February 3, 2011 in Business

TV fans drop satellite, cable for options online

By The Spokesman-Review
 
Colin Mulvany photoBuy this photo

Greg Thomson dropped DirecTV a month ago. He now relies on shows streamed from his desktop computer to his television.
(Full-size photo)

Count Jason and Theresa Kirchner among the recent converts to the cord-cutting movement. The Hayden couple decided to switch from traditional TV service to Web-based viewing, saying they wished they’d done it sooner.

They made the decision largely out of irritation at the monthlong blackout of Fox Network shows for regional DirecTV customers caused by a contract dispute with Spokane’s Fox Network affiliate.

The Kirchners decided it was the right time to leap into the future of Web TV.

Jason Kirchner, a public affairs officer with the U.S. Forest Service in Coeur d’Alene, found dozens of articles explaining how the “connected TV” is a less expensive option for replacing satellite or cable TV service.

It cost the couple $300 to quit their DirecTV contract, but they’re happy now not to be paying the satellite service $80 each month.

“The more I looked at what we were spending, the more I felt foolish we hadn’t done this earlier,” Jason Kirchner said.

They own a 10-year-old TV set, but they mostly watch movies on their computer through the Web.

Cord-cutters such as the Kirchners are taking advantage of widely available entertainment on the Web, much of which is free and most of which can be streamed across a home network to a TV set or computer screen.

At the most basic level of cutting are folks simply connecting a decent antenna to their living room TV.

How long the opportunity for free Web TV will continue is open to debate, say industry watchers. Carl Laron, a senior editor for electronics at New York review site Consumersearch.com, said paid subscriptions will become much more common as people gravitate away from paid services like cable.

“People will have to pay something,” as the providers and producers of shows realize they cannot afford to give the content away for free, he said. “So people will either start seeing more ads or they’ll have some form of paid service,” Laron said.

It costs the Kirchners about $8 a month to watch movies online through Netflix, which started as a mail-only DVD rental service. The Kirchners also pay about $25 a month for broadband online service; without it, streaming video becomes a painful experience.

Nate Kraft, director of product management at California-based tech company Belkin, said no one can predict how far the Web-to-TV experience will evolve.

“It’s too early right now to say if this is a tidal wave taking people to all-digitally delivered content,” Kraft said. “But the great thing is, technology keeps changing, bringing more sophisticated, interesting ways to give us video and entertainment choices.”

For most of 2010 the cord-cutting movement was the strongest it’s been, if the number of lost subscribers by cable and other multichannel providers is an indicator. Research firm SNL Kagan finds that 741,000 people in the nation cut cable subscriptions in the third quarter last year, the biggest quarterly dip since the company began tracking data in 1980.

Cable companies and other industry-watchers said that decline was due to a rough economy more than the advent of Web viewing options.

Also propelling the cord-cutting trend is a flurry of dozens of devices that make it easier for people to stream Web video or entertainment to their TVs.

For several years electronics manufacturers have been selling Web-enabled TVs and Web-connected Blu-ray players that stream Internet-based services such as Netflix or Blockbuster movies.

And major electronics makers are churning out new products that get rid of the need for a computer altogether. Devices such as Apple TV, the new Logitech Google TV and the Roku player directly stream video to TV from sources such as Amazon, iTunes, YouTube, Netflix and others. Even game devices, like the Wii and the Xbox 360, now come Web-enabled for streaming video into one’s home entertainment system.

Much of what those devices provide involves a paid subscription, but that hasn’t discouraged consumers looking to control their entertainment options, said Laron.

Using such devices takes the consumer into one of the higher-level options for connected television. At the other, lower end are Spokane residents Greg and Jessica Thomson, who simply connect their desktop computer with a cable into their high-definition TV set. They also jumped ship and left DirecTV recently.

Greg Thomson, a pilot for Horizon Air, said, “What convinced me to do it was realizing I was able to get most of the shows I like for free or at low cost on the Internet.”

The Thomsons and their 3-year-old son, Dylan, have adapted to a reduced TV menu. Their son misses his Disney shows, and Jessica said she misses a few regular TV series. She goes to Hulu.com to watch those TV shows.

What Web television and Web video can’t provide are major sports events, live specials like the Oscars, and some premium TV channels.

Belkin’s Kraft said he sees several barriers keeping Web-based TV from becoming a mainstream success. The chief failing, he said, is the challenge of trying to connect and manage new devices with Web services, many of which are also experimenting with how they provide video and movies.

People have to be willing to face some frustration and challenge in setting up those devices. “You need a robust network in your home,” Kraft said. “Then you have to deal with managing the devices and managing any subscriptions for services, like with Netflix or Amazon.”

When problems arise the home viewer has to find a workaround.

“For a lot of people who just want to sit back and see their shows, it’s way easier to punch in three numbers on a remote and see it right away,” Kraft said.

And yet, that description may not fit the next generation of consumers who are growing up more adventurous than their parents, he said; they might be the people to take on an all-Web-delivered home entertainment package.

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