Video Subscription, In the Hour of the Wolf

Its an interesting time to be a video subscriber.

In the digital age, consumers want access to content on their own terms. There will never again be another "Must See TV Thursday," that significant 90s cultural artifact that attracted movie advertisers eager to reach the eyeballs of young, affluent viewers just before weekend box office openings. That era is done.

Remember when Sunday nights belonged to The Sopranos? And this is not just TV snob nostalgia articulating itself. Cable consumers no longer have to watch premium content like Top Chef or Justified or Game of Thrones on the nights that they originally play. Thus the cable industry now finds itself competing for video subscribers with all manner of new digital players, not the least of which being the movie rental and streaming service Netflix, which just reported a doubling of first quarter profits to over 22.8 million subscribers. "The advent of powerful browsers, Flash, Silverlight, Netflix, Amazon, increased broadband access, smart phones, tablets, laptops, and media solutions like Roku, Boxee, Apple TV, Google TV, Playstation, Xbox and Wii has deposed television from its place at the top," writes Lee Yi, CEO of Drund, shrewdly, in Business Insider. "Before, there was order and simplicity for both cable companies and content creators; now there is chaos."

What comes after cable TV chaos? In the future televised content will be indistinguishable from all other forms of digital content in that it will be readily accessible via laptops, mobile devices and tablets. Ron Frankel, CEO of Synacor, writes about this digital evolutionary process on Mashable:

It’s no secret that consumers are starting to control when and where they watch television or film content. Jump on a subway in New York City and you’ll likely see several people catching up on a TV episode from the night before on their portable device: iPhone, tablet or laptop.

Still need evidence? In a 2010 survey, more than 20% of Internet bandwidth used during prime time in the U.S. was attributed to Netflix, which recently became the largest subscription entertainment business in the country. Consumers are getting their content in many different forms and increasingly creating their own viewing schedule — one that fits better into their busy lives.

Time Warner Cable (TWC), Comcast, Charter and other cable companies are rallying around an industry initiative called TV Everywhere, with the goal of providing a complete end-to-end online streaming video experience for TV programming and web video. TWC recently debuted an iPad application that enables consumers to watch 32 live television stations from anywhere in their homes. Since the release, TWC customers have downloaded the application more than 300,000 times, but content owners have been fighting TWC over complex rights and compensation issues.

These battles are complicated because every kind of programming — sports, TV shows, movies, etc. — has a different set of viewing rights.

Difficult, but not insurmountable. There is also the problem of cord cutting. The Great Recession and the fragile recovery are two factors that have led many former subscribers to simply "cut the cord" on cable TV to some degree.
 
Time Warner Adjusts to the On Demand Lifestyle
 
What about these cord cutters? "In my own case," writes Matthew Moskociak on CBS MarketWatch, "I used to pay more than $100 a month to the cable company; now I pay about half that for a combination of streaming, downloaded, and over-the-air content." Cable programmers and operators need to be as nimble as Netflix in adjusting to the new on demand lifestyle of cord cutters. Time Warner Cable, the number two cable operator in the United States, lost 65,000 video subscribers due to cord cutting during the first quarter.

"Authenticating consumers has never been a problem for Netflix," notes Frankel. "With more than 20 million paying subscribers and apps available on almost any device, it is a major disruptor in the industry and is betting on consumers shifting to a more on-demand lifestyle." Netflix, quite frankly, is here to stay. It seems as if the big players now accept that fact. Witness Jeff Bewkes who used to be the most vocal Netflix critic. Bewkes's recent about face on Netflix at a Tribeca Film Festival chat with Charlie Rose suggests that the future of Time Warner may not be all about HBO-versus-digital-subscription-services-with-premium content. Then again, Time Warner is not your usual media company in the cable business in that it is both a content creator as well as a content provider. They can afford to experiment.

Its an interesting time to be a video subscriber.