Last week, Thomas Catan and Amy Schatz of The Wall Street Journal published an article about the Justice Department’s antitrust investigation into whether or not cable companies are manipulating consumers’ access to streaming competitors of television content in order to reduce competition. The investigation’s central question is this: are cable companies like Comcast and Time Warner setting data caps to limit download time, speed, and amount of content in order to stave consumers off from using alternatives like Hulu and Netflix? Furthermore, the DOJ is investigating whether or not selective data limits applied to certain streaming outlets (like the fact that Comcast’s data limits can apply to streaming Hulu, but not Comcast’s own Xfinity services) violates Comcast’s legally-binding oath to not “unreasonably discriminate” against competitors.
According to the WSJ,
“Attorney General Eric Holder on Tuesday suggested he had sympathy for those who want to ‘cut the cord’ rather than paying for cable channels they don’t watch. At a Senate hearing, Sen. Al Franken (D., Minn.) said cable bills are ‘out of control’ and consumers want to watch TV and movies online. Mr. Holder responded, ‘I would be one of those consumers.’”
What’s most important about this story for TV consumers is not so much the specific outcomes of this investigation (though that will no doubt have wide-ranging but uncertain implications), but the fact that lawmakers, regulators, and the industry will continue to be forced to recognize new distinctions being made between cable companies, networks, and individual shows as citizens increasingly consume TV online.
The Crisis of Cable
In terms of forming a healthy climate of competition and a variety of choice for viewers, American cable companies hardly represent a free market consumer utopia. Access to certain providers is typically dictated by region, often resulting in relatively limited choice, ever-changing subscription fees and a host of other problems for consumers who feel they have little control, or access to, the companies that bring the internet and television in their homes.
But with the popularization of Netflix, Hulu, iTunes, Zune, and other online streaming alternatives to actually watching television on television (and, of course, the fact that these market alternatives mostly arose as a result of online piracy), the “bundling” logic informing the current business model of cable companies seems increasingly irrelevant. The proliferation of high-speed Internet simultaneous to the threat of TiVo just over a decade ago irreparably changed the average viewer’s relationship to “live” television; access to programming would now be dictated by the consumer’s schedule, not the cable provider’s.
And while DVR no doubt remains a popular technology, with more and more young consumers utilizing their computers to access televisual content it’s increasingly uncertain whether or not we’ll need TVs to watch TV at all in the next decade or so.
Granted, the current investigation is only about possible antitrust violations of behalf of cable providers’ Internet plans, but a shake-up could inspire some of the major cable providers to seek out alternative means of delivering televisual content to their subscribers.
Consumers (and several networks) have displayed an increased preference for an a la carte mode of subscribing through cable networks (though this has yet to be realized amongst the major cable providers). Instead of getting access to cable channels through a bundled subscription, the idea behind the a la carte approach envisions a subscription model that permits consumers to choose which channels they watch and not pay for the (likely) dozens or hundreds of networks that they don’t. But even the a la carte approach is a bit short-sighted, for is still conceives of consuming television content primarily through networks, when consumers are increasingly interacting with television content in ever-smaller increments.
People increasingly watch television today by the show, not by the network, and that’s the real threat that cable companies perceive within the online alternative.
The Crisis of Networks
It’s no wonder networks support the a la carte model for cable providers. It lets them retain a cohesive sense of identity that will outlive their individual shows. But with TV on DVD and many streaming options, audiences are increasingly perusing the market for individual shows irrespective of the network that provides them.
When you have a service like Netflix that makes nearly every existing season Showtime’s Californication, AMC’s Mad Men, and NBC’s The Office all available simultaneously, the perceived distinctions between broadcast, cable, and premium programming that cable providers have lived by since the late 1970s have evidently broken down significantly. Absent commercials (and sometimes even absent censorship for some shows upon reaching home video) and available to be viewed long after their original airing, viewers are experiencing less and less of a sense of cohesive correspondence between the programs they watch and the individual networks providing them – much less which cable package will provide them new episodes of each program. (Test this theory out: do a survey to see how many of your acquaintances can name the network Mad Men airs on; I bet many will mistakenly say HBO).