Why Isn’t Everybody Cutting the Cord?

Last year at least two million households cut the cord. I’ve seen headlines predicting that as many as 5 million more this year, although that seems too high to me. But both of these numbers are a lot lower than the number of people who say they are going to cut the cord in the coming year. For several years running various national surveys show that 15 million or more households say they want to cut the cord. But year after year they don’t and today’s blog looks at some of the reasons why.

I think one of the primary reasons people keep traditional cable is that they figure out that they won’t save as money with cord cutting as they had hoped. The majority of cord cutters say that saving money is their primary motivation for cutting the cord, and once they look hard at the actual savings they decide it’s not worth the change.

One issue that surprises a lot of potential cord cutters is the impact of losing their bundling discount if they are buying programming from a cable company. Big cable companies penalize customers who break the bundle. As an example, consider a customer who has a $50 broadband product and a $50 cable product, but for which the cable company charges $80. When a customer drops one of the two products the cable company will charge them $50 for the remaining one. That means there is a $20 penalty for cutting the cord and thus not much savings from cutting the cord.

Households also quickly realize that they need to subscribe to a number of OTT services if they want a wide array of programming choices. If you want to watch the most popular OTT shows that means a $10 subscription to Netflix, an $8.25 per month subscription to Amazon and a Hulu package that starts at $8. If you want to watch Game of Thrones you’ll spend $15 for HBO. And while these packages carry a lot of movies, if you really love movies you’ll find yourself buying them on an a la carte basis.

And OTT options are quickly proliferating. If you want to see the new Star Trek series that means another $5.99 per month for CBS All Access. If your household likes Disney programming that new service is rumored to cost at least another $5 per month.

And none of these options bring you all of the shows you might be used to watching on cable TV. One option to get many of these same networks is by subscribing to Sling TV or PlayStation Vue, with packages that start at $20 per month, but which can cost a lot more. If you don’t want to subscribe to these services, then buying whole season of one specific show can easily cost $100.

And then there is sports. PlayStation Vue looks to have the best basic sports package, but that means buying the service plus add-on packages. A serious sports fan is also going to consider buying Fubo. And fans of specific sports can buy subscriptions to Major League baseball, NBA basketball or NHL hockey.

Then there are the other 100 OTT options. There is a whole range of specialty programmers that carry programming like foreign films, horror movies, British comedies and a wide range of other programming. Most of these range from $3 to $7 per month.

There are also hardware costs to consider. Most people who watch a range of OTT programming get a media streaming device like Roku, Amazon Fire, or Apple TV. Customers that want to record shows shell out a few hundred dollars for an OTT VCR. A good antenna to get local programming costs between $30 and $100.

The other reason that I think people don’t cut the cord is that it’s not easy to navigate between the many OTT options. They all have different menus and log-ins and it can be a pain to navigate between platforms. And it’s not easy to find what you want to watch, particularly if you don’t have a specific show in mind. It’s hard to think that it’s going to get any easier to use the many OTT services since they are in competition with each other. It’s hard to ever see them agreeing on a common interface or easy navigation since each platform wants viewers to stay on their platform once logged in.

Finally, none of these combinations gets you everything that’s on cable TV today. For many people cutting the cord means giving up a favorite show or favorite network.

If anything, OTT watching is getting more complicated over time. And if a household isn’t careful they might spend more than their old cable subscription. I’m a cord cutter and I’m happy with the OTT services I buy. But I can see how this option is not for everybody.

 

OTT Update May 2016

TelevisionThere is so much activity in the OTT space that I might need one of these updates every few months. It seems as soon as I publish one a new set of changes gets announced in the industry.

Hulu Announcement. The biggest OTT news is that Hulu just announced that they are putting together an OTT skinny bundle package. It’s not expected to launch until next year, but Hulu has already struck deals with Disney and Fox, which happen to be two of its corporate parents. The Hulu package is interesting because this really represents the major programmers taking a shot at stealing customers away from their cable company customers.

Hulu’s history is pretty interesting in that their owners – Disney, Fox and NBC Universal (Comcast) – were very careful in the early days to not give Hulu great content that would upset the cable companies. But that seems to have changed. Hulu is now getting access to many more movies and other content and is making a major run at Netflix. Since it’s owned by programmers who themselves have a lot of content, Hulu certainly has a chance to eventually become the dominant OTT player. I’m seeing a lot of web articles talking about how Netflix is losing their sheen as their content choices dwindle.

YouTube Unplugged. After having this on the shelf for the last four years it looks like Google and YouTube are finally getting serious about launching a skinny bundle of their own. They are in talks with the major programmers and are talking about launching early next year.

YouTube already launched the YouTube Red subscription service last fall that bundles together the premium content found only on YouTube. It’s aimed at younger viewers who seem to prefer YouTube as a source of video content. The cable companies are going to have to start sweating with Hulu and YouTube both making a major play to attract people away from traditional cable packages.

CBS and Star Trek. CBS has announced that after it airs the first episode of its new Star Trek series on TV that all future episodes will be available only on the online CBS All Access Platform. This is a major play to sell more subscriptions to that service. Considering the strong draw of Star Trek it might work. But CBS is not going to dump the whole series on line at once for binge viewing but will feed a new episode each week.

FilmStruck. Criterion and Turner have announced the creation of a new online movie service they are calling FilmStruck. The service will have the largest catalog of older movies online and includes the whole MGM and RKO movie catalogs which Ted Turner bought in the 80s. This gives the service a significant share of the movies on most of the lists of all-time greatest movies. The catalogs also contain mountains of movies that have not been available for years. As part of this deal Criterion will be pulling about 500 old movies from Hulu.

Netflix Survey. A survey of Netflix customers showed that 76% of them believe that Netflix and other online content is going to eventually completely displace traditional cable TV. Of the 24% who didn’t think this was so, the primary reason they thought cable would survive is news programming. Interestingly, 68% of those surveyed did not think that Netflix would replace movie theaters.

How the Internet of Things Will Transform the World

ASIMO is an advanced humanoid robot developed ...

ASIMO is an advanced humanoid robot developed by Honda. Shown here at Expo 2005. (Photo credit: Wikipedia)

I read a lot about the Internet of Things. One of the best articles recently is a series being written by Christopher Mims for Quartz. In the two articles he’s written so far he is talking about how the IoT is going to transform our lives. I don’t think very many people are yet aware that this change is coming and how life altering it will be.

It’s easy to think about the IoT as being a smart device evolution that will make our lives a little easier. People today talk about putting together smart homes where the lights turn on and off as you enter the room and where you can change the temperature and other household settings from your smart phone. And today that is the IoT. Right now companies that make devices are starting to allow them to be IP and WiFi addressable so that we can communicate with them using a smart phone, tablet or computer.

But if that is all that the IoT is going to be it would be an incremental improvement in daily life for the geekiest of us, but it would be far from transformational. I believe that we are entering the century where IoT will transform our world. Within a decade we are going to see huge changes on our lives akin to the sort of changes that came from the introduction of the Web. And I am not sure any of us can really imagine what the IoT will do by the end of this century. But I know that the year 2100 will be as different from 2000 as that year was from 1900. We went from a world of horse drawn vehicles to a computerized world in a century, and the changes due to IoT will make today’s world look just as quaint as the horse and buggy does to us now.

So what are these big transformational changes? The article talks about some of the tools that the IoT will use. All of the types of new tools and techniques noted in the article are the necessary underpinnings of making a new world where people and devices become fully integrated. That total integration is the biggest change coming from the IoT.

Imagine a world where you walk into a party and nobody there is a total stranger to you because your personal computer will tell you who everybody there is and what their connection is to you. You will know without asking that the guy you don’t recognize is your neighbor’s brother visiting from Cleveland and the couple you’ve never seen are your friend’s dentist and his wife. The social changes coming from the IoT will be transformational because social media will move off the Internet and into the world and will be everywhere you go.

The IoT will also finally bring the early promise of the Internet to pass that all information will be instantly at your fingertips. Today you can search for things on the web, but you generally have to do a lot of work to separate fact from fiction. Web search engines bring up every reference to the topic you are interested in without helping you know what is true or false. But we are not far from a time when you will always be connected to the web by some personal device and there will be smart enough programs to automatically separate fact from fiction to bring you answers you want. Arming the world with instant facts will be transformational.

Probably the most astounding change to people will be in the medical field. We will have nanobots in our bloodstream that will be alerting us when they see something wrong. This means we will be able to head off colds and infections immediately and the day of the flu epidemics will be in the past. And many of our current medical practices will look like the dark ages. If a child needs to have their tonsils out we will let these nanobots gently remove the tonsil, cell by cell, over weeks so that there is no need for a scalpel and the associated risk and trauma. People with various chemical imbalances will finally have a local and effective treatment and cure. By the end of the century people will have to ask what cancer was because it will be a ‘disease’ of the past.

3D printing will be transformational. Today this is a novelty, but within a few decades this is something that your house will do for you in the background without you having to do anything more than telling it what you want. Your house will order the needed raw materials for the 3D printer, which will be delivered by robot-powered delivery vans. Your smart house will then make the needed item as requested. I remember a Star Trek episode where underground robots made things that people wished for. We are not too many years away from some version of that reality.

My Take on the Internet of Things

I think there might be as many different predictions about the Internet of Things as there are bloggers and pundits. So I thought I would join the fray and give my take as well. The Internet of Things is that it is going to involve a new set of technologies that will enable us to get feedback from our local environment. That is going to allow for the introduction of a new set of tools and toys, some frivolous and some revolutionary.

I have read scores of articles talking about how this is going to change daily life for households. The day may come when our households resemble the Jetsons and where we have robots with more common sense than most of us running our households, but we are many years away from that.

There will be lots of new toys and gadgets that will sometimes make our daily lives easier. For instance food we buy may have little sensors put into packaging that will tell you when your produce is getting ready to go bad so that you won’t forget to eat it. There will be better robots that can vacuum the floors and maybe even do laundry and walk the dog. But I don’t see these as revolutionary and probably not affordable for the general populace for some time. For a long time the Internet of Things is going to create toys that wealthy people or tech geeks will play with, and it will take years to get these technologies to make it into everybody’s homes. Very little of what I have been reading for household use sounds revolutionary.

The biggest revolutionary change that will directly affect the average person is medical monitoring. Within a decade or two it will be routine to have sensors always tracking your vitals so that they will know there is something wrong with you before you do. There will be little sensors in your bloodstream looking for things like cancer cells, which is going to mean that we won’t have to worry about curing cancer, we’ll head it off before it gets started. This will revolutionize healthcare to be proactive and preventative and will eventually be affordable to all.

English: A technology roadmap of the Internet ...

English: A technology roadmap of the Internet of Things. (Photo credit: Wikipedia)

I think the most immediate big benefactor of the Internet of Things is going to be at the industrial level. For instance, it is not hard to envision soil sensors that will tell the farmer the conditions of each part of his fields so that his smart tractor can fertilize or weed each section only as appropriate. There is already work going on to produce mini-sensors that can be sent underground into oil fields to give oil geologists the most accurate picture they have ever had of the underground topology. This will make it possible to extract a lot more oil and to do so more efficiently.

Small sensors will also make it a lot easier to manufacturer complex objects or complicated molecules. This could lead to the production of new polymers and materials that will be cheaper stronger and biodegradable. It will mean that medicines can be modified to interact with your specific DNA to avoid side effects. It means 3D printing that will feel like Star Trek replicators that will be able to combine complex molecules to make food and other objects. NASA has already undertaken a project to be able to print pizza as the first step towards being able to print food in space to enable long flights to Mars.

And a lot of what the Internet of Things might mean is a bit scary. Some high-end department stores already track customers with active cell phones to see exactly how they shop. But this is going to get far more personal and with face recognition software stores are going to know everything about how you shop. They will not just know what you buy, but what you looked at and thought about buying. And they will offer you instant on-site specials to get you to buy – ads that are aimed just at you, right where you are standing.

I remember reading a science fiction book once where the ads on the street changed for each person who walked by, and we are not that far away from that reality. There are already billboards in Japan that look at the demographics in front of them and which change the ads appropriately. Add facial recognition into that equation and they will move beyond showing ads aimed at middle-aged men and instead show an ad aimed directly at you. The Internet of Things is going to create a whole new set of attacks on privacy and as a society we will need to develop strategies and policies to protect ourselves against the onslaught of billions of sensors.

Probably one of the biggest uses of new sensors will be in energy management. And this will be done on the demand end rather than the supply end. Today we all have devices that use electricity continuously even when we aren’t using them. It may not seem like a lot of power to have lights on in an empty room or to have the water warm all of the time in an automatic coffee pot, but multiply these energy uses by millions and billions and it adds up to a lot of wasted power. You read today about the smart grid, which is an effort to be more efficient with electricity mostly on the demand side. But the real efficiencies will be gained when the devices in our life can act independently to minimize power usage.

Sensor technologies will be the heart of the Internet of Things and will be able to work on tasks that nobody wants to do. For instance, small nanobots that can metabolize or bind oil could be dispatched to an oil spill to quickly minimize environmental damage. The thousands of toxic waste dumps we have created on the planet can be restored by nanobots. Harvard has been working on developing a robot bee and it is not hard to envision little flying robots that could be monitoring and protecting endangered species in the wild. We will eventually use these technologies to eat the excess carbon dioxide in our atmosphere and to terraform Mars with an oxygen atmosphere and water.

Many of the technologies involved will be revolutionary and they will spark new debates in areas like privacy and data security. Mistakes will be made and there will be horror stories of little sensors gone awry. Some of the security monitoring will be put to bad uses by repressive regimes. But the positive things that can come out of the Internet of Things make me very excited about the next few decades.

Of course there will be a lot of bandwidth needed. The amount of raw data we will be gathering will be swamp current bandwidth needs. We are going to need bandwidth everywhere from the City to the factory to the farm, and areas without bandwidth are going to be locked out of a lot more than just not being able to stream NetFlix. The kind of bandwidth we are going to need is going to require fiber and we need to keep pushing fiber out to where people play and work.

Physics of the Future

I highly recommend anybody interested in Technology to read ‘Physics of the Future: How Science Will Shape Human Destiny and our Daily Lives by the Year 2100’ by Michio Kaku. The book is well written and is an easy and accessible read.

Kaku is a theoretical physicist who researched for this book by talking to leading scientists in many fields of science and asked them where current research is taking their fields by the end of the century. Many scientists see practical and disruptive innovations coming from their own fields of study. But when taken all together, the changes that the scientists see coming look amazingly like Star Trek minus the transporters and the warp speed travel and the Vulcans.

At the turn of the 20th century the world was completely disrupted by inventions like the automobile, electric lights, airplanes, etc. At the end of the last century we saw the world changed drastically by the computer.

Some of the many changes that scientists see coming during this next century include:

  • Cheap fusion power, meaning almost unlimited, pollution-free power for everybody.
  • The ability to locally make things (like the Star Trek replicator) which we are already starting to see with the 3D printer industry.
  • Computer chips so cheap that they are built into everything.
  • A high likelihood of computer sentience.
  • Nanotechnology being used to constantly monitor your health from within and that will intercede to keep you healthy. Cancer won’t be cured so much as it will never be allowed to get started.
  • Space tourism will be routine and not just for the very rich.
  • Driverless cars wiping out gridlock in even the biggest cities.

This book is a fascinating read. The next century is going to see massive technology disruptions that will completely transform almost every industry. In the process many of our largest corporations will go the way of the buggy whip manufacturers.

The book made me think about the telecom industry. One thing that is obvious is that there is going to be massive amounts of data produced everywhere and for this data to be made sense of we will need fiber networks. The idea of gigabit networks will be a quaint idea of the past and we will be having discussions about whether terabit networks are fast enough.

One thing the book doesn’t postulate about is the human element. Certainly there will be a lot of people eager to take advantage of these new technologies. But one has to wonder what is going to happen if parts of society turn their back on such revolutionary breakthroughs and what that might mean for the future of the planet. One also has to wonder if these breakthroughs will be made available to everybody or just to the rich. I haven’t read a book in a long time that has given me more to think and dream about.