This article was published 15 years ago

Internet Protocol TV (IPTV) is coming, cable companies better adopt to changing times

Go to any college campus and you’ll see a changing trend happening, students are shunning cable and getting their shows online, either through Hulu and YouTube.

Just ask Allison Bennett, sophomore at Tarleton State University of Texas.

“I watched the OU [Oklahoma University] game online because that channel was not coming in on our TV,” Bennett told Imprint Magazine in 2005.

Flash-forward to 2009.

With so many people having a broadband connection to the home, you can now ditch your cable provider; especially if you only watch a low amount of cable channels.

Last year, a study conducted by the Conference Board found that one out every 5 Americans viewed TV content online instead of on TV.

A more recent survey conducted by Nelsen concluded that online TV viewing is up 3.6% compared to last year.

The Nelsen survey was released during the same week as Comcast, the nation’s largest cable provider, announced in their quarterly earnings that cable giant lost 243,000 cable subscribers in the fourth quarter, or 2% from last year.

Comcast lost 2% of their cable subscribers while online TV viewing is up 3.6% from last year?  This is a completing stat showing that people are ditching their cable provider and going online only.

And that’s on one cable provider.

This economic recession will start a revolution in cable TV.  As more people lose their jobs and many consider keeping their Internet connection instead of their cable provider, online TV viewing will rise and cable TV numbers will go down.  Cable companies, as well those that make the channels, should really pay attention to these changing times.

More will ditch cable because many are figuring out that they can save money by watching episodes on Hulu or by visiting iTunes.  Why pay $110 a month for 126 channels when people only watch 5 or 6 channels?

Before I get CEOs commenting on this column saying that I’m full of <expletive>, there are signs that cable providers are looking at these numbers.

Just in the wrong way.

Time Warner Cable exec. Jeff Bewkes announced that online access to Time Warner cable channels Cartoon Network, CNN and TBS can be viewed online as long as your a subscriber to cable.  In other words, you can watch online TV shows on TNT and TBS as long as your paying for cable.  There will also be a subscription for those that don’t have cable TV service.

How much will the services be for those that don’t have cable will be up in the air, probably the same rate as if you were subscribing to cable.

This is the same Time Warner Cable company that tried out a similar experience in San Diego in 2007 and failed because only 1% of the city’s cable subscribers watched the experiment.  If they tried this experiment again, you will get successful results today than you did two years ago.

However, I don’t think Time Warner would try this experiment again.  Mainly because, if it were successful, people would ditch cable and watch TV online.  And they would lose money on cable subscription fees.

But a new revenue model will would have been born – cable internet fees.

I don’t think cable companies are getting the reason why people are ditching cable.  I’m hearing the main reason is because why pay for channels that are never watched.  I never watch Animal Planet, Military Channel, or any of the other 123 channels I subscribe to that I don’t watch.  MTV Tr3s is supposed to be a Spanish channel, then why is everything in English?

If cable companies had any guts, they would announce an a-la-carte cable subscription, where people only pay for the channels they want.  Former FCC chairman Kevin Martin called for the pay-as-you-watch channels model, and ran into stiff resistance from the cable providers as well as cable content creators.

Will we ever see this subscription model?  Probably not.  But cable companies need to be careful of the younger generation.  They’ve already killed the newspaper industry and changed the music industry.