The pricing models are ridiculous. I cut the cable cord over a year ago, cancelled my $150 a month plan, and now enjoy $30 a month Internet only with $10 a month streaming Hulu plus, $9 a month streaming Netflix, and save a ton of money every year.
The cable business model is dead. I'm sorry, but it does not cost $billions to produce these TV shows. I only watch about 3 TV shows regularly and spend maybe 2.5 hours a week doing that, so I'm not going to pay more than a few bucks a month. Also, I'm sorry, but if I pay for content, I am not going to let you get paid to show me unskippable ads. Not going to do it. The market has spoken. Technology is catching up to the cable companies and they are going to be relegated to bandwidth provider status.
Actually your model doesn't really match the economics. First I'm taking Netflix/Movies off the table for my response, totally different business model.
Most people don't understand how networks make money. The networks make money by one of 2 methods.
1. Ads.
2. Carriage Fees. Carriage fees are a portion of your cable bill that goes to the networks. These fees are MASSIVE. ESPN makes $3-$4 per subscriber (all subscribers - not just ones who watch ESPN) They make a billion dollars a year this way. Most networks make under a buck but still multiply $.50 (what Food Network gets on Cablevision - as an example [1] ) * 80,000,000 (estimated cable households in the US * 12 (months). And you end up with $480,000,000
So can you deliver content via the internet in a better way then over cable - maybe. But you also need to replace the revenues they're paying to the networks and nobody has figured that out. The cable companies and networks are tied together so tightly in this model that an OTT model doesn't make sense.
There's no way that $10 (per viewer) a month split between each of the shows comes anywhere near what the big networks are making in carriage fees. The bigger Hulu gets the more dangerous it gets to existing models and the less likely that it will get top tier shows.
As the producer of Modern Family said "Some estimate Hulu IPO could bring in $2Bil. What will the content providers get? Zero. What is Hulu without content? An empty jukebox."
If you're only watching 2.5 hours of TV regularly then you should cut the cord. But most people are watching that much a day [2]. Thats 17 hours a week (or close to 1.5 seasons of a one hour show a week). Even if seasons were $12 you end up paying over $60 a month. (and you need to know what you're watching).
I think it's fairly uncontroversial, especially in this forum, to say that I'm sick and tired of subsidizing a race to the bottom. Food network has increasingly stopped showing cooking shows, and I'm ready to vote with my wallet. The same goes for most of the other subject networks. If they lose that money, I'll be quite content, because they deserve to lose it.
That's right, Hulu is a network, not a TV producer (well, technically they do produce at least one show that I know of). Modern Family's producers get paid every time Hulu airs a show. All they have to do to make money is price it appropriately.
Let's do some napkin math, shall we?
Let's say Modern Family has 20 million regular viewers. Let's say it costs them $5 million to make one episode in production costs, actor salaries, etc. They can charge Hulu or Apple $0.50 to show an episode to a viewer, and then Hulu can either choose to sell 4 30 second ad slots for $0.25 each, or Apple can choose to charge $0.99 per episode. The producers made $10 million revenue for 50% profit, Hulu/Apple also made $20 million revenue for 50% profit, everybody wins.
The problem is that the cable companies and networks are used to being able to double and triple dip at the well of consumer spending. Charging for content and ads is double dipping. Bundling channels I don't want with the few channels I do want is triple-dipping. Why should they be allowed to do that?
There is plenty of profit to go around, but the cable companies might not like having their piece of the pie made smaller.
You're not really the typical TV watcher. The average person watches nearly twice as much video in a day as you do in a week. There was a NY Times story a few days ago examining cord-cutters showing the numbers just don't back up the hype. People actually aren't cutting the cord. They might be scaling back (who needs 30 HBOs?) but for the most part they're willing to pay for linear video services. I agree the future of cable / telcos is being an IP pipe but I don't think they'll be dumb pipe providers. They'll either be selling the IP services or cutting deals Verizon/Google style to maintain control of the network in other ways. Think about it from the perspective of Hulu -- wouldn't it make sense to cut a deal with Comcast if they were willing to make it very difficult for their subscribers to download illegal files? You'll end up subscribing to Hulu or Netflix the same way you subscribe to Comcast's digital premium expanded gold package or whatever they call it. Just another line item on your Comcast bill.
I know why I haven't cut the cord yet: sports. AppleTV doesn't solve this problem either. ESPN360 only kind of solves it since they black out any big games and it's kind of a pain to get on your TV. Until there's a way to say "I want nothing but a selection of every currently playing sporting event, and those I want in the highest possible quality", then it will be very difficult for me to avoid forking over money to Comcast. This despite the fact that I have developed something I can only call genuine hatred for them over the past 8 years.
How/where did you get $30/month internet? As soon as I ditched the TV part of the package from Comcast (and lost the BS 'bundle' discount), internet-only service went up to $60/month.
I (very happily) pay about 40 euros/month for unlimited internet (fiber nonetheless) plus free VOIP to Europe and the USA/Canada (and relatively cheap rates elsewhere). I believe I could get VOD as well plus TV but I have no interest in the latter and get my video from iTunes rentals.
Poor Americans are so isolated in their MSM cocoon they have no idea how they are ripped off! One would think that since they spend 40+ hours a week or whatever it is watching telly they would at least understand the true costs (i.e. how much they are being exploited).
Northeast - Cablevision. I'll admit the $29.95 is an "introductory rate" for the first 12 months, but then it only goes up to $49.95 a month. It's not a bad price for 20 megabits down and 2 megabits up.
Hulu Plus is still in preview but I got an invite recently. (though I haven't used it yet) I suggest you sign up here for the waiting list: http://www.hulu.com/plus I received mine 3 weeks ago and had signed up a couple of weeks after the announcement.
I received my invite about two weeks ago and signed up immediately. I do not have cable (or a tv), but I'm not sure if I will keep subscribing.
I don't spend enough time watching it on my iPad, and there's far too many shows that are still restricted to the last x (5 normally) episodes.
If you're caught up on the shows you watch, there's no need to subscribe unless you want it on other devices as well. But if you want to watch the whole series of a show, $10 is much cheaper than buying or renting elsewhere.
Yep, preview invitee. It's not all it's cracked up to be. Sure, you get back-seasons of some shows, but for PS3 and iPad there are no closed captions, which seems like a huge step backwards.
720p is nice on the shows that have it though. I have a laptop connected to a 55" LED-backlit LCD TV via HDMI and it seems to work pretty well for me.
I've got an invite, and I was not impressed. A lot of the recent content is still only available through the web site, and the recent content is the only reason to get hulu in my opinion. If you want old shows, netflix is the way to go.
This will probably improve over time, but I don't anticipate keeping it much longer.
The cable business model is dead. I'm sorry, but it does not cost $billions to produce these TV shows. I only watch about 3 TV shows regularly and spend maybe 2.5 hours a week doing that, so I'm not going to pay more than a few bucks a month. Also, I'm sorry, but if I pay for content, I am not going to let you get paid to show me unskippable ads. Not going to do it. The market has spoken. Technology is catching up to the cable companies and they are going to be relegated to bandwidth provider status.