Thursday, December 31, 2009

Time Warner Cable Shows Subscribers How to Cut the Cord

Time Warner Cable Shows Subscribers How to Cut the Cord

by Peter Kafka
Posted on December 31, 2009 at 8:41 AM PT

time warner screengrab The nightmare scenario for cable companies is that customers drop their TV subscriptions and grab their video directly from the Web, turning the cable guys into mere providers of “dumb pipes”.

But here’s a comprehensive set of instructions from a big cable company showing its customers how to do just that. It suggests that they head to the likes of Hulu, Fancast or “any search engine” — weird for them not to call out Google (GOOG), no? — to find their favorite shows.

Time Warner Cable’s (TWC) instructions on “How to Connect Your PC to Your TV” are embedded at the bottom of this post. And here’s a helpful video (Sorry for the clumsy screengrab – the video kicks in about 5 seconds in, and there’s some unpleasant coughing around 2:30. Yikes!):

The instructions (which Time Warner Cable promised to provide last week) are part of the company’s game of chicken with News Corp.’s Fox (NWS), which is supposed to come to a head tonight. If you believe the posturing so far, and Fox and its associated cable channels (Fox News, FX, etc) will disappear after midnight tonight, because the two sides can’t agree on new rate.

Alternate view: This thing will go down the wire and then get resolved, just as Time Warner Cable’s back-and-forth with Viacom (VIA) went a year ago.

If you want blow-by-blow coverage, let me suggest the LA Times’ tireless Joe Flint, who is updating each salvo in real time, or very close to it. Or you can just turn on your TV set after midnight tonight and take a look for yourself.

Still, no matter how this resolves, the danger for both sides is that consumers really do take up Time Warner Cable on its offer and start watching Fox stuff on the Web. And to be clear: Fox would prefer that people keep paying for cable TV, because it really likes getting subscription fees from cable TV providers.

That’s happening already, of course, but it’s not mainstream behavior yet. It may be that it’s inevitable anyway, but no matter what you hear from both sides of this contract dispute, both of them like this model very much, and they’d like to keep intact as long as possible.

Which is why discussions with would-be “over the top” providers like Apple (AAPL) are supposed to be about adding additional TV programming, not replacing cable.

The safety catch here for the TV business is that consumers who do go to watch TV on the Web, at least through sanctioned means, may be disappointed: They’ll find that the programming that is there doesn’t show up for at least a day — and often longer — after it airs. And some stuff, notably live sports like the NFL playoffs (contrary to the image in the screenshot above) and Fox’s “American Idol” don’t make it on the Web at all.

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