On March 9th, as with the rest of the tech world, I loaded up apple.com/live to check out the latest from my favorite company. In this case, I was in Chicago’s O’Hare airport, and had made my way to American Airlines’s Admirals club. I found a seat, grabbed a drink and tuned in.
As much as the Apple Watch intrigues me, there was one part of the presentation that surprised and delighted me the most: the HBO Now announcement.
As with many my age, I don’t have a cable or satellite television subscription. My school didn’t have a great option for cable for on campus housing or university affiliated apartment buildings. I got used to relying on Hulu Plus, Netflix and the myriad of other online video services.
Above all of those services, I most enjoyed using Apple’s iTunes store to purchase season passes for my favorite shows. I followed, at most, three shows at any given time (mostly due to my limited free time in school) and used Hulu Plus / Netflix as a way to surf channels should I find myself with some amount of free time. I hate, hate, hate advertisements on network websites and Hulu. Nine out of ten times they don’t apply to me: car insurance (I have no car), homeowner’s insurance (I don’t own a home) and for several months Huggies commerials (I don’t have a kid) dominate the ads shown. Most of the time these advertisements were grating to watch and were shown so fucking often I would actively seek to mute and ignore them. I wanted to give them my money to make these awful ads go away.
With cable/satellite providers, you pay for the privilege to enjoy ad-sponsored programming. This is the same model found for some services, such as Hulu Plus. Talks with various Hulu employees generally lead me with the answer that it would cost 3–4 times the current subscription price to provide ad free content. Currently, for $7.99 a month, I get the same ad-sponsored content, occasionally with more of a back-catalog, on all my devices. For $32 a month they could provide me the same experience without ads. Something I would pay dearly for. No matter how many times I tell Hulu that this ad does not apply to me, or fill out their demographics quizzes (the “Ad Tailor”), I still am shown the same set of four commercials. After connecting Hulu to Facebook, providing dozens of quiz answers and clicking the “no” button on 90% of ads they show me, nothing changes. Same exact 30 second ads. Since joining Hulu Plus on Day 1, the average ad break has been extended from 15 seconds to 75 seconds, or to put it bluntly, a 500% increase in ad time, even for paying users.
Like many other students, I became used to time shifting entire seasons of shows. No one watched the shows live, and a small few watched the day after. The vast majority would simply wait until it appeared on Netflix. Everyone on the campus paid for two services: Netflix and Spotify. These streaming services offered us the ability to enjoy ad-free content on our own timeframe, on any device we could possibly own. Most also had a way to get HBO Go, either via a shared login or their parent’s provider information.
Bringing it back to the Apple event, HBO Now might just be the first, real example of how television might change in the coming years. A monthly subscription payment, made directly to the network. There’s no annoying advertisements and the ability to watch shows live or on-demand at a later point. Device agnostic services like HBO Now, if done well, should scare the shit out of Time Warner Cable, DirecTV and Comcast.
Two months back, I actually started paying my parents for access to HBO Go. I would pay them $15/month and they would subscribe to the channel through DirecTV. I could then log in and watch the shows from where I live in San Francisco. No need for a TV, a hefty cable subscription, and considering I’m lucky enough to have access to inexpensive ($45/month) fiber internet, with 500mbps down and up, I don’t really want to have to have a bunch of boxes to decrypt a cable signal. I just want to be able to watch the shows on my laptop.
Now that HBO Now will be available, I don’t ever see paying for a TV subscription.
For the next few years, we will probably see a myriad of options as networks begin to unbundle from providers. They will probably land in two ways:
- CBS All Access style with current shows available the next day with ads, and older seasons available without ads from their site. Expect these services to be priced similarly to Netflix: $6–9/month
- HBO Now style with all shows available on a nearly current timeframe without advertisements. These will probably cost a bit more, especially for channels beyond what’s included with basic cable: $15–20/month.
After that goes around for a year or two, I’d expect to start seeing the prevalence of services that begin bundling these services together again. I don’t think networks like Spike and TLC will be able to survive without being bundled with other channels. Also, once networks have gotten used to managing their budgets without ad money and have been able to stabilize their digital offerings, they’ll be able to work more closely with new services that provide these on demand catalog options, probably ad-free, for less than your standard cable subscription price. Currently, Sling, an affiliate of Dish, is providing access to a few channels, including ESPN, but the way they have bended to network demands and gimped rewinding, pausing and on-demand access to shows on nearly every “channel” make it undesirable.
I think that when better bundling services begin to appear, actual changes and “innovation” will start to occur. I’m sure that if they provide a great user experience, clear pricing and reliability, these services with thrive. If they’re able to keep costs low (at least initially) they’ll garner wide appeal as well. Plus, they’ll never have to cost as much as a cable subscription, just simply by the fact they are cutting out the middleman and limiting the need of a massive infrastructure build-out. Finally, the first one to be able to adequately implement a good, targeted advertising system will certainly reap the massive rewards.
I’ll definitely give out bonus points to services that also offer educational discounts or partner with colleges to provide IPTV services campus-wide. It’s a nearly completely untapped market. (Gold stars for startups already in operation like Philo and initiatives like Xfinity on Campus.)
The Final Frontier for television services and networks will be in the live programming space. Every sport, sans NFL, already has a provider agnostic, online service for sale. Yearly award shows, like the Oscars and Golden Globes will need to get off their asses and actually get either an app or one-time payment service going for those who want to watch it. Since graduation, I’ve become used to going to bars to watch live events. I pay for the ability to sit, drink and eat food while the award show or game plays. It’s weird that I can’t still pay the NFL directly for the ability to watch my team online without inane blackout rules or reliance on DirecTV.
I do think that we’re at least two years out from a stable service that will become commonplace to replace TV providers for every (high-speed broadband connected) home. Cable and satellite providers have the option here to jump on the tech bandwagon and provide their own IPTV solution, or risk simply becoming a pipe and losing their lucrative TV business. I’d love to see these companies work to get more broadband available in more areas, and if they have the incentive of switching them to their own internal IPTV solution, maybe it will happen.
Also, I’m sure there will be at least 5 years of one-off shows not being included, like the Olympics or election night. I hope that networks and 24-hour news services jump to offer independent subscriptions.
As these giants start to realize the market they’re losing, or are going to lose, I think the future of television is nothing like what’s been happening in the past half-decade. Stay tuned.
I just posted an update for 2016, go read that.