- Millennials are tech-savvy, thrifty and more likely to stream entertainment online than other Americans. Have they abandoned …
...so I've chatted with Bernadette Aulestia. At length. She's not stupid. She's also not telling the whole truth.
Right now, HBO makes most of its money from cable companies. The true cost-to-carry for an HBO subscription is about the same as a Netflix subscription - the other $13 a month is what Time Warner makes selling you HBO. So on a per-user basis, HBO could come to you for about what Netflix does.
And you'd buy it. You know you would.
But for now, HBO has a powerful disincentive to sell it to you - they're fully funded and have big larders of cash purely from those big dinosaurs on their way out, the cable companies. Who are not about to give Netflix money to have Netflix programming on their copper.
So while Netflix goes out and pioneers exactly how you set up a studio that makes content that sells without ever going through a channel, beating their heads against Hulu, against Youtube, against Chiller, against Amazon, against everybody else, establishing a distribution channel, finding customers, reinventing metrics, and all the other things necessary when one is reinventing distribution, HBO gets to sit back and say
"step off, bitch, we're HBO."
This is one of the reasons Bernadette has said a few times that Game of Thrones being the most torrented show on television doesn't hurt them a whit - they're making all their money from cable companies who don't care what shows you watch, they're billing you monthly. Every viewing of GoT isn't a lost sale for them, it's a freebie giveaway that renews and re-establishes HBO's brand.
What all these articles miss is that as soon as the cable companies are dead, as soon as nobody is watching non-timeshifted media, as soon as it's a battle-scarred wasteland where Netflix, Amazon, iTunes, Hulu and Youtube have been whittled down to Googlezon and Hulutunes, they can pop their heads up and say
"Did I mention we're HBO? Who wants to carry us?"
And they will come out the other side of the bloodbath without a fucking drop on them.
Lather, rinse, repeat for every other channel that produces content... except since they don't have HBO's premium price, they can't have HBO's premium coyness, so they're whoring themselves to whoever they can.
Young americans will pay for TV. They just won't pay cable companies. Everybody knows this but the cable companies, and everyone will be fine except the cable companies.
Very well said.
How do you think things like this factor into the equation, though?
They don't.
That's piracy. Piracy will always be a factor whenever the cost of legitimate purchase is too high. OTA broadcast is free, though, and most of the content you want to see on cable is timeshiftable. This is a haxie to get around the current structure, and it's always been available - you can do the same thing with a Slingbox and have been able to since 2004.
Well, sure, but you don't think that such a haxie might play a much bigger role in all of this in the future? Particularly given its quasi-legality and ease of arrangement?
In twenty minutes, I went from never having seen XBMC before, to watching a legitimate (but overseas) stream of HBO2. And I'm out of the age demographic being discussed (though, to be fair, I consider myself part of that group, as I haven't paid for cable in over a decade, and absolutely never will again).
So... do you know legos?
Know how they come in a whole bunch of qualities, from Mindstorms to Technic to the themed stuff down to Duplo?
You and I, we can pick up a Lego Technic set, follow the instructions and end up with a race car with moving pistons. The steering works. The tires are rubber. it's dope. All we had to do was follow the instructions and we figured it out. In fact, we could probably put something together that wouldn't exactly be a race car, but it would have moving parts and be awesome.
On the other hand, your aunt Mary isn't particularly interested in building race cars. In fact, she isn't much in the mood to build anything. If she wants a dollhouse, she'll buy a dollhouse. No need to build or customize one, thanks. She's not particularly interested in Duplo... but if it'll save her some money, she'll build a house out of Duplo.
Check out the instructions for making a Roku work. Or an Apple TV. It's a little bit above Duplo-grade. They know that nerds will figure the shit out immediately, but they're not interested in selling to nerds. They're interested in selling to people willing to build a dollhouse out of Duplo.
Now check out the instructions for getting XBMC up and running. It's closer to Lego Technic. Yeah, any fool can do it (I have, and I hit it with my Roku) but they don't. It's a level of technical tweaking that nobody but nerds are interested in.
Keep in mind - the overwhelming majority of the internet-browsing audience doesn't know how to leave a youtube comment, let alone configure XBMC. It's not that they can't - it's that they don't want to. For them, they'd rather pay Netflix $7 a month and stream on their phones. It takes not a lot to set up and they're good to go.
So "ease of arrangement" is one thing, but "bone-stupid and simple" is where it needs to be for mass adoption. Like I said, Slingboxes have allowed people to do this for pushing eight years now, and it just hasn't mattered. Their marketshare remains teensy. I've got friends that program arduino to make their jobs easier and I know one person who has bothered with Sling. She gave it up in 2008.
Thanks for this conversation kb and WorLord.
KB, I think you have a good understanding of the consumer, I really do. It's not an easy distinction to be able to look at a buying block and say, "they are not all me." I've seen CEO's make the mistake of doing otherwise.
There is an opportunity cost to complex products, they take time. The payoff may be greater in the end, but there is an investment in learning the product. Most people, myself included, will pay $ to not have to "figure a product out" if it's not in their desired specialty/hobby bucket. If it is music related, Ill read the manuel and figure that sucker out, otherwise I'll pay my $7.
Heck, this is the same reason people hire plumbers. I know that if I took the time to learn about plumbing, I could fix the leak I just don't have the time.
The best products make things easy and at the same time make you feel like you are using a "cutting edge" product. Roku is a good examples of this. While people want ease of use, nobody wants to feel like they're using the "idiot" version of something. When people stop saying "what's Roku?" it may lose some of it's appeal to this demographic.
It really comes down to how you spend your leisure time. The early adopters of television were those who were interested in spending their leisure time tuning a television so that the rest of the family could watch programming. The early adopters of computers were those who were interested in spending their leisure time coding a program so that they could demonstrate its tricks. That's why the Aibo failed - there just aren't that many nerds walking the earth who would rather program a dog than play fetch with a dog.
iPods were not better MP3 players than the rest of the market. They were more expensive, they didn't play a lot of files, they had limited battery life, they had no removable media. But they had a UI that anybody could figure out. Same with iPhones. Same with iPads. i-anything is basically someone else's product stripped down to the bare essentials and made useful for people who hate tech. This is why the original Apple TV was loved by nerds and hated by everyone else - it was a castrated Mac Mini running a slimmed version of OS X. The new Apple TV, on the other hand, is loved by everyone else and hated by nerds - the shit you can't do with that thing is offensive. But you take it out of the box and it works.
Sports will ensure that TV is around for a long time. Eventually, I'm sure that many of the major leagues will stream their games at competitive prices with high quality feeds, but I don't think that's going to happen in the next few years. I pay ~$75/month to DirecTV specifically to watch sports, as I can get all the other content I like elsewhere.
Yep. Live events are what keep TV going at the moment. That's why I was shocked that NPR cut the plug on Talk of the Nation. It was really the only show that you couldn't just stream and get the same effect. Call in shows are less interesting if you feel you couldn't be a "caller" yourself, thus people "tune in". Now, public radio can be cherry-picked and you needn't even listen to your particular "local station."
We haven't had cable for something like 7 years now. It's not only the gobs of money and the set schedules, but commercials are intolerable once you begin to live without them. We have Netflix, and that suits us for most needs. However, we have used a friend's HBOGO account to get Game of Thrones faster.
I would love a service where I paid $1 for each show that I watched.
Cable is dead. It's overpriced, inflexible, and you pay to watch commercials.
- Millennials are tech-savvy, thrifty
Has anyone also thought about the fact that many millennials became independent adults around the same time that the economy tanked? Of course they aren't likely to spend money on TV when they can get it cheaper or free. It will be interesting to see if this changes as we get further away from financial crisis.
I'd like to say I won't buy TV when I get a steady job, but I do enjoy watching SportsCenter in the morning and other sporting events on the weekends. I'm not too big on other Tv shows, I don't even know if I'd find it worth it to buy netflix. I usually just watch shows on youtube these days, or if needed download them. So I'll have to decide if its worth getting a basic channel package to watch SportsCenter and football/miscellaneous sports a couple hours a week.
Seriously, if it wasn't for sports I think a lot less people would have cable television.
This. If you're just set on not paying for cable, you really do not have many great options. The NHL service has been the best so far, since the NBA, MLB both have pretty draconian lock out deals. You don't even get to see past games in the current season that are nationally televised, the NHL lets you wait 48 hours and then the lockout is lifted.
But college football depends on the team and the NFL doesn't know the internet exists as far as I can tell.