The battle between IPTV and cable providers is about to begin as this Wired article intones. —

The stage is set for a showdown between television networks and cable/satellite TV services, thanks to the internet. It won’t happen overnight, but your monthly cable or satellite bill could eventually be replaced by a monthly bill from Hulu, an online service that streams TV shows on demand.

For $10 a month, viewers will reportedly have access to a wider selection of shows than the free, ad-supported version Hulu currently offers. The service would work on PCs and specialized devices such as the iPad, videogame consoles and set-top boxes. The company plans to test a version of this “Hulu Plus” subscription, an expected development, with select users as early as this month to find out whether they’ll will bite, according to sources cited by the Wall Street Journal and All Things Digital.

In order for consumers to pay for a video service like that, it will need to be reasonably comprehensive. So it’s no accident that the same week Hulu’s subscription plans came to light, a Bloomberg report surfaced that the company is talking with CBS, Viacom and Time Warner’s television studio divisions to add their shows. That would be on top of a line-up that already includes “Fox, NBC Universal, ABC, ABC Family, Biography, Lionsgate, Endemol, MGM, MTV Networks, National Geographic, Digital Rights Group, Paramount, PBS, Sony Pictures Television, Warner Bros. and more,” including Wired.com.

Source

There is one piece that I believe will not bode well —

Cable and satellite are classic middlemen. When the internet meets the middleman, the middleman tends to disappear — or at least be replaced by a thinner middleman. We’ve seen it with record stores, classified ad-dependent newspapers, video-rental stores, bookstores and any other business that delivers something that the internet can deliver more efficiently.

If you look at the Supply Chain Collapse that have gone before, in industries like retail, trucking, warehousing, etc, there is no such thing as a thinner middleman. There were only dead middlemen. There is a twist to this scenario however. For IPTV to work one has to have a fat pipe. That means Cable, FIOS, or WISP as a provider. So the carriers may not be dead but they certainly will be wounded. So how does this all play out –

• Hulu launches the premium service. Expect the cost to rise to $15-20 end game. More providers will want to get in on the act which will raise the cost.
• Expect cable costs to collapse. That $40/mo you have been charged will wilt under the shift that is about to occur.
• But that cost savings will not go without a price. Expect the Comcasts of the world to respond to this by cutting services. All those cut portals that require maintenance by high priced talent will be shelved. YOYO will be the name of the game.
• We will finally see a shot at ala-carte services. It would be a no brainer for Hulu to provide ‘The Indie Channel’ at a $1 a month. They give you a key on subscribing that is entered into your HTPC. Hulu keeps the key current as long as you are subscribed. When you drop it they cease the update and the channel stops working. That capability is the real nail in the coffin of cable tv.
• Expect in some corners to see a large shift away from network produced product to lower priced indie production. Able to tap into Hulu, these indie producers could create short run series. The model is already there with shows like Burn Notice and Royal Pains.

The content choices are going to explode here very quickly. The beauty is you may only pay for what you want. Out of a million choices you may only subscribe to 40 channels for $15-30/mo or less. I can’t wait.

It also makes Verizon’s choice to go with a Cable-like pricing model the wrong move. They should have derived the FIOS pricing on the cost to deliver the pipe as a data only service. Just like they have done for the last 150 years. Like the knight in ‘Indiana Jones’ related — “He chose poorly.” Indeed they did.

A most unusual source, Linux Journal, has a scathing but humorous observation about television offerings and the Suits that provide them. –

For the purpose of discussion, let’s suppose that you are a *huge* fan of NBC’s 30 ROCK. I’m not, even though I think Tina Fey is really, really hot, but let’s just pretend for a moment. Further, let’s suppose that you missed last week’s episode, so now you are pointing your Linux-powered Firefox browser at www.nbc.com to catch it. After a quick search and a couple of video advertisements you find the link to last week’s episode.

You click it.

You get a pretty Flash animation of the NBC peacock, and a pop up window containing the following message:

Sorry but we do not support that browser, please use one of these
= = = = = = = = = = = = = = = = = = = =
Windows
Internet Explorer 7
Internet Explorer 6
Firefox 3
Firefox 2
Chrome

Mac
Firefox 3
Firefox 2
Safari
Chrome
Camino

See what I’m getting at? What a stupid message! What a stupid policy to block Linux users! And how rude to not even tell us up front that we are being blocked! There are xx million Linux users in the United States. Nobody knows what xx is, but we’re pretty sure that the number of Linux users in the US is in the tens of millions. …”

Yes. NBC opts to pass over Linux viewership thinking of little consequence. The sad thing is it will only get worse for them as embedded linux browsers are appearing in internet ready TV’s, set top boxes, etc. So to watch that 30Rock episode one will have to go over to Hulu as described in the article.

We have never said that the Suits were smart, they are only well heeled.

Read the whole piece at the link.

Linky.

There’s a mind set in the cable side of the broadband duopoly that refuses to sell us what we want and demands the we buy what they are selling. It’s the conventional wisdom among the management in the world of coax as demonstrated by Comcast COO Steve Burke:

Speaking at the CTAM cable marketing convention in Denver, Colorado on October 25, Burke described his fears if the industry does not move ahead to form new business models. The industry-wide TV Everywhere authentication project is a way to try to “take the cable industry and put it ahead of the internet and try to not let it roll ahead of our industry,” he said.  Burke also illustrated some frustration with those in the business who were not lending a hand.

“Some people’s business models are going in the wrong direction,” he said, a likely reference to News Corp, Disney and NBC Universal who are partners in free online video site, Hulu that is considering putting some content behind a pay-wall.  “I’ve yet to meet a content provider who doesn’t worry about cord cutting and doesn’t see the wisdom of trying to get ahead of that. Stop talking about how hard it is and start figuring it out,” he said. (Broadcast and Cable)

Let’s see, cable needs to get ahead of the internet with a more limited, restrictive, and expensive product? It’s amazing Comcast’s shareholders tolerate this kind of leadership. Video on demand has become as common as email on the internet. Both free and paid models are succeeding growing and delivering profits. Instead of burning a pile of money building a whole new technology like TV Everywhere that consumers don’t want, why not offer more of what they are actually buying. Netflix, Amazon and iTunes are having no problem finding people who are willing to pay for content. If Comcast would simply discover the big dumb pipe, and deliver content via the internet to anyone with a broadband connection, it really would be ahead of the trend. But that would require some profoundly arrogant folks like the cable industry  to start their customers what they really want. Cable isn’t accustomed to doing that.

Youtube continues to spend a  fortune while its much anticipated ad revenue remains elusive. Any sensible person could have told Google that pitching ads that would share space with low quality vid capped clips from TV shows intermixed with  stupid human tricks and  Jackass wannabees is going to be a very tough sell.

This week the tech blogosphere has been abuzz with a new tab on Youtube that offers full length programs including newly added Sony content. In my cursory run through the shows I found a sparse offering and that video quality not quite up to the standards of Hulu or the network sites. Google seems to have learned selling ads is much simpler of this kind of content.

Will Youtube ever gain dominance in the full length format?  With the nearly unlimited resources of Google backing it, there’s a chance. One thing is certain. Hulu and even Joost have a heck of a head start. It’s going to be very expensive to catch them if it’s even possible.

Why would Netflix as if subscribers would pay an additional $10/month for streaming HBO content? Probably because that’s what it will cost to add these programs to the streaming library. Funny thing though, most of the content listed that would be available is already available at no extra charge to Netflix subscribers on DVD by mail.

Netflix sent out a survey to customers asking if they would be willing to pay an additional $9.99 per month for HBO shows. Netflix already has more than 700,000 customers paying an extra $1 per month for Blu-ray titles, so they’re already setup to collect the fee. (Hacking Netflix)

If you are a one trick pony type device then what you do you have to do well. Not just better than the competition, but laps ahead of the competition. Roku, the TVoIP streaming box is in that genre of devices. And it does it with aplomb –

One of the best examples I’ve come across in the last year is the Netflix player from Roku. It’s a tiny little box that streams anything from Netflix’s on-demand library straight into your television, and that’s all it does.

It’s a wonderfully elegant little device. The user interface is clean, and the menus are super easy to navigate. It has outputs that range from RCA to composite video and HDMI, as well as digital audio. The remote has nine buttons on it - that’s fewer than I have on my cell phone - and they mimic the controls we’re all used to on a DVR or DVD player. It’s so small and simple to set up, my wife and I frequently move it between the two TVs we have in our house, and I’ve tossed it into my backpack and taken it with me to friends’ houses for movie nights.

Set up was incredibly simple, and it took less than ten minutes from the time I opened it until I was watching my first movie. Speaking as a life-long technology geek, the highest praise I can give it is this: I still haven’t opened the manual, and don’t think I’ll ever need to.

So I love it, but is it worth $99 to you? It depends on your movie-watching habits and your network speed. If your ISP throttles your bandwidth, or your download speed is slower than 3Mbps, you won’t get the best quality picture. I didn’t realize how much that really mattered to me, until I was forced to watch a bunch of movies that looked like they were VHS quality on my HDTV. I upgraded my service to a faster bitrate so I could get maximum resolution, though, and the next movie my son and I watched, Vanishing Point, was indistinguishable from DVD.

The Roku is one of those class of devices that ‘Just Works’. It lets the experience stand for itself. And no worries about the time showing ‘12:00′ all the time. There is no clock!

Linky

We noted previously that folks are abandoning the package deals of the cable cos for TVoIP fare as part of household budget cutting. Well now it appears that it is happening to Dish as well –

“I just couldn’t justify watching only 10 percent of the channels I was paying for,” she said. “I would have felt a lot better about keeping the satellite service if I could have thrown out the extra channels and only paid for the channels we watched. It’s just like buying a whole loaf of bread and only eating two slices–such a waste.”

This idea of a la carte pricing for TV channels or allowing people to pick and choose which channels they want to get has had strong support for several years from Federal Communications Commission Chairman Kevin Martin, as well as from many parent and consumer advocacy groups. But the cable TV industry has long argued that pricing individual channels would result in higher prices and fewer choices for all consumers.

After a few Google searches, James said she found a wealth of legitimate sources for TV programming online. Sites such as Hulu, Fancast, Joost, YouTube, and most major TV networks’ Web sites offer TV shows and other video content for free. Using an existing rooftop antenna, James plugged her TV into the hook-up to get more than 50 high-definition TV channels over-the-air. The cost for these HD channels: zero.

And instead of spending an extra $20 a month for HBO or any other premium movie channels, James subscribed to a $17-a-month Netflix service, which allows her to rent three movies at a time and download some movies right to her computer.

Its no revelation that Dish too would be affected by a down economy. But it does show the breath to which this is happening. It also means a couple of other things –

• TVoIP is here to stay. When people get use to the idea of using media computers to view content, the rationale for going back to the original provider is pretty much gone.
• TVoIP is here to stay II. When advertisers can see that they can deliver ads cheaply then money will pour into this venue with a vengeance. They will like it even more when they can narrowcast demo data into an even smaller audience than before with traditional TV.
• The consumer wins. The fact that this couple is now only paying for what they use is a boon to them and the millions of others who will adopt this medium. It will probably usher in ala-carte cable casting as a response to the TVoIP threat to the cable cos.
• I would not be surprised to see a flurry of content houses spring up. Not having to have a 8 share 15 view to even get on national networks means that profitable franchises can be built with very small audiences. A olympic skating channel. A sailing channel. This could all be possible under TVoIP.

We Americans aren’t dumb. Just we sometimes need a swift kick in the rump to make a change. That’s good, for all of us. The Suits in the ivory towers in Hollyweird and the Big Apple will have to do the same very soon.

Linky.

We have counted how in tight times people were going to go to a data only subscription and get what little entertainment they desired off Hulu-like services. Well here is an economist making that same microeconomic choice for quite a different reason –

Does anyone else out there remember when cable TV was the wave of the future? Most cities had three broadcast channels, and that was it. The first cable services would usually bring in an independent channel station or two from larger cities, TBS, CNN, and MTV. If you were lucky you got ten extra channels coming through the wire, which seemed to be pretty amazing at the time.

The world turns, though. Now I am dissatisfied with close to 100 channels, all because they don’t provide the content I want when I want to watch. Instead of cable, I now look to free video-on-demand to entertain me for the four hours or so a week where I actually want to watch television.

Seems to be a step in the right direction.

Specifically read the comments. Note that people are well aware of their TVoIP choice in this arena.

The carriers better get wise soon.

HT: Instapundit
Linky.

[PS:] Looking back on things the HDTV and DTV efforts have been a real waste. How much further along would we have been if we had allocated those $$ to a broadband expansion so that at least 80% of the country had a 10mb connection to every household? Spilt milk I know, but it does make one wonder.

The Euros are not standing on their haunches in regards to TVoIP. There have been several offers over the past year. Well here is a new one. Zattoo. It is definately a Eurocentric offering. The play list is Germany, UK, Spain, Italy in origin. But the depth of offers is impressive. Well over 150 in all. –

I believe Zattoo Player is available through the Add/Remove software option in Ubuntu but, as I don’t currently have a naked Ubuntu system running, I cannot verify this for you. If it’s true, it’s certainly preferable to install it this way.

Because my CrunchBang system uses the Openbox window manager, and the Openbox menu doesn’t auto-update, I hand-edited it to add Zattoo Player (the execute command is zattoo_player BTW), then ran the program.

After a brief licence agreement I was faced with the player window and a separate channel list which contained all the TV channels I would expect to get via Freeview here in the UK, plus some ‘foreign’ channels such as Al Jazeera, Russia Today and a couple of French and Italian channels (there’s a full channel list here).

A review of the Zattoo service is here. From what I can see of the web site they have their act together.

Zattoo.

Yes I mean that in the truest sense of the word. No snark or back handed complement. With the technology at the hands of people today exactly where is an advertiser to place their advertisement dollars? –

Or, in my case, not want to watch it at all.

But they’re on the right track. Aside from football games and breaking news, I watch nothing “live” anymore. Indeed, I’m only vaguely aware of what networks air the shows I watch, much less the time slot in which they’re broadcast. Everything is either on my DVR or otherwise downloaded to watch at my convenience.

Increasingly, my wife and I don’t even bother watching new shows when they debut, preferring instead to catch them a season or two later on Netflix. It’s actually quite annoying, especially for serial dramas, to be at the mercy of the network’s scheduling vagaries. It’s much more enjoyable to watch the episodes back-to-back in a relative short period.

That’s the rub isn’t it?

In the good ole days (1950-1990) the marketing department had it pretty well nailed. Whose your demo for the product? Gotcha. We’ll slot 9-10, kiddies are in bed by then. Budget? Little low, but maybe we can get you on for 2 slots on Knighthawk. They are #8 in the time period.

Nice an tidy. The marketers knew the demo, shows that appealed to that demo, time slots for those shows and the appropriate seasonal variations. The only thing left to chance was the haggle over price and placement with the program staff at the major networks.

But now!? Whoa! Time slotting is out. With the arrival of the Tivo and its ilk that died. Fact there are now indications that shows that were canceled in prime first run TV are having higher ratings as NetFlix season series. Producers love that one! A marketing manager might know the right demo to sell to but how? Mass media is dead. Placement now depends almost entirely on the demo-show axis. That sounds simple till you understand that easily a third of new shows are on cable, hundreds of them, not the networks. The level of micromanagement increases.

The ironic part? With the demo-show axis being the only reliable link anymore we will see the return of the ‘placement in view’ on programs. In the late 40’s when TV first started out the entertainment included the sponsor right in the program. Only later did the networks figure it was easier to mix and match program to sponsor and be able to jigger their program schedules. That is already happening in the major films. (Watch GoldenEye, you’ll see what I mean.)

The other will be sponsors themselves may return to doing so on a exclusive basis for given entertainment venues. When it was extremely expensive to put on a network program it was necessary to arrange 15-20 sponsors per program to keep the advert view costs in line. Well now not only are production costs way down thanks to technology but so are the distribution costs. It would not be too far fetched to see a short run series distributed via TVoIP to be wholly funded by a single advertiser. Or maybe 2. The producer then aligning one or two other sponsors for the next short run if the show was a success. (Keep in mind that today success can mean a million downloads rather than 10m Arbitron in the 1980’s.)

Then there is of course the NetFlix longtail to consider. For the advertiser they have continuing exposure so long as there is an audience for the program in DVD/BlueRay/Instantview. Something that is not the case for TV syndication as we have traditionally known it.

Yep. The marketing types’ job today is fraught with peril. There are no convenient formulas right now. You have to know your user base well enough to know exactly what is their current interest. That’s a tough act.

Linky.