Can Cable TV Survive the Hulu Era?

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Is cable TV about to go the way of UHF? Data culled by the Pew Research Center estimates that 22 percent of American adults have cut back or canceled cable within the past year, and within that group, 32 percent have connected their computers to their TVs to view Web video. Not surprisingly, cable TV providers such as Cablevision and Comcast have begun to take notice, and are rolling out their own online video services in response.

"I no longer pick between the TV screen or my laptop screen—my computer serves double duty," said Twanna Hines, a 34-year-old, New York City-based relationship writer and blogger, who traded in cable television for online video this past spring. "I don't even own a television anymore." When Hines is in need of a visual diversion, she points her browser toward Hulu or YouTube. In fact, she's considering purchasing a large-screen monitor to recreate the experience of watching programming on TV. And Hines isn't alone.


Time Warner Cable, the nation's second-largest cable operator, lost 119,000 basic video customers in the fourth quarter of 2008, as the economic downturn caused consumers to second-guess the necessity of premium TV. And although cable companies are doing their best to dangle Triple Play discounts (which includes cable, Internet, and phone service for a low price), some customers are just fed up. Lauren Fairbanks, a 25-year-old blogger who writes about budget living, believes that these deals aren't enough to entice her to sign up for paid TV ever again. "It's just too much to pay for TV," she said. "Cable companies are greedy bastards." Unfortunately, thanks to the continuing online ad slump—and the fact that broadcasters are searching for new ways to monetize their content—the free online TV party may not last much longer. Growing Online Audience There's more legitimate television and movie programming available online, and for free, than at any other time in the Web's relatively brief history. You can watch the latest episode of Lost on the day after it airs, catch up with back episodes of 30 Rock on Hulu, and follow the adventures of Star Trek's Captain James T. Kirk on YouTube.


Hulu, the 2007 joint project between Disney, NBC Universal, News Corporation, and Providence Equity Partners, has experienced tremendous growth, according to data compiled by Nielsen Online. In April, users streamed more than 373 million videos, a whopping 490-percent increase over the same period last year. Due to this increase, Hulu has become the second most popular online streaming video repository; only YouTube (which displays both studio and user-generated videos) eclipses it. The demographic of online viewers isn't merely comprised of teens and twenty-somethings, either; Nielsen estimates that 29 percent of Hulu's audience is made up of adults—ages 35 to 49—who are looking for long-form content, not just cute kittens and skateboarding mishaps. Hundreds of movies and thousands of TV show episodes have been available on YouTube's Shows and Movies channels since its April launch. Although YouTube wouldn't reveal the exact number of viewers it has, or the number of streams thus far, a representative from the popular video hub gave us a taste of its early impact: The world premiere of Wayne Wang's independent film The Princess of Nebraska was viewed more than 165,000 times during the first 48 hours that it was live; a number that Variety estimated was the equivalent of landing the 15th spot on Hollywood's weekly box office charts. "The business is changing fast," said Graham Bennett, YouTube's strategic partner manager. "We consider ourselves on the forefront. Clearly, online is the future." Hulu and YouTube are pushing the television-on-the-Web movement, but the question must be asked: Is forgoing cable TV, which can cost anywhere between $20 to well over $100 per month, for online television and movies a viable option for entertainment seekers?

Next: Should You Cut the Cable Cord? >> Should You Cut the Cable Cord? Pros & Cons. "I gave up cable in 2008 solely because I had maxed out three credit cards and didn't have money for it anymore," said Fairbanks. "It was either that or rent." Fairbanks discovered Hulu during her period of financial crisis, and enjoyed the service so much that she continued to use it in lieu of cable TV, even when she was long out of debt. She also traded in her pricey cable Internet subscription for Verizon DSL, which starts at just $19.99 per month. naruto_shGabriel Fuentes is another online TV convert. The 30-year-old EMT trainee discovered Hulu while looking for a method to view episodes of Heroes that he had missed, and now says it commands at least 75 percent of his TV watching time. "Hulu's great for catching up on your favorite shows, and also discovering new shows," Fuentes said. "I discovered First 48, Kings, and Naruto there, and found it hard to go back to traditional television. I can watch when I want to watch without buying a DVR." A major drawback that's specific to most online television programming is the lack of a live feed. Typically you can't tune into, say, Fringe as it's being broadcast. And although you can usually stream live breaking news, such as a Presidential address, major events can result in online traffic jams. For example, although Hulu streamed the Michael Jackson memorial as it was happening, the amount of traffic to the site slowed the video to a crawl. "Sure, it sucks that I don't get to see shows live or as they occur, but it's okay because I can always catch it later," said Hines. "It's a trade-off, but it's worth it." Fuentes also sometimes misses live TV, because Web videos can kill the channel-surfing experience. "Every show starts at the very beginning of an episode, so you don't have an opportunity to sample a show as you would when you jump into the middle of one while changing stations," he said. roku_shThe current state of online television is basically that there's a variety of good content to watch, but not enough of it to attract the vast majority of couch potatoes. "Until the good chunk of content is online, there won't be much cord cutting," said Tim Twerdahl, vice president of consumer products for Roku, which makes the $99 Roku Video Player. "Popular channels such as Discovery and Food Network don't put that much online." However, the major players in online video are trying to close the gap between traditional and Web TV. For example, Roku now lets sports fans tune into live Major League Baseball games starting at $29.95 per year. The company's box also streams content from Amazon Video On Demand ( and Netflix (starting at $8.99;

Next: New Cable Initiatives, Fees >>

<< Introduction

Cable's New Initiatives: TV Everywhere, On Demand Online The biggest hurdle that Hulu and YouTube face may be the cable companies themselves, which are already home to some of the most popular movies and TV shows. In June, Time Warner announced a partnership with Comcast to develop TV Everywhere, a model that was created to extend cable programming to the Web—free and on demand—for existing customers. The goal is to allow subscribers to view their favorite programming via the Web, and offer deeper content than Hulu and YouTube. comcast_shAs part of this initiative, Comcast announced that it would kick off national trials of its new On Demand Online service in July, which would bring A&E, BBC America, CBS, Discovery, HBO, IFC, Starz, TBS, TNT, and other cable channels to approximately 5,000 customers, and serve as a test run of TV Everywhere's authentication technology. The content is available at,,, and On Demand Online will function very much like traditional on-demand services offered today via cable TV; you select a show to watch from a selection of content to which you currently subscribe. If a given show has ads when you view that same content on your TV, ads will appear in the online version. Similarly, such premium channels as HBO will lack commercials when streamed through the Web. Although late to the game, services such as On Demand Online are designed to show entertainment seekers that they can get more content than online-only services—if they're willing to not cut the cord. But would cable providers consider letting costumers pay for strictly online content? Don't hold your breath. "Cable companies have an entrenched business model," said Roku's Twerdahl. "It's not in their DNA to deliver a Web-only experience." A cursory glance at On Demand Online may cause some to agree. While content from Hulu and YouTube can be viewed on any Web-connected notebook, Comcast's new service is not yet mobile. "Right now it's available in the home," said Kate Noel, senior manager for corporate communications for Comcast. "The authentication technology recognizes the user as a Comcast subscriber." Noel wouldn't comment on the possibility of allowing non-Comcast subscribers to sign up for the service, but she did say that Comcast was working to extend On Demand Live beyond the abode of its subscribers. Noel added that, despite this key limitation, there's much to like about On Demand Online. "We bring customers significantly more content than what's currently online," she said. "Customers can watch more TV in more places than ever before." Subscription Fees Coming? hulu-ad-23000With online advertising still in a slump and with cable companies looking to steal some of Hulu's thunder, could it just be a matter of time before Hulu pulls the plug on free online TV? Jonathan Miller, News Corporation's chief digital officer, has publicly stated that "the answer could be yes. I don't see why over time that shouldn't happen." News Corporation of course, is one of Hulu's backers. However, while it may seem inevitable that Hulu and YouTube will be forced to adopt a paid content model—at least as a premium option that supplies more content or less ads—some analysts believe that it will be a difficult transition. "It would be cool to pay $24.95 per month for all-you-can eat, or perhaps a pay-as-you-go plan, but that requires a strong infrastructure," said Roger Kay, president of Endpoint Technologies Associates. "It requires a lot of bandwidth, especially if you allow viewers access to full seasons." Kay believes that the ad-based models Hulu and YouTube currently employ are the best methods available to both, as neither company has a mechanism in place by which to accept payments. He stated that getting people to pay for content may be tricky, as not every studio may agree to participate. "Content owners can make the idea of a pay area difficult," he said. "Time Warner may do it, but Fox may not." Roku's Twerdahl agrees that Hulu and YouTube may not need to go pay. "Pay isn't inevitable; I think all models have a place," he said. "My take is that it's a matter of growing the audience."

<< Should You Cut the Cord?

<<  Introduction

Add a comment
  • lamapper Says:

    Cable TV will survive in the Hulu era, but first they will have to re-position themselves to survive and remain competitive, much to their chagrin over the longer term. Of course they will resist this for a few more years, as they have for many years already. The party is almost over for them, just not completely over yet.

    For well over 29 years now the Telco ~ cellular ~ wireless ~ wireline oligopoly has been over controlling and limiting the choices of citizens of the United States of America. Even after receiving American tax dollars in excess of $200 billion and spending money on lobbyists at the rate of $1.8 million per week; they still resist the one thing that could save them in the near (near then they truly understand) future ~ that one thing is Fiber over the last mile to the homes/apts of their subscribers.

    Even in 2009, 2010 a couple of short sighted players are ONLY running fiber to the neighborhood and from a point in the neighborhood to the individual subscribers coaxial cable. They can probably milk that for another year or two, which of course they will. History is clear on this, thus its obvious.

    They made a business decision to perpetuate the scarcity myth in order to raise subscriber fees, in perpetuity from whatever they were to the Cable Systems ideal of $150 - $200 per month. They did manage to push many people up to over $100 per month, however at what cost, as this article pointed out, in 4th Quarter of 2008, they lost 119,000 basic video customers.

    Kind of reminds you the problem the movie theaters are having, push up those ticket prices to three and four times their levels and have half empty theaters and lower concession sales. Obviously they went way too far and some theater chains are starting to suffer for it. The economic recession / depression driven by conservative corporate interests is exasperating the issue further.

    This republican driven bubble occurred after Harding~Coolidge~Hoover and now again after Reagan-Bush-Clinton-Bush. When are Republicans going to learn that you can not drive supply without driving demand. Economics 101 and demand is solely driven by workers wages, which they seem hell bent on driving to less than $5.00 per hour. Good luck surviving on that as any person who has worked three minimum wage jobs at rates between $7 - $9 per hour, but still can not afford health care will tell you. WAKE UP!

    This business decision, while seeming great, from a Stock perspective at the time, was extremely short-sighted as only an economic recession/depression can bring the deluded powers that be to realization. Of course they will all jump ship with heavy stock options, bonuses and more. Some will even move to other countries and leave the rest of us to clean up their mess. And a mess it will be.

    Its humorous to note the same conservative, religious, republican powers that be that demand worker wages drop to the same level as those in other countries...say about $5.00 per hour or less; unrealistically expect the citizenry of the country to continue to have the demand for increased goods and services fueled by higher priced oil, higher priced supply, increased credit rates, increased health care, usury loan rates/fees, predatory banking practices and the general increase in over all prices they need in order to sustain an increased supply to sustain stock prices and maximize share-holder value.

    The solution, from a streaming content perspective, is fiber. Only fiber can sate the consumer appetite for content. And the solution will come from private companies that do not have peering (read controlling) agreements with American telcos. There are already two examples of shining lights in the dark, dingy future:

    1) Greenlight, Wilson N.C.; invited in by local politicians after the telco/cable cos refused to provide fiber service. Granted the fees for 100 Mbps / 100Mbps are closer to $100 per month, rather than the $40 - $55 per month Japanese rates circa 2000; but at least its synchronous fiber access.

    2) User Owned Fiber, like Utopia in Utah, where a customer can pay $3,000 and literally own the fiber link from the local city / community owned telco switching station all they way through the last mile to their home. The providers must negotiate with individual home owners from the community telco point out for service. Thus they are “forced” to compete for customers. Again the users have bi-directional synchronous service.

    You (Americans) should ask your local politicians to offer User Owned Fiber in your community!

    We must have:

    ~ Unrestricted (100% of Cable service is throttled, restricted, limited, deep packet inspected to very, very levels, lower then DSL level speeds) access to the Internet.

    ~ Net Neutrality; This access must be net neutral (i.e. cable companies must not interfere/slow down packets to other streaming content providers (CBS, NBC, ABC, Hulu, Sci Fi, Discovery, etc... websites to stream content). 100% of Cable companies restrict a customer's broadband access to below broadband speeds (currently defined at the over slow/low rate of 768Kbps). Customers, Americans, Politicians, the FCC need to ask themselves, is it broadband if the bandwidth is reduced to less than 768Kbps at all, ever? I would suggest to you that the service is NOT broadband when limited to such low levels.

    ~ bi-directional, synchronous bandwidth of no less than 100Mbps / 100Mbps. It's 2009, it should actually be higher!

    ~ Minimum bandwidth level guaranteed for 100% of the time in order to be considered broadband.

    If the market is free (it is not) and working (it is not) then explain to Americans why in Japan they went from 100Mbps/100Mbps ($55 per month) in 2000 to 1 Gbps / 1 Gbps ($52 per month) in 2006; while here in America the FCC definition is only 768Kbps. Explain/Justify further that Cable companies routinely throttle/restrict bandwidth to lower than 400Kbps downstream and 40Kbps upstream? If broadband is 768Kbps, that is NOT broadband!

    In fact if you use the open source DD-WRT software you will see the throttle/restricting begin the instant the Speed Test ( finishes. What is even more disturbing is seeing the upstream “broadband” cable service throttled back to 0 Kbps and your streaming content of course stutter and stop.

    Customers need a minimum guaranteed level of bandwidth required for a service to be considered broadband. No Cable company will offer a guarantee of even 768Kbps. And the rate should have been 100Mbps/100Mbps by 2000. Hello, its 2009!

    The cable companies can not even approach this without Fiber, they know it, have known it for years, even if you are just learning this for the first time now. You should be pissed off that you have been kept in the dark! No other response is appropriate! Remember they have accepted your tax dollars since 1990 for the sole purpose of building out fiber, as a friend of mine says, “Where's the Fiber?”

    I know this type of technological censorship is not what my ancestors fought and died for. Nope, no way.

    I have purchased more than 4 homes over the years, I have bought/sold them and only because I had been in the last one for so long have I been able to escape foreclosure thrust down our throats by Republicans and supported by Democrats in bowed down prayer to their banker, financial masters. Too many Americans have not been as fortunate.

    Americans need to remember and vote. Never vote Republican again, they put us where we are today. Only vote Democratic until a new “Constitutional” party emerges. At that point, never vote for either of the two parties that seem to want to keep the “corporate-lobbyist-focused-status-quo” that is obviously failing miserable and simply not working. Its time for radical changes to economic, financial, credit, banking, health and insurance related issues. All the barriers, laws, checks and balances that prevented abuse in the past need to be re-implemented and restored to save American families. Its just taken Americans another 20 years (since Reagan) for us to learn what does not work. I mistakenly voted for him as well, we all can learn from our mistakes! Americans need to demand, in the form of more and higher wages, jobs that will economically stimulate demand and give us a chance of digging ourselves out of this mess. A chance to save not only our families but our neighbors as well. We need to follow the money of our purchases and consumptions and be sure that 60 – 80% of it stays here in America, period. Too much has been allowed to flow overseas where it does nothing to help Americans.

    Corporations are not, nor have they ever been people. Any politician that suggests otherwise or supports person hood type regulation needs to be removed from office for violating their oaths of office. (“Enemies foreign and domestic) Should they not do the right thing and remove themselves, we the voters, must do it for them. No matter how much corporate lobbyist money see thrown at these politicians, our vote does matter, as we discovered with electing President Obama. Had the turn-out been lower the Republicans could have stolen another election. Only with high voter turn-outs can that be prevented. Do not become apathetic, this plays into their hands and does not serve you well. Always get out and vote! ALWAYS!

    Everything we need to save us and fix all the problems exist in the Constitution and the Bill of Rights. If we are to be a nation of laws, our leaders, even the President and his cabinet, MUST be held accountable to those laws or the laws mean nothing. This alone will fix much of what the lobbyist are doing, much of which is illegal by many laws already. Getting lobbyist money out of the political process must be pursued along with enforcement of current laws.

    All this political and economic comments applies directly to the question, “Can Cable TV Survive the Hulu Era?”. Not only will Cable not survive in the long term, but most Americans will not survive without a stimulation of demand, i.e. worker wages that allow individuals to buy goods and services.

    When you do not have enough money for food, for gas, etc... forget about Health Care, forget about Cable, those things become nice to haves, not necessities, because you simply do not have the wages to pay for them. The new Health care regulations if passed may force Americans to pay an additional $1000 per month to purchase Health Care. That's an extra $5.81 to $6.25 per hour and at a time when wages are being driven down to less than $5.00 per hour. ($1000/4.3 weeks per month / 40 hours per week = $5.81 per hour) It just economically does not make sense. Also remember that those wages in other countries that are so low, the the powers that be want to drive us to, well those countries have FREE health care, don't they!

    How can it be good, to force Americans to buy service from the same industry they have come to despise and hate, the current failed Health Care/Insurance marketplace. There is something inherently un-American about this. I would suggest that we pay enough in taxes already for Single Payer/Universal Health care. And we should all, already be covered. Last time I went to the Doctor, I did not need the Health Insurance executive team, nor do those on Medicare! That saves America more than 30% right off the top.

    So they might actually legislate that we MUST purchase health care, but they will NEVER legislate that we must purchase Cable anything (Internet, TV or phone).

    From a Phone perspective, my VoIP service costs me only $60 per year and I am constantly told that I pay too much! So much for your triple pay service cable companies. Get a clue!

    My next house will have fiber or the capability of me purchasing my own fiber link or I WILL NOT BUY it! A good investment to pass on to my children or the next purchaser of my house.

    So yes, Cable TV will Survive Hulu, Hulu is here now.

    But consider this, I will be purchasing a new home sometime in the next two or three years, as many Americans hope to as we dig ourselves out of this politically created corporate recession/depression, even if that house has cable, I will not use it, ever. You have so abused my TRUST with your tiered business pricing model. You could offer your cable service for FREE and I would say NO! Yes, I am pissed, have a long memory, never forget and share all of this with family, friends and neighbors. I might not influence them all, but I will influence many, because the logic is sound. The history is obvious to all that care to learn.

    Yes, you can survive Hulu, but you will not survive the must-have-fiber-only years that follow, soon after!

    Enjoy your gouging Cable Company, the end is near. For Americans, the Fiber light is visible and will be to all eventually, even a house in the middle of no where.

  • Scott Says:

    of course it will. every single time a new thing comes along everyone always says the old thing will fail. we still have books, we still have newspapers, radio, television. I see television becoming more user enabled giving the person the ability to control the programs

  • ikkefc3 Says:

    "Can Cable TV Survive the Hulu Era?"
    Yes, because Hulu won't play video's outside the U.S.

  • Pookie Says:

    As soon as the addition of the TV (giant flat screen) to your network is as easy as plugging in a cord in the back of the TV - and the picture is as good as cable hi def - cable is dead. That time is very soon

  • seamonkey420 Says:

    i use my laptop and win7 rc to get my dvr'd network hd tv programmingand hulu desktop on my hdtv. only thing that can save able is a la carte pricing/channel ordering.

    the only cable channel that interests me is The Discovery Channel HD. i could care less about QVC or CSPAN or Home and Garden. They need to do this sooner than later or they could end up like the newspaper industry; too many steps behind to come back.

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