Cutting the Cable

Friday, September 25, 2009


Last year, Netflix spent about a quarter of its $1.4 billion sending its little red envelopes back and forth through the mail. That’s why it would rather stream movies directly to your TV. As Wired reporter Daniel Roth tells it, if Netflix can cut the same content deals with Hollywood as Comcast and Time Warner - this could be the beginning of the end for cable.

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Comments [7]

Eric Mesa from Baltimore, MD

Just wanted to comment that I am one of those who canceled cable because of Netflix. When it came to it, I'd rather have netflix (DVD or streaming) to watch TV shows once they come out on DVD and I can watch the whole thing at once rather than being held in suspense week on week. Also, many of the shows I would have had cable for (Daily Show, Colbert) are on hulu. I have no problems watching commercials if it means I don't have to pay any money for TV. After all, wasn't that the original promise of cable TV? Since you're paying for it, there are no commercials. That's how The Disney Channel used to be. Now they have McDonald's commercials. (OK - the ORIGINAL reason for cable TV was for regions where OTA TV didn't work because of mountains. But I mean the original argument to cable TV for most people)

Although there are some, like the piece mentioned, who just want to vedge out and channel surf, I just want to watch what I want when I want it. Why should I have to be there at a certain time or record it with my DVR?

Sep. 30 2009 12:30 PM
Jack from Chicago

@JP Whose dumb pipe do you connect the ROKU & the player to? For most people, it'll be cable's. Sure you're eating into cable's VOD service, but that's not where they make their money.

Sep. 29 2009 06:22 PM

I have a ROKU player in one room, and a Netlflix/Amazon capable Blu-ray player hooked up to our main room HD projector system.

Jack is in La-La Land if he thinks these new AWESOME innovations aren't going to lead to cable's steady and relatively rapid (10 years?) demise. Obviously, he hasn't experienced these burgeoning technologies first-hand.

Cable monopolies are right to be scared sh!#-less, as people as old as Jack and me are becoming a less and less significant demographic.

Sep. 27 2009 11:20 PM
Mark from North Carolina

It is the last mile not the back bone that nobody wants to provide. If the ISPs become just dumb pipes and their only income is your monthly bill then you can look for caps or a much higher bill. I don't do much streaming so why should my bill go up to pay for the infrastructure upgrades so a Netflix customer can have unlimited streaming. The ISP world has changed the reason the ISP could charge a flat rate for a given speed because the equipment on both ends of the pipe could only send and receive a limited amount of data. That is why you had to put up with the buffering. Now the amount of data the end equipment is capable sending and receiving exceeds the what the pipes can handle. I heard one ISP CEO state the amount of data in their system was increasing by 50% a year and the revenue was only increasing by 3%.
If Google and NetFlix want to be treated equally then maybe every byte should cost the same. Now the big data generators pay next to nothing because of the current pricing structure while the little store front pays a bigger percentage per byte then the big guys but put a much smaller demand on the system.
Watch for the ISPs to start charging two rates one for speed and the other for usage. I am tired of paying the same price for less then 10Gig of data a month as the guy that uses 250Gig or more a month.
Remember if the ISP was not there you would have to get your NetFlix by mail and Google would not work period. Look at the newspaper business how are you going to get news if all the papers the internet gets its news from shut down or finds a way to charge for their orignal reporting.

There is no free or cheap lunch long term if you don't pay for the pipe it may not be there. Ask the rural communities how great their internet experience has been.

Sep. 27 2009 05:36 PM
oh4real from Austin, TX

Great bit. Very informative.

(a) great to hear how/why Netflix Watch Instantly doesn't have more titles - as they'd pay a royalty per viewing/pipe less than postage; and

(b) you forgot to mention one of their most important, IMHO, channels: TiVo! I specifically dropped my beloved $70/mo DirecTiVo for $25 worth of OTA DTV and Netflix via TiVo HD.

(c) y'all could have done a better job explaining net neutrality and tied/segwayed(sp?) it DIRECTLY into NetFlix story.

NetNeu isn't about Google getting a better $bit rate than some new search engine innovator because it is so big so much as it is about ComCast/VZ/ATT/TWC/etc unfairly charging Netflix 100X the $bit to keep them from competing with their own on-demand service, which uses the exact same broadband pipe.
Or so ATT charge more/slow Google frustrating Google users and making its partner Yahoo's search more competitive.

Also, net neutrality opponents' arguments are mostly mythical - consumers and businesses already pay higher rates for higher speeds (1.5Mb/3.0Mb/6.0Mb/etc.) - which are presumably needed for bigger files/more packets in streaming.

#1 to avoid 90 secs of buffering for NF Watch Instantly, I can upgrade my ATT package;
#2 latency by Netflix would cost subscribers, so they buy fat pipe.

One NetNeu argument that has validity, IMHO, is regarding transversing packets. A NYC user watching Netflix movie from server in CA may have packets that use Qwest pipes.
Qwest isn't managing the subscribers, but must build network to handle the transverse packet load spikes as packets dont discriminate by network. So spikes in transverse packets impact Qwest subscribers' experience through slower networks than promised and transverse packet revenue may not offset Qwest's capital improvements needed to compete.

Having said that, NetNeu opponents dont make the latter argument very often or propose reasonable solutions;
IMHO, they just want to throttle competitors - direct or partners'.

Sep. 27 2009 11:56 AM
Patricia Bee from Gainesville, FL

BOB hates cable? At least he can afford to pay the monthly cable bill, unlike many since the recession hit. For me it was either cable TV or broadband, and the computer won out, but don't get me started on the expense of THAT service in the U.S.

Hey, if there's a lobbying organization dedicated to making this happen, sign me up! I shall enjoy watching the greedy cable bastards go down in flames. In the event "cable will be here longer than you think," then at least they will be subject to some mean competition (which has been sorely missing from most markets), causing their prices to go down, down, down at last.

May I live long enough to see it happen. You go, Netflix!

Sep. 26 2009 04:54 AM

This all wishful thinking on Bob's part. We know from his constant bloviating that he despises cable, and Comcast in particular.

First of all, cable as a dumb pipe is in a very secure financial position. DSL is lsoing, FIOS and Uverse are niche players, broadband wireless an expensive pipedream.

Second, tv programming is a pass-through expense not a great profit generator. Time shift all you want, there will still be people living their lives by the networks' (cable as well) schedule.

Finally, video on demand is nice but why do we need any of these middle men, cable or Netflix. Studios should go direct to the consumer, all they need is a couple of servers. In the meantime, it's about eyeballs and cable's got 'em.

So dream on Bob. Cable will be here longer than you think.

Sep. 25 2009 06:17 PM

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