shows a day adds up to to $89.10 for a 30-day month, without taxes. That’s way more expensive than my current digital cable cost. I also don’t like the idea of buying or leasing episodes of a show that I find uninteresting. I can’t return it, but watching cable I can simply switch to another recorded show or to a different channel, and no extra cost. That is why I stopped renting at Blockbuster – they charge by the movie, regardless of whether or not I liked it and watched the entire thing. The Netflix subscription model for movies is much better. If I don’t like a movie, I send it right back and they send me the next one on the list.

      1. “I pay one flat fee to one company regardless of whether or not I watch one hour a day or 10 hours a day” … “an average of three shows a day”

        Holy cow. Who has time to watch 3 shows a day even once a week, much less *on average*? (This is my big problem with flat pricing for TV: it encourages me to watch more TV. I want more quality, and less quantity.)

        “That is why I stopped renting at Blockbuster – they charge by the movie, regardless of whether or not I liked it and watched the entire thing. The Netflix subscription model for movies is much better.”

        The public library model is even better: I don’t pay at all, regardless of whether or not I liked it and watched the entire thing.

        (Also, the selection of foreign films is *much* better at my library than at Netflix, though YMMV.)

    3. Great post, Jack. I completely agree with you. If “TV” keeps its head in the sand, it’ll be gone before it has time to take a breath. If it happened to the music industry, it can happen to television. Especially with the content creators’ ability to essentially have their own “networks” in YouTube, Vimeo, etc. that can reach as many people as TV can.

  3. If my Dish PVR had more than two receivers, I probably wouldn’t need Hulu.

    But Jack Frost’s (is that really your name?) comment is dead-on. What amazes me is that the TV executives are repeating the Record Industry playbook with virtually NO CHANGE, and they expect a different outcome.

    If the TV executives had a half-brain between them, they would either build their own online subscription service, or just buy Hulu. They could still protect their content AND get the subscription fees AND the advertising revenue.

    But, common sense isn’t in the Play Book they got from the Recording Industry.

    1. “If the TV executives had a half-brain between them, they would either build their own online subscription service, or just buy Hulu”

      What are you talking about? Hulu is a joint venture of NBC, Fox, and ABC. They already own Hulu, and always have.

  4. It’s only going to hurt Dish. Not TV. And not customers.

    IT’s going to hurt Dish the most because Satellite’s strength is not on-demand content ITs strength is broadcasting.

    That’s why Eisen doesn’t like what he sees.

    To consumers, it is obvious that Netflix and the new ESPN service on the 360 are the new model of living room TV. The cable and satellite model are outdated.

    YOu can see how a monopoly slows down innovation. Cable companies control the set top box and the pipe to your home. They have been in the business for decades.

    But who has the leading on-demand interface and service? Netflix. And they did it from nothing in the last 5-10 years.

  5. Do they realize they’re competing with free? I don’t think they realize that users can get this content through newzbin or private torrent trackers really easy. And not only that, those who get the content through illegal means (I’m not one of them), get it without commercials, before it airs on the Pacific coast, and in HD, not some stupid flash player.

    My coworkers laugh at me because I watch stuff on amazon video or itunes.

  6. I believe the word that he is avoiding is disintermediation. Their relevance is quickly diminishing. Of course, they know this and they’re going to milk this cow until it’s gone.

    1. But change is not a death sentence. Netflix appears to be successfully negotiating the transition from plastic discs to broadband distribution.

      Alfred

      1. That’s because Netflix planned for the transition from plastic discs to broadband distribution from day one – I mean, they named the company NETflix, not DVDByMail. For Netflix, DVD-by-mail was a stopgap measure to build up customer base and relationships with studios; digital distribution was the game from day one.

  7. I have absolutely no sympathy for DISH Network or any of the other distributors who have had too much power over content creators and consumers for too long. The TV Industry is evolving, the old species will have to adapt or become extinct. You have had your chance to figure it out, this wave is not going to slow down for you.

    I totally agree with Jack Frost and Chris K posts.

  8. The TV industry is a $200 Billion industry today, just in the USA. I am probably estimating it low.

    The numbers are above $70 Billion per year for the ads
    I dunno exactly how many cable/satellite subscribers there are, possibly 100 million, paying average $60 per month
    Plus DVD sales, movie sales, cinema, merchandise etc which is all related.
    Also few billions they already make from streaming on the web.

    Web TV is a very careful experiment for these TV moguls, reason being, they know it, web TV means the eventual total removal of the need for centralized TV networks.

    So there you have it, they see their $200 Billion per year industry, probably around $1 Trillion per year industry globally, they don’t want to simply let go to some revolutionary Google TV little box thing to come and completely disrupt their business and take away their control.

    Here comes the next part. Not only is TV in itself very lucrative, one of the most lucrative businesses between Oil and Telecom. Also, very importantly, TV owns our democracy. They most certainly don’t want to let that one go!

    You can probably find lots of numbers, people’s opinions are shaped by TV more than anything else. The factor that determines elections in the USA and countries in Europe are by huge margin determined by the content and stories that TV networks decide to broadcast. There are people deciding who work in those TV networks. Those people are chosen VERY carefully by TV network managers and owners. Their consideration for hiring editorial staff goes much further than plain and simple finding people who can make them most money upfront. They hire for an overall political agenda.

    Because when you look deep, those people who own the $1 Trillion TV industry, also own other trillion dollars worth in Oil, Telecom, Infrastructure, Healthcare and more. They are all the same people behind. Some times it may not be that obvious who really controls which international corporation, but if you search you will find, they have obvious interest in doing what they can do organize the public opinion in a way that suits them best at elections. Why would they ever support an editorial agenda that may lead to the eventual election of representatives of the people who may want to facilitate the disruption of any of their own multi trillion dollar industries?

  9. Even if I had to wait 30 days, I wouldn’t pay $40-80/mo for the 2 BROADCAST CHANNELS that I watch in HD. The rabbit ear solution isn’t really a viable option as the HD signal is choppy. It was better when the system was analog, because I could at least get a fuzzy picture. Now I just get black-out or blocky/choppy.

    Yes, I cut the cord. Why? Garbage on TV = Garbage on the mind = Garbage for society. I believe it’s obvious that there is garbage in my head. Must be from too much garbage on TV when I was younger.

  10. » Pay TV exec ignores reality and blames Hulu for subscriber shrink Wednesday, November 3, 2010

    [...] Greg Kampanis, SVP of Content Strategy and Operations for South Park Digital Studios had a more measured take on the issue. “We would rather be behind an authenticated wall,” he said, adding that the industry was simply too slow to roll out these models, and studios like his had to roll out their own, less restricted offerings. (GigaOM) [...]

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