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Five companies that want to break up your cable bundle

Janko Roettgers — Tue, 19 Mar 2013 15:57:00 +0000

Tired of paying $100 for hundreds of channels if you only watch five of them? You’re not alone: An increasing number of companies is also looking for alternatives to the traditional cable bundle. The alliance of companies pushing for unbundling contains a few unexpected candidates — one of them may even be the very company that charges you for that bundle.

Pay TV providers have long complained that TV networks force them to carry channels they don’t want. But in recent weeks, those complaints have turned into action, with Cablevision suing Viacom to break up the network’s bundle, and Verizon starting to talk about paying programmers based on their performance, as opposed to a flat fee for a bundle of channels.

So who is trying to break up the bundle, and how? Check out our list:

Verizon: Putting its money where your eyes are

Verizon execs have been talking for some time about changing things up, to the point where director of consumer video services Maitreyi Krishnaswamy, who is responsible for the company’s FIOS TV service, said last year that cord cutting wasn’t growing fast enough for the company. The logic behind those remarks? If consumers cut the cord, then programmers are going to be more willing to rethink the deals they’re having with Verizon.

Verizon sells bundles – but it would like to change them.

Looks like this is now beginning to happen, at least on a smaller scale. The Wall Street Journal reported this weekend that Verizon is pressing smaller channels to pay them based on their actual performance, as opposed to a flat fee per subscriber. The result wouldn’t actually be a pick-and-choose TV lineup. Instead, Verizon would potentially distribute even more channels — but only pay the ones that are actually attracting eyeballs.

Making this model work won’t be easy for Verizon, especially when it comes to the biggest cost drivers, which are sports channels like ESPN. But some smaller channels might be eager to sign on. This could potentially lead to some cheaper bundles that offer actually more content, save for some of the most expensive fare.

Cablevision: Suing to get rid of the duds

Cablevision has chosen to take its attack on the big bundles to the courts: The company sued Viacom last month to get out of a contract it struck just two months earlier, arguing that Viacom is forcing the company to carry a number of channels its customers don’t want. The lawsuit is about a total of 12 channels like MTV Hits and VH1 Classic, but it could ultimately threaten the whole concept of a bundle — which is why it will likely get settled out of court.

Aereo: A new kind of bundle

Aereo is circumventing the cable bundle altogether with an offer that’s squarely aimed at cord cutters: The company offers streaming of broadcast networks like ABC, CBS and NBC for as little as $8 a month.

Aereo’s tiny antennas could have a big impact on bundles.

It’s undercutting the cable companies through the use of a legal loophole, which involves an elaborate setup of miniature antenna farms, and resulted in a lawsuit brought against the company by those very broadcasters. However, the company won a first round last year, and is now looking to expand to close to two dozen cities this spring.

To learn more about Aereo and the company’s take on the future of television, check out our upcoming paidContent Live conference, where I’m going to chat with the company’s CEO Chet Kanojia about these very issues.

Boxee: Unbundling the DVR

Boxee’s new Boxee TV device comes with a promising proposition: The device won’t just let you watch major broadcast networks without paying for cable, it will also upload any show airing on those networks to a cloud DVR with unlimited storage and streams them not only to your TV, but also to your iPad or computer. Boxee’s cloud DVR is currently only available in limited markets, and the device itself has been met with mixed reviews – but the idea behind it is definitely disruptive, because it’s essentially TV Everywhere without the expensive cable price tag.

Netflix: Showing that you can succeed without a bundle

Netflix has long shied away from discussions around cord cutting and cable bundles, with execs insisting that that wants to be complementary to cable, and that it will eventually just be another channel that consumers subscribe to, just like HBO.

Netflix’s House of Cards is like a cable show, but without a cable bundle.

However, the big difference is that you can only get HBO as part of a premium cable bundle. Netflix, on the other hand, is available to anyone, no matter whether they pay $50, $120 or nothing at all for cable.

That strategy has been working well for the company: Not only does Netflix now have 33 million subscribers, investors have also given the company a thumbs-up on its original content strategy, with stock roughly doubling since the beginning of the year. And with new, original shows about to debut on Netflix every month this spring, the company seems to demonstrate HBO that you can, in fact, succeed without being part of a bundle.

Image courtesy of Flickr user HarshPatel;Photographer.

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Connected consumer fourth-quarter 2012 analysis

Wed, 16 Jan 2013 22:25:02 +0000

The fourth quarter saw new fissures emerge in some corners of the digital media business, while some old fissures reemerged in others. Having held off the immediate challenge of over-the-top video, the traditional pay-TV industry began to show signs of severe internal stresses, while the music industry fell into a new, internal battle over performance royalties. Also, the Justice Department’s lawsuit against Apple and five major publishers over ebook price fixing put an end to agency pricing of ebooks and opened the door to innovation in publishing and bookselling.

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Connected consumer third-quarter 2012

Thu, 18 Oct 2012 06:55:33 +0000

The third quarter saw many parts of the traditional media business in flux. New digital platforms that once had confined themselves to user-generated content began to invest in creating professional-quality content. At the same time, TV programmers began to wrestle with both the threat and the opportunity presented by second-screen and social-TV platforms. The period also saw the rollout of new device-based content ecosystems, red flags and red ink for traditional consumer electronics makers, and a resurgence of consumer purchases of movies. This quarterly wrap-up discusses these developments as well as offers trends and topics to watch for the remainder of 2012 and beyond.

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Takeaways from connected consumer’s second quarter

Thu, 19 Jul 2012 06:55:44 +0000

Tablets featured prominently in the connected consumer space during the second quarter of 2012, both as a product category in their own right and as a component of broader platform strategies by the major OS providers. Meanwhile Apple added AirPlay streaming to Mac OS, and Microsoft made an aggressive bid to dominate the second screen by introducing SmartGlass apps. The period also saw important moves by Facebook to broaden its monetization strategy and an investigation by federal antitrust authorities into pay-TV licensing practices and their impact on the emerging online-video business. This quarterly wrap-up discusses these developments as well as offers trends and topics to watch in the second half of 2012 and beyond.

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Patching the cord

Paul Sweeting — Fri, 16 Mar 2012 13:00:20 +0000

In just the past few weeks, Barry Diller-backed Aereo launched a subscriptions streaming service in New York City, Cisco bought NDS for $5 billion, word leaked of Intel’s plans to create a nationwide virtual cable TV service and Netflix began chatting up cable operators about addings its channel to their old-fashion, through-the-cord TV subscription services. While varied in their particulars, what all those moves represent is a big-money bets on the future of bundled TV subscriptions, and at least a tacit acknowledgment of the limits of a la carte distribution.

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Apple looks to the small screen

Paul Sweeting — Fri, 09 Mar 2012 14:00:06 +0000

This week’s announcement from Apple indicates more clearly than ever that the company’s path to disrupting the pay-TV ecosystem runs not through the living room but through mobile devices and the cloud.

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Digital won’t “evaporate” ad dollars

David Card — Mon, 27 Feb 2012 14:00:37 +0000

A new survey has revived the fear that digital ad spending will shrink the overall pie. While newspapers have it tough, other big ad markets are still pretty healthy, and technologies like targeting and social media advertising could still increase the value of — and thus spending on — both digital and traditional media.

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Will Aereo be the next Slingbox?

Paul Sweeting — Fri, 17 Feb 2012 22:00:11 +0000

Now that streaming broadcast startup Aereo is formally launching in New York, the litigation watch is on. From an operational perspective, the closest analogy to what Aereo is doing may be Slingbox’s model. And despite occasional threats, no broadcaster or content owner has ever sued Sling Media (now owned by EchoStar), a failure that ultimately could weaken any case brought against Aereo.

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What are Boxee’s upcoming mystery products?

Janko Roettgers — Thu, 09 Feb 2012 19:17:44 +0000

Boxee’s spat with cable companies over their desire to encrypt basic cable programming got a lot of press this week, but one interesting detail hasn’t been reported yet: A publicly available copy of Boxee’s most recent filing with the FCC (PDF) contains large sections of blacked-out content. An accompanying letter (PDF) describes that this measure was necessary to conceal “confidential commercial information regarding Boxee’s business plan, technology and product pipeline.” The folks at the FCC obviously got the unredacted filing, but the rest of us are left wondering, What exactly is Boxee working on?

“We’re not ready to discuss our future product roadmap . . . but it was a useful tool to demonstrate to the FCC where innovation is headed in the TV space for both over the top and over the air/QAM,” we were told by Boxee VP of Marketing Andrew Kippen. The filing itself also states that “both the Boxee Box with Live TV and the products under development provide consumers with competitive alternatives to traditional pay cable delivered via rented set top boxes.” Of course, one could argue that any over-the-top offering with access to online sources like Netflix can be an alternative to your cable box — but that is already true for the existing Boxee Box. The need to black out two entire paragraphs in the filing leads me to believe that Boxee is instead working on additional ways to access and consume over-the-air broadcast and cable TV.

So what does it have in store for us? Here are some possibilities:

DVR functionality. This has been the most-requested feature ever since the Boxee Live TV tuner came out earlier this year. The tuner currently only displays what’s airing at any given time, but a software update and an attached hard disc could turn the combination of Boxee Box and Live TV tuner into a full-fledged DVR.
A Boxee TV. Viewsonic was supposed to release a TV set powered by Boxee last year, but it scrapped its plan when consumer demand for smart TVs didn’t materialize. Of course, that doesn’t mean that another TV manufacturer couldn’t fill the gap. A TV with a built-in tuner would obviously also have access to Boxee Live TV and as such be impacted by any attempt to encrypt basic cable.
A revamped Boxee Box with internal storage. This would go well with any DVR offering, in part because not every consumer wants to have an external hard drive and a USB dongle dangling from their Boxee Box. Of course, it would also be possible to directly add the TV tuner to the Box. But this could bring costs up even further, so I would expect this to be sold separately for the foreseeable future. Iomega is already selling a Boxee device with a hard drive in Europe, but the company told us it doesn’t have any plans to bring the device to the U.S.
A cable set-top box. Yes, you read that correctly. Boxee has been big on cord cutting rhetoric lately, but the company is reportedly also talking to smaller cable operators about using Boxee’s platform as an alternative to the traditional cable box. This could be done with the existing Boxee Box and a Live TV tuner, but one could also imagine slightly revamped hardware that could offer subscribers online video, basic cable channels and a DVR for a small monthly fee, much like Sezmi used to offer. But instead of selling it directly to consumers, Boxee would offer the device through a regional cable company.

We will likely have to wait a while until we know what the company has up its sleeve. However, the success of the Live TV tuner — the device is currently sold out and on back order — shows that the company is clearly on to something here. And while the list of possible products above is admittedly pure speculation, it goes to show that there is a lot of potential for Boxee to innovate in this space.

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Boxee clashes with cable companies over encryption

Janko Roettgers — Wed, 08 Feb 2012 14:00:53 +0000

Boxee’s live TV dongle has only been available for a few weeks, but the company is already embroiled in a fight with cable giants like Comcast and Time Warner Cable over it, and it is now getting support from groups like Public Knowledge and the Consumer Electronics Association.

At the core of the issue is whether cable companies should be allowed to encrypt their basic cable programming, something that existing regulation doesn’t allow. Unencrypted signals can be used by tuners built into most modern TV sets as well as equipment like Boxee’s live TV tuner to access these basic cable channels straight from the coax cable that comes out of your wall, without the need for any set-top box.

Cable companies have asked the FCC for waivers to these restrictions, arguing that encrypted channels would reduce piracy and that encrypted cable connections can be remotely serviced, eliminating the need for many service visits. The FCC is currently hearing all sides of the issue as it contemplates whether to do away with the restrictions and allow all cable companies to encrypt basic cable. Boxee has filed multiple letters with the commission and met with its staff last week.

On Wednesday, the startup wrote on its blog:

“[The cable companies’] real motivation is to prevent you from being able to connect the cable from the wall directly to your TV or Boxee Box. You will need to rent a set-top box from your cable provider, pay an extra $5–$15 per month and it will no longer work with your Boxee Box or similar devices. The cable companies are losing subscribers every quarter. If they want to reverse that trend they should look into building better products, reducing prices and improving customer service, not going to the government asking for rule changes to force consumers into spending more money and blocking start-ups from competing.”

Boxee’s position has been shared by Public Knowledge as well as the Consumer Electronics Association and consumer electronics manufacturers like Hauppauge, which makes the Boxee dongle. The cable companies, on the other hand, have been getting support from the Motion Picture Association of America (MPAA) as well as some municipalities, including Miami.

Altogether, more than 80 documents have been filed with the FCC on the issue. Many of these filings from both sides make it clear that this is about not only what is going to happen to those basic cable channels but also the role that consumer electronics manufacturers, cable companies and startups like Boxee will play in the future of pay TV.

Consumer electronics makers have long favored a new standard called AllVid that would provide a new interface among traditional pay-TV services, online competition and connected devices. Cable companies opposed the standard; Boxee, on the other hand, came out in favor of AllVid in the presentation to the FCC last week, stating on one of its slides that “AllVid holds exciting potential for development of new consumer devices delivering integrated entertainment experiences.”

Check out our video review below to see how Boxee’s live TV tuner works:

Watch this video for free on GigaOM

Image courtesy of Flickr user familymwr

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