Cable and satellite television are beginning to face challenges similar to those their broadcast counterparts faced when broadband gained popularity.
Cox Communications, DirecTV and Dish Network - the three major television providers in the Valley - are increasing their offerings and attempting to make them more user-friendly as competition with Internet-to-TV streaming devices grow more popular.
New HD channels and movies are popping up on a near-daily basis. On Demand and CinemaPlus features have been streamlined and for-purchase video libraries expanded.
Program guides are beginning to look and feel edgier with different color schemes and more search options. Tile-based icons of movies are replacing bulky images that once cluttered On Demand.
And that's just the beginning of the industry's metamorphosis.
Cox, DirecTV and Dish Network have or are in the process of developing technologies that allow consumers to access TV from their cellphones or computers anywhere, anytime.
The new technologies come at a time when market competition is at its peak with streaming devices such as the Apple TV, Roku Box and Xbox360 becoming more popular. The devices allow consumers to purchase shows or movies via Netflix, Hulu and iTunes and watch them on their televisions.
And according to some industry insiders, that's one of a myriad reasons why cable subscriptions shrank in this year's second and third quarters - an unprecedented downturn for the industry. Other reasons could be the lukewarm economy and the rising cost of TV subscriptions.
Although subscriptions shrank, cable companies are benefiting from rate hikes and consumers who are opting to buy additional channels, movies or other upgrades such as high-definition programming. The average consumer spent $69.41 per month for television services in the second quarter of 2010, compared with $68.33 in the first quarter, according to data provided by SNL Kagan.
Growing competition
By upgrading devices and providing additional services, major television providers are trying to remain competitive in an industry that's becoming increasingly crowded.
With devices that bridge television with the Internet, some consumers have access to movies and shows without a subscription to cable or satellite.
Apple TV, Roku Box, Wii, Xbox and Samsung Internet-connected TVs are among the most popular products that consumers use to access Netflix, Hulu, Amazon and iTunes.
The blossoming TV-via-Internet business may be one of several factors leading to a marked decrease in traditional cable and satellite customers, some experts believe.
In the second quarter, the top 12 public multichannel video programming distributors reported a net loss of 55,000 customers. Four of the five largest cable companies - Comcast, Time Warner Cable, Charter and Cablevision - reported a loss of 518,300 subscribers in the third quarter.
Cox, which is a privately held company, does not report subscriber gains or losses.
Satellite providers had mixed results.
In the third quarter, Dish lost 29,000 subscribers and DirecTV gained 380,000 customers in the U.S. and Latin America.
Despite its loss of customers, Dish reported net income of $245 million, or 55 cents per share, compared with $80.6 million, or 18 cents per share, in the third quarter of 2009. That's because individual customers paid more for their services.
Greg Ralbovsky, a 25-year-old Tempe resident and freelance television producer, stopped subscribing to cable television a year ago to save money. He relies solely on his Xbox 360, a paid subscription to Netflix and his broadband Internet for streaming movies on his television.
"I've briefly considered subscribing again because Conan O'Brien is back on the air, but otherwise I have very little interest in getting cable," Ralbovsky said.
While the new devices don't cost as much as a cable or satellite subscription, they have shortcomings, the most obvious of which is the inability to provide comprehensive content. They also have limited access to the Internet, though Google TV, one of the newer products, boasts free rein.
However, several major networks have blocked content from Google TV users.
The future of television
Whether new products will continue to draw consumers away from the traditional cable and satellite has yet to be seen.
Most industry insiders believe that until more and better content is available online, cable will remain the more popular option.
"Although the technology is here, the licensing for the content is the big struggle," said Mark Goldstein, president of the International Research Center.
Ian Olgeirson, a senior analyst at SNL Kagan, echoes Goldstein.
"Our outlook tends to lean toward multichannel subscriptions remaining the primary method people get their television service for the foreseeable future," Olgeirson said.
New technologies
Just as Internet providers are moving to the big screen, cable and satellite companies also are trying to move content to other devices.
Of the traditional content providers, Dish is the furthest along in implementing television-to-cellphone streaming capabilities, although DirecTV and Cox say they're close on its heels.
This spring, Dish released its latest version of a DVR box that uses "placeshifting" technology to stream video to other sources.
Consumers must have a broadband Internet connection for remote viewing.
Dish will soon launch a "slingloaded" adapter that's compatible with several existing DVR models and allows consumers to watch TV on a smartphone or laptop, the company said.
DirecTV began streaming Sunday football games to portable devices such as smartphones in 2009 and iPads this year, a company spokesman said.
It will introduce an online video service, similar to TV Everywhere, in mid-2011.
With TV Everywhere, customers can access movies and television once they've authenticated their subscription. That content can be watched over a cellphone or computer.
Similar technology will be coming for Cox customers, said Josh Nelson, vice president of information and technology services. "Products of the future really get away from individual devices and start speaking in harmony," Nelson said.
by Megan Neighbor The Arizona Republic Nov. 25, 2010 06:24 PM
Cable, satellite providers aim for innovation
