Cutting the Cord – Conspiracy Theory

After going through the long process of cutting the cord, I realized the term is wrong. Here is my general logic. It’s kind of a long proof, so bear with me.

  1. Most television and video is produced to make money.
  2. The money only comes in two varieties: Subscription and Advertising.
  3. Network (Antenna) TV is all about advertising.
  4. Cable TV introduced the subscription model and they rolled up a bunch of small networks into tiers. Comedy Central = Standard, HBO = Premium.
  5. The individual content channels still make their living off advertising.
  6. Tivo invented the DVR and the allowed customers to SKIP THE COMMERCIALS. This is a crucial development. No commercials, mean no way to make money for the channel. Skipping commercials is a big value for customers.
  7. The content producing industry needed to provide a different value to the customers. Answer: Access to every show on demand.
  8. At first on-demand tried being subscription based. (Pay-Per-View). However, recently, they realized that they could just block ad skipping.
  9. Hulu introduced a tier of “no commercials” for $5 extra per month. (This set a price tag for advertising per user)
  10. Now every channel has a streaming option. But here is the kicker, you still need to pay for access, even with the commercials. Most channels are charging $10-15 per month, which is economically bad. If you get hundreds of channels for $60 through cable, why should 1 single channel cost $10? (Because they don’t want you to do it!)
  11. Interestingly, every channel allows a three-legged authentication. In other words, if you have a cable TV package they allow you to stream the content (with the commercials of course) Each channel has their app branded like HBOGO or ShowtimeAnywhere.

Ok, so it’s a bit convoluted, but the bottom line is that you can’t really cut the CABLE cord. You can cut the DVR cord.

In other words, the industry hates the DVR because it cuts out revenue from advertising. So it’s trying to keep the model exactly the same (Buy cable and get access to streaming WITH commercials)

I spent all of yesterday installing a new TV for my in-laws.  (Great price/quality) It had Roku built-in and they get internet and cable from xFinity. The Roku is the perfect example of how the industry wants you to experience the world of video. Roku is a very nice interface and has “channels”. Many years ago, I thought the word channels was wrong. However, now their vision is coming true. It’s not an app. It’s a channel. It’s TBS and TNT and AcornTV.

You have to add the channel and then sign in to xFinity. At that point you can stream any content from those channels from any season.

The only way to truly cut the cord is for the channels to offer streaming at a more reasonable rate. My suggestion is $3-$5 per month for a standard channel and $10 for a premium one. HBO and Netflix are the top of the line content producers and are worth the $10-$15. Everyone else has to get a grip on themselves. Tennis Channel isn’t worth the same as HBO.

I wonder if there is a reason they don’t offer the price lower. Are they contractually obligated to the cable providers? Is it some form of conflict? What are the economics involved. I am sure it’s quite complicated.

Anyway, take from this what you will.

Whatya think?