There has been a debate brewing for decades about the importance and the role of networks who provide content and that of those who transmit it to end-users.  Each side, of course, supports its own self-interest.  Over the past few days, several fairly heated discussions have occurred between companies on both sides.  Most notably, Viacom recently threatened to pull some programming from Time Warner Cable.  In light of these problems, the news of CBS and Time Warner Cable reaching a fresh broadcasting deal without major fireworks led to a large sigh of relief from the industry and all of us as consumers.  

Cable companies have also been increasing their rates, a move parallel and related to these discussions.  As we’ve mentioned, Comcast (Etilities Forum) is planning to raise rates in February, and today Time Warner Cable (Etilities Forum) announced a planned increase in fees as well.  A spokesperson for the company explained that the move is required in order to overcome higher fees from programmers: “The programmers, we are wholesaler distributors of them, we have to purchase their product, biggest expense”.

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A spokesperson from Comcast (Etilities Forum) has recently confirmed that the company’s television subscribers will see rate increases in February 2009. Although the average increase will only be 3.2%, compared to 4% in previous years, any bump at all will be felt more this year as the economic situation in the US tightens wallets nationwide.

We’ve included a brief summary of the announced increases below.  However, your actual cost may differ depending on local taxes, promotional values, and other factors.  As always, check with your local Comcast representative to confirm.

The rate increase, when combined with the slowed economy, could drive subscribers to seek out new alternatives, including Hulu (Etilities Forum), Joost (Etilities Forum), and even the venerable (and versatile) Netflix (Etilities Forum). While the rate change is not slated to affect Comcast’s Internet or phone plan rates, it could trigger bundle consumers to scale back monthly payments by considering VoIP phone services like Vonage (Etilities Forum).

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Blockbuster (Etilities Forum), the well-known movie rental company, announced on Tuesday that its customers will now be able to stream movies from the Blockbuster online library to their TV set.  The service will require a new device, the MediaPoint Digital Media Player, developped by new partner 2Wire.  The box will cost $99, which includes 25 free movie rentals.  Each additional rental will cost $1.99, for what is being called “DVD-quality” video.

Blockbuster, which has built a large consumer base during their 20+ years renting videos, has been struggling lately due to the fierce Internet-based competition in entertainment delivery services, especially that of Netflix (Etilities Forum).  Blockbuster’s move is clearly an attempt to catch up to the competition, but we cannot help but see the latest move as “too little too late.”

First, the fact that the player will deliver DVD-quality content is not a selling point, it’s a turn-off: iTunes (Etilities Forum) and Netflix both offer HD quality streaming content.  Second, they do not specify the size of their online library, only mentioning that includes “thousands of titles.”  Given the lack of specific numbers,  we can only assume that they are nowhere close to Netflix’s library of 12,000 online titles.  Lastly, their competitors have quite a head start.  The list of online entertainment providers is growing larger by the month, and a lot of them have been in the streaming business for some time: Netflix, iTunes, Blinkx (Etilities Forum), Hulu (Etilities Forum), Joost (Etilities Forum), Sling, YouTube…  Unless Blockbuster can come up with a true game-changer, all they will have going for them is their existing customer base, which has eroded significantly as consumers flocked to the early streaming services.

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The number of services offering Internet-delivered TV content continues to grow.  We’ve previously discussed some of the “new standbys” such as Hulu and Joost, as well as slightly more traditional mechanisms like Netflix.  Now, Sling Media has added browser-based television content to its offerings.

Sling has primarily been behind a series of hardware devices that allow you to extend the viewing of your home audio/video equipment anywhere there is an Internet connection.  This technology is quite impressive, and we’re planning to cover it more extensively in a future article.

The new sling.com portal serves video content through either a standard web browser or any of the company’s hardware devices.  The content is extensive, with current TV content (“24,” “CSI”) as well as classic shows (“Alf,” “Miami Vice”).  Additionally, the portal offers some non-traditional content, including web shorts from the Funny or Die site and meta content such as interviews with the stars of shows.  There are even some movies making their way to the site through various partnerships.

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Compared to the slew of new media delivery solutions that have developed over the past few years like  iTunes (Etilities Forum), Netflix (Etilities Forum), Hulu (Etilities Forum) or Joost (Etilities Forum), Cable TV seems a bit like a dinosaur.  Along with radio, it is one of the older content delivery services, and it shows.

Research group Parks Associates released a study in late October explaining that Cable TV has customer satisfaction issues compared to Satellite TV and IPTV providers.  Although the details of the study are not publically available, my thought is that this is primarily due to a shift in how much control consumers expect to have on what they watch and when they watch it.  The old, familiar model is that you need to tune in to the right channel at the right time.  You arrange your schedule around the TV network schedules and hope you don’t get interrupted.  What products like Tivo (Etilities Forum) and the Apple TV have introduced is the ability to make your own entertainment schedule.

The answer to this was Digital Cable, specifically Video On Demand (VOD) offerings which let you select movies, TV shows or documentaries out of a library of media that your subscription gives you access to.  But there are still problems.  First, VOD tends to have a more limited selection than the alternatives listed above.  Second, the interface is often sluggish and poorly designed.  Lastly, and perhaps most importantly, this offering still rides on a service that is very expensive: according to the FCC, cable prices have more than doubled over the last decade!

The main thing Cable TV has going for it is that it has a very large established consumer base, and old habits die hard.  But Cable providers should probably realize, for their own good, that we are in the middle of the danger zone: a tough economic downturn that makes everyone try to save money.  Once enough people realize the alternatives out there, Cable TV will need to make a choice: adapt or wither.

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When Google (NASDAQ:GOOG) acquired YouTube in October 2006, there was no shortage of speculation (and some doubt) as to how the user-driven video portal would grow.  Two years later, it seems that YouTube is only getting started.  We talked last week about the addition of retail links on the site that take users to Amazon and iTunes store pages.  As it turns out, that is only one aspect of Google’s strategy.

Earlier this week, YouTube started screening old, popular shows such as “Star Trek,” “MacGyver,” and the original “Beverly Hills, 90210.”  Although the selection is currently quite limited, this indicates the beginning of a new strategy for the media sharing site, which seems to be aiming to compete with companies like Hulu (Etilities Forum) and Joost in the online TV space.  While the established players have a bit of a head start, YouTube has the advantage of an enormous user base: in fact, it is now #2 (just ahead of Yahoo (NASDAQ:YHOO) in the search market industry with a staggering 2.6 billion searches in August 2008.  If you combine Google and YouTube, the search giant fielded over 10 billion queries just for the month.

Although YouTube has not been profitable for Google so far, analysts project that it will generate $200M to $250M in revenue this year, and that it could contribute a significant share of the parent company’s revenue by 2011.

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Joost (Etilities Forum), one of the early implementers of Internet-based TV service has shed its standalone  desktop application and launched a service that plays its content within a standard web browser.  This opens up its free content to a far greater audience, which will certainly increase the amount of material that TV networks and other owners will be willing to provide.  ”More eyeballs” is the rule of the content land.

Joost boasts a rather impressive array of current TV content in their library, including mainstream TV shows and channels.  They also provide some innovative social features that allow you to see what your friends are watching on the Joost network.  Just like your regular, pre-TiVo TV, the content is ad-supported.

I’ve used the old desktop client before and find the new browser one to be a little jumpy, but mostly watchable.  The target audience seems to be the college crowd, but Joost has added a lot more content in recent months, so it may be on its way to becoming a viable alternative to the traditional broadcast TV.

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