The Jeff Pulver Blog: Internet TV may pose threat to Cable Companies by 2012

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March 31, 2008

Internet TV may pose threat to Cable Companies by 2012

The Cable Version of “Wireless Conversion” is going to happen.

For the past eight years, billions of dollars of fixed-line revenue has been lost by phone companies around the world as their customers have given up using fixed telephone lines in favor of purchasing their primary phone service from wireless carriers. This trend is known as “Wireless Conversion” and this is revenue that will most likely never be replaced by the phone companies.

In the near future, I expect cable companies to start to suffer a similar parallel fate as the wireline phone companies. This eventually will mean billions of dollars of revenue loss without any notion of being able to replace the lost revenue. And I expect we will start to see this trend happen first in the 16-24 year old demographic.

How does this happen? It happens because there is a portion of the existing 16-24 generation which does not watch traditional broadcast TV and they are not watching Cable TV. What they are watching is TV content repurposed and available on the internet.

And when these kids leave home and go off to college, they are not signing up for cable TV service in their dorm rooms. Instead they are continuing to watch their favorite TV shows thanks to BitTorrent or are going online to the network websites to catch up with a missed show or in some cases they are also going to iTunes and purchasing the shows to watch on their video iPods and computers. This trend was one of the inspirations behind the recent alpha launch of PrimeTimeRewind.TV

So it shouldn’t be hard for many of us to fast forward to the time where there are plenty of consumer electronic devices which seamlessly take Internet TV content and deliver the content to the televisions in our living rooms. I believe the updated version of Apple TV is getting us to this and there are quite a number of other devices that I have recently seen that also do get us there. MythTV continues to be interesting too. While this model does assume basic broadband connectivity in the home, it does not assume basic cable service. And in the near future when more content owners like MLB.TV decide to go direct to the consumer and bypass traditional distribution channels, what we end up with is what Shelly Palmer and others would consider ”Television Disrupted.”

I also believe that in the next 4 years (maybe sooner), most of the major movie studios will start to look to offer viewing access to their first-run movies directly on the internet. This is already happening with Indie Films and it is just a matter of time for this to transcend to the major studio releases.

Add in the millions of “unisodes” already available for viewing on the internet and combine this with the long-tail Internet TV shows that are available for viewing, more people will start to take notice. And when the major TV studios implement their own Internet TV strategies and decide to also go direct to consumer and bypass many of the costs associated with traditional content distribution, things like basic cable service become a commodity that an entire generation of people may decide they just don’t need.

At the current rate of innovation and change, I except more and more people will start to watch Internet TV in their living rooms. This in turn will start to pose a real threat to Cable Companies by 2012

The Cable Version of “Wireless Conversion” is going to happen. We just need a name for it.

Tags: Internet TV, Apple TV, MLB.TV, Cable TV, Jeff Pulver

Posted by jeff on March 31, 2008 08:11 AM | Permalink

Additional resources: #140conf events | Watch the Jeff Pulver Show | Jeff's Qik Videos

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Isn't internet TV already a real threat? I mean, I know lots of people ditching cable for Apple TV, even up in Canada.

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AT&T, with their U-verse service attempts to get around this problem by refusing to sell you just Internet. They require you to subscribe to their TV service!

Posted by: Jim Gottlieb at March 31, 2008 03:53 PM

This doesn't work so well if you are outside of the US. I live in Canada where all of the most popular shows come from the US. We get all of the US OTA networks here but the popular US shows are generally rebroadcast on Canadian stations. But Canadians can't download US shows from iTunes store or from the US network sites as we are blocked due to our non-US IP. Canadian TV network sites do not offer the shows for download. That leaves BitTorrent as the only option but that can be difficult as well as the large ISPs (read cable companies and phone companies) use traffic shaping to slow down torrent traffic.

Posted by: Wayne at March 31, 2008 01:50 PM

Absolutely. I've been holding out buying a new TV system for this very reason. I'm tired of commercials screaming at me, so I record everything on a digital recorder and watch it later, skimming over the ads. The second that internet TV becomes available with the same content that I like to watch via satellite, I'll be using a computer (probably a Mac!) as a full entertainment system.

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for me the biggest frustration is that it is actually becoming less common to simulcast cable TV over the internet. there was a time when you could watch CNN over the internet and get the same version that went over cable. i want that time back. i do not subscribe to cable but would love to be able to watch the few shows i am interested in over the net. since i do not watch sports or most movies on cable i really do not care about hidef and all that. mostly i watch news programs and some talk shows. please TV studies simulecast your broadcasts(the same version not some geeked up special internet edition) on the net.

Posted by: anon at March 31, 2008 10:05 AM

Jeff.....if you follow AT&T's strategy, they are working to delivering this type of content on your TV, your PC or Wireless device.

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March 31, 2008

Internet TV may pose threat to Cable Companies by 2012

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