Cable vs. the Internet is Slightly More Complicated
I have a confession to make—despite being both a fan and advocate of quality television, I cancelled my cable subscription in June 2009. While part of my reason was obviously financial, given the rising costs for the service, it also centered on the growing ease and convenience of being able to pick and choose the shows that I enjoy via the Internet. In regards to the many series that I have a strong commitment, I was more than willing to pay iTunes for the right to download them directly onto my computer and thus watch them in both a time and place of my choosing. Others I simply watch on the corresponding network’s website or Hulu. Even with the cost of Internet service (which I would need anyway) and what I pay iTunes, it is still a lot cheaper than cable. And as for the convenience, that was priceless.
Apparently I am not alone in my switch from my flat screen TV, which I now use exclusively for DVDs, to the World Wide Web. The Hollywood Reporter, for instance, ran an article on August 24, 2010, detailing data released by SNL Kagan that revealed the largest cable subscriber decline since the information and research firm began tracking the industry in the 1980s. Apparently 711,000 people dropped their cable provider during the first quarter of 2010; combine satellite and telecom into the mix and that number is reduced to 216,100 who shed their television service but it still pales when compared to the 378,000 increase in subscribers during the same time period in 2009.
While The Hollywood Reporter had numerous experts and analysts predict that it was a one time loss due to unemployment, a weak housing market and cancellations following the expiration of one-year discounts given before the digital conversion of 2009, MG Siegler has a slightly different opinion. In an op-ed piece published on TechCrunch entitled, “The Full-On Assault on Cable Is Underway,” the author predicts that a war between cable and the Internet is about to erupt. Citing that Google, Apple, Microsoft, Netflix and Amazon are all in the planning stages of challenging cable’s supremacy in terms of television distribution, as well as the billions of dollars at their disposal, Siegler argues that it’s no longer a matter of “if” but when Americans make the shift to an Internet-based service for their television needs.
While the bulk of Siegler’s assertion stems from the large fees that cable charges subscribers, coupled with notoriously bad customer service and inferior equipment, he also points to changes within both the music and publishing industries due to rapidly evolving technology as additional justification for his thesis. “People probably never thought the Kindle and other similar devices would lead to a changing of the book industry as quickly as it has,” he writes. “But it’s happening, just ask the Borders down the street from me which is going out of businesses.”
Although MG Siegler’s article is an intriguing read, it does leave out one or two key components to the changes he both foresees and advocates—the television industry itself as well as the creators of its content. Television is a business, after all, and an expensive one at that. Network television, for instance, relies almost exclusively on advertising revenue to fill its coffers. Cable channels, on the other hand—which have seen an increase in original programming in recent years, including such acclaimed series as AMC’s Mad Men and FX’s It’s Always Sunny in Philadelphia—rely on a combination of ad revenue and cable carrier fees. If viewers such as myself keep shifting away from the traditional broadcast model, how will both the networks and cable channels survive, let only those shows that I enjoy? Yes, I am willing to spend a buck ninety-nine per episode on iTunes, but I’m pretty sure that pales to what the likes of Coca Cola is willing to pay for a thirty second commercial. And let’s be honest—up until now no one has found a way to make any significant amount of money from online video distribution, especially the kind needed to produce a quality television series.
One person concerned about the trend of watching television shows over the Internet, as well as being directly effected by it, is the creator of the 2010 Emmy Award-winning Modern Family. Steve Levitan made headlines throughout the month of August when he protested the availability of his series on both the official ABC website as well as Hulu. “I understand why big media backed Hulu,” Levitan told The Hollywood Reporter. “To stave off piracy and to gain some control in the online space, but I don’t believe Hulu’s upside outweighs the potentially disastrous long-term effects. Network TV has some distinct advantages over the music and newspaper industries. Sharing a few songs from an album requires very little bandwidth. News is available from a wide variety of sources. But at the risk of sounding like a pompous ass, nobody but a show’s creator and producers is capable of delivering that particular show.”
Steve Levitan then argues that the current business model of television production and distribution works, and that changes could seriously diminish the amount of quality series that make their way onto the schedule. “If a disproportionate number of any show’s viewers watch in alternative ways, then, under the current system, that show may not appear to be as strong as it actually is,” he explains. “If a show brings someone to a screen, any screen, then shouldn’t they get credit for that? If not, then some really interesting new shows with a disproportionate number of young online viewers will get canceled because their audience isn’t being counted.”
Levitan goes on to add that, “The iPhone and iPad are very successful, but, with all due respect to the prophetic Steve Jobs, I don’t see Apple giving them away. It’s very simple. Shows like 30 Rock and Lost and The Office are expensive to produce. Plus these ‘hits’ cover the costs of all the misses. If viewers want to continue to see quality content like that, then we have to find a way to keep it profitable. Otherwise, we’ll all be watching clips of a sneezing panda—which, by the way, were adorable.”
Reading Steve Levitan’s comments, it’s hard not to find a level of legitimate concern in his words. But MG Siegler is also correct in his assertion that with so much money at stake and so many high profile players involved, changes in regards to how we watch and enjoy television is no doubt inevitable. As he wrote on TechCrunch, the likes of Google, Microsoft and Apple are all “currently sitting in the same boat about to storm the beaches.” How can there not be some sort of seismic shift with that kind of fire power?
The coming war and its multitude of potential battles will be for naught, however, if talents like Steve Levitan are not able to create quality programs like Modern Family. While the traditional means of distribution may indeed evolve at some point in the not so distant future, the financial models of the television industry needs to evolve as well—along with the definition of what makes a successful television series. It means nothing, after all, to pay less for the convenience of watching TV on the Internet if there is nothing there that’s worth watching.
Anthony Letizia (September 3, 2010)
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