A few years ago, while TV networks were happily setting up Hulu as a place for people to watch shows online for free, the cable companies were fretting. If cable customers could watch shows online for free on Hulu, or through cheap subscription services such as Netflix, who was going to pay for cable service? Sure, the cable companies would still get you for Internet access, but they’d lose one part of their “triple play” package — usually the most expensive and lucrative part.

So they dreamed up the idea of “TV Everywhere.” It came mainly from the minds of Comcast and Time Warner Cable, who didn’t like the notion of their cable content getting out into the wilds of the digital world. As a recent cover story on BusinessWeek magazine points out, TV Everywhere is the “Revenge of the Cable Guys” who didn’t want to see their industry downsized in the same way the music industry was hit with file-sharing.

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But who are the cable companies getting their revenge on? Is it the array of tech startups that want to help people cut the cord? No, the real revenge is on cable customers who were considering cutting the cord. Rather than allow them to go online to customize their TV viewing and pay only for the content and channels they want, Big Cable wanted to lock them into the old routine of paying for 500 channels while watching about eight of them. TV Everywhere is a solution for Big Cable — not for its customers. Just look at the image that BusinessWeek chose to show cable’s revenge: A customer wrapped up in a cable like a prisoner (see image at left).

While cable companies say they are not seeing widespread reductions in customer subscriptions as a result of people cutting the cord, my Guide to Cutting the Cable TV Cord story at MediaShift has been the 3rd most popular story on the site over the past 12 months (even though it was only published two months ago). I’ve heard from scores of people who have happily cut the cord or are considering doing so.

The cable companies believe that their method of paying for all those channels of content and then collecting huge (and rising) premiums from customers is the only way studios and content creators can be paid to produce high-quality shows. But how long will the old way be the only way? Aren’t those content creation costs a bit inflated when you consider that the tools and distribution are being democratized online? Yes, online video sites have not become huge money makers for independent web productions yet. But that doesn’t mean a shift isn’t coming down the line.

Reasons for Failure

Here’s a rundown of why I think the TV Everywhere concept — and Comcast’s beta of Fancast Xfinity TV — are doomed to failure over the long term.

  • Taking away choice.
    While Comcast pitches Xfinity as giving users more control over content by being able to watch what they want when they want, the reality is that Comcast is locking people into their menu of offerings for cable TV. And, most importantly, they are giving people the chance to watch content on other platforms — laptops, smartphones, etc. — only if they keep paying their cable bills. There is still no choice for people who want to pay less for just the shows they want. The ultimate in customization comes from the Internet, where you watch what you want and aren’t usually forced into bundles of content and channels.
  • Propping up old technology.
    The TV Everywhere push has absolutely nothing to do with promotion of new content platforms and everything to do with propping up the old one. The perfect analogy is newspaper publishers (the latest being Cablevision with its acquisition of Newsday) who think they can get people to pay for print newspaper subscriptions in order to get free web access to their content. The customer wants to get access to the content online, so the publisher’s reaction is to say, “OK, you can have that, but you’ll need to pay for this other thing that you no longer want.” You can only prop up the old model for so long before someone figures out a way to make the new one work without it.
  • No plan to charge people for online-only access.
    The cable companies have no plan to give people the option to access Xfinity or other TV Everywhere services for a fee instead of forcing them to pay for cable TV. That means this is not a strategy for working out an online business model (either through advertising or paid content, or a mix of those or something new). Instead, the cable companies have one aim: Protect the old business model. Again, this is not a strategy born from innovation or smart thinking about new platforms. This is survival mode and all about protecting the old, broken way of doing business.

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Boxee Box
  • Google TV on the horizon.
    It’s true that the earlier entrants in web-TV convergence (including WebTV) were failures because the technology wasn’t quite there yet. And when you consider the multiple steps required to get your TV hooked up to the Net properly, it makes sense that most people won’t cut the cord to cable. But more TV sets are being built with easier web integration. And what happens if Google, Intel and Sony band together for Google TV, as rumored in the New York Times recently? And with the Boxee Box due out this year, the web-TV setup without cable gets even easier. That makes low cost alternatives enticing vs. the TV Everywhere promise that you’ll be paying your cable bill forever.
  • People don’t trust Big Cable.
    In survey after survey, people say they have poor customer service from cable and satellite companies. They would likely jump at the chance to get a service that gives them any kind of friendly help, or can portray itself as even slightly responsive to their needs. You rarely hear people complain about the service they get from Netflix, for instance, so the upstarts have a chance to show they can do better.
  • Not delivering on its promise.
    Worst of all for TV Everywhere is a failure to deliver on its initial promise. The promise was that you could watch all your cable shows and channels on your laptop and mobile phone. But as PC World’s Mark Sullivan points out in a review, you can’t get all the content you expect. “After all the hype from Comcast about the new service, I’m surprised at how little subscription-only and premium video — especially movies — is actually available on Fancast Xfinity TV,” he wrote. That could change over time, but first impressions can make a difference with word of mouth.

I am convinced that this early trial for Xfinity and TV Everywhere is doomed to failure because they are a way to prop up a legacy media in transition. But there are ways that the cable companies could change course. They could come up with a fair payment for online access for people who don’t want to pay for cable. They could offer more customization for cable, allowing people to buy just the channels they watch.

But, at the moment, the cable companies are content to sit high on the hog, charging huge sums for cable TV services that continue to defy gravity, and the recession, by going up, up, up.

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What do you think about Xfinity and TV Everywhere? Will they keep you happy paying for cable TV? Or have you quit cable and cut the cord? Share your thoughts in the comments below. And don’t forget to vote in our poll about your satisfaction with your cable or satellite service:


Mark Glaser is executive editor of MediaShift and Idea Lab. He also writes the bi-weekly OPA Intelligence Report email newsletter for the Online Publishers Association. He lives in San Francisco with his son Julian. You can follow him on Twitter @mediatwit.