TV Everywhere: The Future of Television, or Another Over-Hyped Promise?

2009-SM-Think-Series-3 Over the past year, cable companies such as Comcast, Time Warner, and Verizon have all announced what they call "TV Everywhere" trials. The premise behind these trials is based on the notion that one day, the cable companies will give subscribers the ability to view on their computers the same content they get to their TV set.

While many want to proclaim that such TV Everywhere offerings will be the future of the cable industry and that the cable companies will be forced to offer such a service, it's not at all clear that this will indeed become a reality. Such a service would be interesting and valuable to many consumers, but no cable company has yet to figure out how the service will be paid for, who will manage the content, what video platform will be used, what type of video quality viewers can expect, and how this content will be delivered with scale and performance. Too many questions still remain about the service and, to date, the trials that are taking place are extremely small-in some cases, as few as 5,000 cable subscribers.

There has been a lot of talk in our industry of consumers cutting their cable TV services in favor of online video content offerings, but that's more myth than fact. Yes, some consumers who don't watch a lot of TV or only watch shows that are available over-the-air (OTA) or with a Netflix subscription may be canceling their cable. But for the vast majority of consumers, getting rid of cable TV is not an option, and the number of cable TV subscriptions is actually going up, not down. Some are predicting that as long as the cable companies can offer the service for free with the knowledge that consumers will use it, the value proposition for the cable companies is that it will allow them to retain their subscribers.

Who's Going to Pay for It?
But no cable company can afford to offer a TV Everywhere product if they aren't recouping what it costs them to operate it. While Comcast and others have talked about using online video advertising as a way to pay for it, let's be real. Video advertising alone will not pay for the costs associated with a TV Everywhere offering. In the end, cable companies will either raise our bills each month to pay for the so-called "free" offering, or they will charge an additional fee per month on top of our cable bill. While there is nothing wrong with them offering a new service at an additional price, the majority of consumers won't pay for it.

If there is one thing that consumers have clearly told content owners, it is that they are not willing to pay for the same piece of content multiple times. We already pay for cable; now we have to pay more each month simply to watch that same content on a different device? Consumers won't stand for that. Sure, the cable companies would get some users to pay more each month for the service, but not in the numbers they would need to cover their costs. Just think how much it costs to deliver a 500Kbps video on the internet today and then multiply that cost by a factor of six for a TV Everywhere offering that would probably deliver video at around 3Mbps or more.

While much of the content could be delivered via the cable operators' closed networks-which would be cheaper than using a CDN for delivery-it would still cost on average a few cents per hour, per user for the cable companies to deliver high-quality video. And if they wanted to deliver it in HD, which is typically around at 3Mbps or more, the cost could potentially be even higher.

You can read the rest of this white paper from StreamingMedia.com's Think Series, sponsored by Internap, for free here.

  • Dan,
    Just read through the entire white paper you’ve written. Very well done, and an extremely interesting read, but I’m curious about whether consumers have actually even expressed an interest in experiencing TV “everywhere”.
    I would think that before going into a discussion about who’d pay for it, and how it would be implemented, there’d be a whole lot of data about how much of a real demand there is for it.
    Is there any data to validate that?

  • Hi Preetam, you hit the nail on the head. To date I have seen only one study that says consumers want to be able to have more video options with their cable companies. Duh. Like we need a study to tell us that? What the study didn’t tell us is exactly what they want and more importantly, what they are willing to pay or not pay for. This is typical of many products and services in the market. Companies built them, hype the service, roll it out and then ask if it is something consumers want.
    While the cable companies are quick to say that TV Everywhere services add a lot of “value” to their offering, they don’t say to whom. Value to the consumer? Ok, great. But who’s saying that? The cable company or the consumer? If it’s the consumer, show us what they are asking for, what the define as value and what the business is that can support it.

  • Charles

    It isn’t surprising to me that Cable Companies want to dominate and control new platforms. While your article above makes interesting points, it misses that part of the goal of TV Everywhere is gaining more control over the digital content windows. MSOs can and WILL use TV Everywhere to restrict content going to other digital platforms including Hulu, Netflix, Amazon etc. With initiatives like this we must remember that the MSOs are operating to keep themselves in business first and to benefit their customers second.