The stage is set for a showdown between television networks and cable/satellite TV services, thanks to the internet. It won't happen overnight, but your monthly cable or satellite bill could eventually be replaced by a monthly bill from Hulu, an online service that streams TV shows on demand.
For $10 a month, viewers will reportedly have access to a wider selection of shows than the free, ad-supported version Hulu currently offers. The service would work on PCs and specialized devices such as the iPad, videogame consoles and set-top boxes. The company plans to test a version of this “Hulu Plus" subscription, an expected development, with select users as early as this month to find out whether they'll will bite, according to sources cited by the Wall Street Journal and All Things Digital.
In order for consumers to pay for a video service like that, it will need to be reasonably comprehensive. So it's no accident that the same week Hulu's subscription plans came to light, a Bloomberg report surfaced that the company is talking with CBS, Viacom and Time Warner's television studio divisions to add their shows. That would be on top of a line-up that already includes “Fox, NBC Universal, ABC, ABC Family, Biography, Lionsgate, Endemol, MGM, MTV Networks, National Geographic, Digital Rights Group, Paramount, PBS, Sony Pictures Television, Warner Bros. and more," including Wired.com.
For ten bucks, one wouldn't expect the level of programming cable and satellite offer for larger monthly bills. But if paid Hulu works, the networks will have proof that the internet can circumvent cable and satellite companies and they could easily add more expensive content tiers down the road.
If the networks prove they can charge consumers directly, and consumers are happy to supply their own “cable boxes" in the form of game consoles, television-connected computers, set-top boxes, tablets and so on, it's difficult to see why networks would tolerate cable and satellite providers grabbing a slice of profits, just for sending the shows through one pipe rather than the other.
Cable and satellite are classic middlemen. When the internet meets the middleman, the middleman tends to disappear -- or at least be replaced by a thinner middleman. We've seen it with record stores, classified ad-dependent newspapers, video-rental stores, bookstores and any other business that delivers something that the internet can deliver more efficiently.
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