Updated on 01/05/2010 I was talking about this with some folks over the Christmas holiday and formulated some new thoughts on it.
Several months back I finally became frustrated enough with paying roughly $150 per month for my cable television and internet service. I had been slowly adding packages to my cable service over the years (DVR, digital cable, HD channels, etc.) and it had all gotten out of control. I had several hundred channels to watch but maybe watched 10-15 of them on a regular basis (or at all, for that matter). When I started looking into cutting back my service I discovered there seemed to be a huge chasm in pricing between the absolute bare bones basic cable and the minimum that you needed to get high-definition channels. I ultimately decided to bite the bullet and cut back to true basic cable. My bill monthly bill went from $150-$160 to roughly $70.
To help fill the gap I also put together a home theater PC roughly following Jeff Atwood’s guidelines in his excellent post: Building Your Own Home Theater PC. By adding a TV tuner to this setup it gave me the ability to run Windows Media Center as a DVR for the few basic cable channels that we did still get, and even let me tune in some local channels in High Definition via Clear QAM. In addition, software like Hulu Desktop let us get a few shows that we couldn’t get through our cable service anymore. It took some adjusting, but we hardly miss having a huge bloated digital cable service package now. It was expensive and it encouraged spending a lot of time cycling through the channel guide looking for something to waste time watching.
We’ve been pretty happy with this setup for a few months now and have recently started watching more and more shows on Hulu, even when we have the ability to DVR them via our basic cable package. In most cases the shows are available on Hulu the day after they air (though there are many shows that are delayed) and oftentimes the video quality that we get off of Hulu desktop in full screen to our television is better than the DVR recording off of an analog cable station. Throw in the fact that you know Hulu will never accidentally cut off the end of a show due to a timing issue or a football game running long and it becomes an increasingly more attractive option over the DVR. Some television networks also allow streaming of shows in HD via flash players on their websites and the quality is really quite good; almost indistinguishable from watching an HD broadcast via cable. I would say that we currently watch about half to two thirds of our usual shows via some online streaming service as opposed to watching it live or via the DVR. The other day we were watching something when Hulu launched into one of its in-show advertisements. I instinctively reached for the remote control to hit fast-forward, thinking that I was watching a DVR recording. Obviously this didn’t work, as Hulu won’t let you fast forward through ads. Here’s where I realized something pretty important:
I didn’t care.
I don’t mind watching one thirty-second to one minute ad during the ad breaks of a show on Hulu. I don’t really mind ads that much at all, honestly. If it means that I can get decent quality video streamed to my television via a home theater PC without giving a cable company more of my money I’m even happy to watch an advertisement or two. Then it hit me: this model of delivering content is the way that everything will eventually move. Bandwidth to the home is getting faster and cheaper and people are becoming increasingly used to being able to watch things on their own schedule due to the prevalence of DVRs. A DVR essentially takes all the control away from the people who deliver the content (television stations and advertisers) and gives it all to the consumer. Once recorded, the consumer has a lot of control over that content including the ability to circumvent advertisements by fast forwarding through them.
The Hulu model is completely different. They don’t let you “own” the content because they simple serve it up to you directly and remove the option of recording/downloading it for later viewing. They can force you to watch the advertisements and I don’t think that consumers will mind. I’m waiting for the first “mainstream” television show to come out with an online-exclusive air schedule. It just makes sense: make it available online when you would normally want to air it live, let people watch it when they want, and subsidize the bandwidth with advertisements. It’s more or less the original television revenue model with the main difference being that today’s technology allows people to watch the shows whenever they want. You reach a larger audience this way and can show any kind of advertisements you want.
Some folks might argue that people will continue to prefer the DVR model because it allows them to fast forward through commercials. I say that DVRs became popular not because they let people fast forward through commercials, but because they provided an easy means for people to watch shows the like on their own schedule. Fast forwarding through the commercials is just icing on the cake. Services like Hulu let me watch things on my own schedule but force me to watch the commercials, which is fine by me. I think the majority of television watching public will agree.
I think that certain types of programming will likely remain on broadcast television like news shows or anything else that could be time sensitive. I don’t think I’d care about watching the morning news from yesterday. That type of programming is just stuff that you turn on when you have a few minutes and are getting ready for work or cooking dinner; it’s not something that you necessarily sit down specifically to watch.