When the levee breaks on this golden age of TV, what does that look like?

Yeah, i was going to mention that, Tyrion. We have a number of issues that are coming to the fore.

  1. There’s waaaaay too much quality TV. It sounds like a weird problem, but it is for the aforementioned reasons. It’s sort of like being an app in the App Store. Good lucking being noticed. We’re past the point that even TV critics, whose job it is to watch television, can’t keep up, even if they forgo sleeping, eating, and having a life. Meanwhile, ratings keep getting splintered.

  2. It takes a lot of money to make all this content (salaries, production costs, CG costs, location costs, sets, etc), but it’s even harder to make a return on that investment. Between cord cutting and a la carte options, it’s pretty terrifying to be a cable network, particularly a basic cable network. If they try and charge higher carrier fees to the cable companies, the cable companies feel pressure to pass the costs to the consumer in the form of rate hikes, which just furthers the cord cutting by consumers who have been watching their cable bills climb.

ESPN is the perfect example of this. The Worldwide Leader spent $15 billion to get the Monday Night Football contract for 8 years, $7.3 billion just for the college football playoff games for 12 years, $2.25 billion for SEC football games for 15 years, teamed up with Fox to give the Pac-12 $3 billion for rights to their games for 12 years, then there’s the Big 10, ACC, etc, etc And that’s just for football! That’s not counting the other major sports contracts they need to pay, such as NBA and MLB.

There’s tremendous pressure on the networks for ratings in the age of the DVR and timeshifting and streaming. Sports is one of the very few forms of televised entertainment that is almost impossible to timeshift. So they’ve become especially valuable for advertisers. But, still, ESPN has to jack up their carrier fees to the cable companies, which is directly passed on the consumers. But then blue-haired grandmas who don’t watch sports complain to their congressmen about sky high cable bills and ask why they have to pay essentially an ESPN tax for stuff they don’t watch. There is pressure building for this. Richard Blumenthal joined with John McCain to offer a bill that would force a la carte pricing. The bill sorta died, but you know there is pressure building when a guy like Blumenthal, whose state is home to ESPN, could get behind something like that.

Even without a la carte pricing, people are cord cutting, and there’s tremendous pushback from the cable companies to the networks against any hikes in carrier fees because the cable companies aren’t stupid; they see that rate hikes leads to more cord cutting. Meanwhile, ESPN is desperately trying to cut costs, but they’re in a difficult position because their biggest expenses are these long-term contracts that cannot be reduced. What It’s going to have to create its own streaming service. But if they do that, then that might actually accelerate the cord cutting, since sports is one of those few things that people still stick to their cable service (you can’t watch the BCS playoffs on Netflix). But if lots of people suddenly cut cable and sign up for ESPN streaming, it’s going to devastate cable television as we know it.

Meanwhile, I imagine that ESPN fans will be surprised by the real cost of their entertainemnt. Because all of those blue-haired grandmas and everyone else who has a cable subscription but doesn’t watch sports are today subsidizing ESPN’s costs for everyone who does watch sports. But once the cable subscriptions collapse, there will be less subsidizing by non-sports viewers and ESPN viewers will have to shoulder more and more of the costs. Which totally sounds fair, but I expect a total shock from people when they’re hit with the bill.

I would be one of these individuals. I can’t wait for sports to disappear from any cable package I purchase. The only one I ever really cared about were the Olympics and NBC went out of their way to make that difficult to watch for cord-cutters so I stepped away from that too. The thing is, the people who love sports, they’ll be wiling to pay for those channels, or the app, or the football package… many of them pay more now for all that stuff. The revenue model will change. Some of it will become more expensive. Some of it will seem reasonable and for others they’ll just exit the market. I know a few people who don’t even own TVs. They don’t want them.

The doom and gloom predictions happens every time there is a shift in the market, and each time it happens the industry, or people familiar with the industry, proclaim they’re something so special they can never be compared to anything that happened before. It’s a natural response. I don’t blame them for it at all. I think the days of 200 dollars a month for more channels than anyone could possibly watch are numbered. And maybe it might seem like we’ll get less for a time but even if 80 dollars equates to paying more for the channels we want… it’s still less than 200.

I guess fundamentally I don’t see a problem because the two things that I think are pretty much guaranteed - a decrease in the amount of quality television produced and a rise of streaming prices - are the two things that are not going to be a dramatic issue for me or, I think, most consumers. There’s way more TV than I could possibly keep up with even if that were my primary form of entertainment, which it is not, and to be able to subscribe to 90% of it (plus a ton of movies) by paying $8/mo for Netflix is clearly not sustainable as streaming becomes a primary vector of consumption. But you up that by two or three times and it’s still cheap (much cheaper than cable) and if it keeps even 50% of its current content spectrum it’d still be a good deal, I expect.

But if we do see a great deal of balkanization and price gouging, then my response won’t be going back to traditional broadcast/cable TV, because I never, ever had any interest in paying for cable for a tiny handful of channels spread across several bundles and who each have perhaps a couple of hours of TV I would want to watch per week, and with the advent of DVD was perfectly happy to wait a year or two to watch even broadcast things on my schedule and without obnoxious interruptions. I am currently watching more TV than I ever have precisely because of how easily available it is and how cheaply. If I have to mess with a dozen different services and pay through the nose for each? I’ll just watch less. Maybe none. I don’t care enough to put up with that shit. I have 1900 games in my Steam library and dozens of Youtube Let’s Plays to watch and books to read and movies to see. I have more than enough to fill my time without TV. I just enjoy it when it’s convenient and accessible according to -my- preferences, not those of some CEO someplace.

Hey first off, I want to stress that the questions I’m asking below come from my desire to learn the facts, not (entirely) from a desire to argue my viewpoint. Just wanted to throw that out there since it’s easy to come across as an asshat in back-and-forth discussions like this.

Are they? While others have cited the costs of sets, CGI and whatnot as growing costs, it seems like most of those costs should be falling nowadays. Good/high-quality cameras are easily obtainable (as long as you’re not shooting 4K), and though I would imagine that the lighting , sound-booms and whatnot are probably still pricy, I can’t imagine that’s increased in cost. I don’t know about CGI, but my assumption is that Moore’s Law is constantly driving those costs down. Same with editing software and tools.

So what is ballooning in cost? Talent, sets, location-costs and sound-stages?

But is the audience fixed now? To be sure, Americans are watching fewer hours of TV per day, but total number of eyeballs on your content? My impression is that the final total audience is much larger now than it has been in the past. And I’m not just talking about selling BluRay copies of your seasons or reaching new people on Netflix and Hulu, I mean world-wide. I (anecdotally) feel like I’m seeing a lot more foreign shows now… especially British, but also lots of other countries’ content - like Swedish - that have been fun to explore.

Is it also the case that more foreign audiences are consuming US shows like the increase in foreign box-office? That was my assumption, anyway.

ESPN is the poster-child for short-sighted decision-making. Looked at through the lens of two or three years ago, it seems like a logical set of steps to maintain their dominance. It’s only with the concussion scandal, the attendant (and surprising) decrease in Football popularity, and the collapse of the venerable bundling system that they look like idiots.

But I’m not sure if he collapse of ESPN has a lot of parallels elsewhere. When the bundles collapse there are plenty of “little fish” and specialized channels that will have to scurry around to find new distribution avenues, but are there a lot of other examples of channels being so unwisely invested? I don’t get the impression that HGTV has so much cash rolled into “Flip or Flop” that they’ll lose their shirts when they have to go a la carte.

That’st the thing. The dirty secret about cable television is that everyone is subsidizing everyone else’s entertainment. If you have cable for mainly ESPN, you’re also paying for all of those other channels that you don’t watch because you don’t have a choice. And if you have cable for anything other than sports, you’re still paying a $7 month tax to ESPN, because you don’t have a choice.

When the big fracture happens, a lot of revenue streams will dry up, and the networks will all have to adapt. And you can bet a lot of the nichier ones won’t survive. And I’m not saying that’s a bad thing. But this golden age of TV is right now built upon the cable model. All of those smaller networks suddenly creating great content are going to have a hard time funding that content when the carriage revenue collapses. But it’s also part of the reason why everyone is suddenly into trying to create Must See TV. Because when the big fracture happens, they’ll need a reason why you’ll want to sign up for their streaming package.

So coming into work today the network radio news was commenting on expected cable bill increases that will go into effect early next year. The rises are coming to help offset the decline in subscribers. I wonder how long they think that scenario will last, or are they banking on some idea that people who are going to leave cable have already left?

I would imagine that, as audience goes down, the cost of these contracts to ESPN will decline (once the current contracts expire). Perhaps part of the issue here is that professional sports leagues (and the TV contracts in particular) are also massively over valued.

The problem is that a lot of these contracts don’t expire until 2021 or later… 6 years is a verrrry long time.

Yep, and those of us who are subbing mainly for live sporting events are subsidizing channels we not only don’t care about, but may actively hate. Popping up the Uverse channel directory in the 1100’s, I see stuff I watch all the time (TNT, TBS, FX, Comedy Central, Spike), stuff I might watch if I was in the hospital (BBC America, USA, FXX, A&E, SyFy), stuff I have zero interest in (MGM, Smithsonian, Discovery, E!, TV Land, BET, TV1, TRU, OWN, GSN, Bravo), stuff I did not know existed until today (Audience Network? MeTV? Heroes & Icons? AWE? Aspire? Justice Central?), and a few channels I am pretty sure are just a name slapped on an endless sequence of infomercials (Lucky, Deals, BuyIt). And this is only a fraction. Hell of a lot of bandwidth, and I seriously doubt that any but a few of these could actually get a critical mass of direct subscribers.

Preach it, Brother malkav11.

Which is to say, I expect that to be the dominant reaction to the industry’s attempts to protect its margins.

Yeah Redbox raising rates because fewer people are renting movies turned out real well for them. This keep raising rates until people on the fence leave too, it’s symptomatic of an industry that’s been on auto-pilot for too long.

I think right now execs are looking at Netflix, Amazon Prime, HBO GO and seeing monthly revenue. Then they look at the average cable bill of $100 a month (of which their network receives far less than what Netflix. Amazon and HBO net per month per subscriber) and they think “if we can convince consumers to cut the cable cord and just offer up all our shows streaming for $10 a month we’ll make a fortune!”. The problem is, hardly anyone (HBO possibly being the exception) has enough in-demand content to actually get away with charging $10 a month just for their own stuff.

Then you have cable companies, who are not stupid. They see the writing on the wall, and they understand that the current model of offering up 300+ channels for $100 a month is slowly dying. It’s a self–defeating system, as consumers eat up more and more quality content provided by the networks, the networks demand more and more money from the cable providers , resulting in either loss of subscribers due to rate hikes or loss of subscribers due to no longer carrying the network with the hit show(s) making outrageous demands. Premium channels, once the lifeblood of cable providers, have all but abandoned them, preferring instead to stream their own content for a monthly fee (HBO) or partnering with a streaming service to offer their content for an add-on charge (Starz). The cable companies know they have to do something, or risk getting left behind.

Every network streaming their own stuff for a monthly fee is not the path to a successful future. Consumers are not looking to replace a single $100 a month bill for 300 channels with a dozen $10 a month bills from the networks they actually watch content from. If the pay television system fractures into dozens of networks hawking subscription services, many of them will go under. Consolidation is still key, but the delivery method is going to need to evolve. Standard television viewing as we’ve know it for 50 years is dying. People want to watch TV at oddball hours, they want to eye-guzzle an entire season of a show in two sittings. They want to pause in mid-show and come back days later. They want their television delivery system to recommend things based on their previous viewing habits, remember what they watched and alert them when new episodes are available, and span a broad spectrum of movies, television shows and sports. They want the content of cable with the convenience and comfort of streaming, and they don’t want to pay more for it.

That presents a challenge. Cable companies are going to have to evolve into content companies. There will be no more “primetime schedule”, “ratings” will be calculated in all new ways (made far easier and more accurate with streaming delivery). If you want people to continue to pay a premium for television, you will need to change the way you deliver it to them while keeping the quality high and the content rich. I believe the merger of DirecTV with AT&T this past year was a direct response to the coming shift in television as we know it. I’m willing to bet those two companies have been cooking up a plan to deliver television content over AT&T’s network. it’s the only way I see current cable companies surviving in the new age, they become like Netflix, only instead of streaming a library of old shows, they stream a library of all the current shows from all the current networks (plus a massive library of older content) using a similar revenue model. They pay the networks to carry their content, and in turn, they can continue to charge consumers $100 a month. As a consumer, would you rather pay $100 a month for all the cable & network content you consume now, only in Netflix form, or would you rather pay a dozen providers $10 each to watch only the content they provide?

Companies like BrightHouse, Time Warner, Cox, etc. already have data infrastructure in place in millions of homes. If you have cable with Time Warner chances are you probably have internet with them for another $30 a month already. If Time Warner called you and said they would be willing to bump your internet speed up to the next higher level, switch you over to their streaming television service (complete with free “smart” adaptor box for any non-internet enabled televisions you might own) AND cut your current bill by $30 a month for the first 24 months…would you say no?

I didn’t want to start a new thread, so I’ll toss this in here. Not quite a left-turn here, but maybe a slight angle off of the original topic:

I’ve been enjoying The Expanse quite a bit, and I was thinking a bit about their tactic of putting the first four episodes up on the web. And the more I think about it, the more genius this move seems to be.

First off, “pilot” episodes tend to suck sweaty donkey balls. I think that The Expanse did pretty well with their first episode, but that seems to be the exception rather than the rule. Typically, the initial episode of a series is saddled with a lot of exposition (pretty much everything, but The Expanse is a pretty good example), some fairly clumsy “meet cute” or “origin story” sequences (Firefly), actors who aren’t yet comfortable in their roles (Constantine) , and sometimes some odd continuity errors or disappearing characters resulting from actors disappearing from the project between the pilot and the first “shot” episode (Constantine again, Game of Thrones).

For all these reasons and probably some others that I haven’t thought of, networks often give critics several episodes of a new show to chew on rather than just the pilot. I’ve read many reviews where the critic notes that the show gets better in the second of third episode.

But until now, the audience hasn’t gotten that same courtesy, and I reckon that’s hurt a lot of shows. I figure that the word-of-mouth on the first four episodes of The Expanse would probably not have been as effusively positive if it had been stretched out over the course of a month… in the Holiday Season.

I wonder if we’ll start seeing more of this tactic? Not just as a mechanism to promote new shows, but also as a way for the channels to draw viewers to their subscription venues.

One topic missing from this discussion is piracy. I feel that from 2013 to 2015 illegal downloading finally slowed down; it did for me and my friends, partly due to maturing (mid-30’s) but mostly due to the convenient and cheap alternatives (finally).

But the grasp on the technical-savvy group as paying customers is tenuous. Everyone (except me, it seems) pirates Game of Thrones. HBO Go is not available in Canada. I personally know some couples with relatively high incomes who pirated it. Too easy, alternatives too expensive and inconvenient. Last season I got it as part of a cable package, but cancelled it after the season ended.

Another example, I recently asked my youngest sister-in-law (22) if she still uses Spotify, and the answer was no. It was ok but they seemed to up the ads recently and the free option was getting annoying, so back to torrents. $10 a month is hilariously over-priced in her eyes, $2… still overpriced. 30 cents a month, probably wouldn’t bite. Even for me $10 is a bit expensive for how much music I listen to (I prefer to listen to podcasts in the car), and I’ve cancelled a couple times and restarted on the ‘welcome back’ offer which is $10 for three months. So I guess that’s saying that my own price is $3.33.

To the same sister-in-law, Netflix is seen as a convenient service for a ‘fair’ price. It doesn’t have that many good shows, but it has a few, so it’s worth it overall, and she shares the account with two other sisters (others are couples).

The piracy/online-but-legit/pay-for-cable balance is also driven by demographics. My parents hate their $120 monthly cable bill, but having learned to use the PVR can’t drop it in favor of online.

I actually have a cable subscription, the very basic, but literally never watch it, in the correct use of the word ‘literally’. The reason I have it is that it was part of a package that included Shomi (an Canadian alternative to Netflix), and the package was a good overall value even without the cable. The guy even told me at the time “a lot of cable cutters are getting this and just see the cable as a useless but free add-on.” The last tiny reason for me to have cable is MLB but watched the last season online this year.

I read an anecdote that they tested free internet wi-fi on a flight and nearly 60% of the passengers used it at one point. They then tried charging $1. A buck. Usage dropped to something like 3%.

I guess my only theme in this string of thoughts is that we all have this bizarre cost-value relationship going on in our heads for entertainment right now, the free option is still an option for many people. It’s all really tied to demographics too. And a lot of us are internally inconsistent. Kind of like how we all hold back on $1 apps on our $800 phones. It’s really going to be interesting to see how it shakes out.

Great thread.

Free is free and on a flight of 2-3 hours, why pay? I get that. Read something or nap or whatever. I’m flying to New Orleans tomorrow for a short holiday and I will not pay for wifi or movies or whatever. I have my kindle, my iPad Air with games on it, and simply relaxing and chatting with my companion. I’m not paying for anything extra.

I also think that a bucket of channels for a set price is attractive, versus setting up multiple accounts to stream multiple sources. Most consumers will opt for simplicity or if price-conscious, opt out entirely. I don’t think the cable providers are in serious trouble. I think all they need to do is change their packages to lure back some of the cable-cutters.

As a fan of the show and the books, I don’t like being a Debbie Downer, but we might need to wait to see how this all shakes out before judging its success. Right now, ratings have plummeted since its initial airing. Hopefully things get better starting next week, and Syfy maintains its second season order (they could decide to shelve it if the ratings continue to be terrible).

In a bus so can’t find the source but in Denmark at least, downloads of shows and movies have sadly exploded.

I don’t disagree, I do the same thing, but its interesting behavior in terms of what we’re willing to pay and how it is at odds with the cost of producing the content (producing the data stream to your seat). I don’t know what your flight cost, but in the context of your trip, $1 is basically free. It obviously has some non-zero value since 60% of people will use it when it is available. Not paying $1 seems inconsistent with our other entertainment expenditures.

This I tend to disagree with because for a lot of demographics, television is not dying but dead. Television, even the word conjures up a negative sentiment for me personally. I hate television. I can’t stand the whole paradigm of 8 minutes of advertisements in a 21 minute program, even recorded on my PVR. I have 25 channels or so that I refuse to watch, ever.

Live TV, specifically live sports, is the last bastion of cable, and the move online has started. I like baseball but I’ve been watching live streams this year.

So bump it up to 300 channels even for free and I still won’t watch live, I suppose I would, rarely, start to PVR some shows to watch later, though it is increasingly rare. The hassle and annoyance of PVR means I’ll probably just find something else on Netflix and Shomi. In fact I have about a dozen different shows, some with multiple seasons, on my ‘watch later’ list which I haven’t even started. It will take another Game of Thrones level show, not available online, to get me to watch any cable TV.

Granted like I said above, my parents have gotten too used to the TV / PVR paradigm to give it up and it seems to be worth $1,200 a year to them.

I’m going to respectfully disagree.

For a while, I think this model was valid, and it’s certainly nothing new. My buddy cites the show The Office as a great example of this. The Office (US) was pushed heavily to iTunes at the start of season 2 by NBCU as a sort of “Let’s see if this helps” initiative. It worked and translated into ratings, because–hard as this is to believe–people actually paid for seasons and individual episodes of shows on iTunes. Even more quaint: they showed up in measurable, material numbers to watch the show when it aired on NBC also. Wasn’t that a quaint time! It’s also why The Office was on Netflix very early, while other NBC shows weren’t. The idea of offering a program cross platform like this, which seems like really good marketing, began to show diminishing returns.

Now, all evidence points to it being negative returns. As in, you SHOULDN’T do this.

The problem for The Expanse and SyFy, to take this example, is that what they’ve done now is to “train” their audience to seek out the show by free means, and possibly by free and non-commercially interrupted means. The people who watched the first four episodes of the show online for free simply don’t translate to measurable Nielsen viewership on SyFy, and for that particular network, that is the only useful measure of success or failure.

The other side of that same coin is a low-level resentment that you are paying many hundreds of dollars to this airline who is still trying to nickel-and-dime you to death with baggage fees, legroom fees, etc. Despite the relatively good deal that is a $1 Internet rental for a few hours, it FEELS like they our gouging you.

For me (and more especially my wife), it’s the news. Despite having access to many other (and perhaps better) sources of news, my wife really likes to be able to have the evening news on in the background while she cooks dinner.

And yes, I’ve tried to push OTA network reception as an alternative. She’s convinced it’ll be bad. And since my cable bill is pretty much just a trivial add-on to my Internet bill, I don’t argue the point too much.