Like glaciers in the arctic, TV networks are slowly and inevitably warming to the idea of cutting the cable cord.
Over the last several months, there have been lots of stories about negotiations between TV networks, such as ESPN and Viacom, and tech titans such as Apple, Google and Intel. The goal is presumably to change the way we watch TV by tapping into the Internet and using new technologies like touchscreens, voice and motion controls.
But how different would these web-based TV offerings be from what’s already available, and how close are they to actually happening? Let’s take a broader look at everything we know so far, and what’s still up in the air.
The Players and the Deals
I count four tech companies, at least that we know of, that are trying to cut deals with popular networks: Apple, Google, Intel and Sony. These companies are hoping that instead of going through a traditional TV provider like Comcast or DirecTV, you’ll just buy a game console or set-top box and stream all your shows through the Internet.
On the other side, we have the TV networks. I assume the tech companies are talking to as many networks as possible, but ESPN and Viacom are the names that come up the most. Google has also reportedly been talking with the NFL about getting the rights to NFL Sunday Ticket after DirecTV’s deal expires in 2014.
Discussions like this have been going on for years, but there are signs of change now. ESPN President John Skipper is now talking openly about shopping around with tech companies, and Sony has reportedly reached a tentative agreement with Viacom. Apple, meanwhile, has apparently gotten the attention of TV networks by promising an ad-skipping technology that pays the networks for the difference in eyeballs. This may turn out more fruitful than trying to cut deals with cable companies, Quartz reports.
Not every tech company with big TV ambitions is taking the same approach. Microsoft, for instance, wants to tap into users’ existing cable or satellite TV subscriptions on the Xbox One. The upcoming game console will allow you to plug your cable box into it, so you can watch live TV, play Xbox games, watch Blu-ray discs and stream Internet video all on the same input.
We’ve seen this approach before, in products like Google TV and Nintendo’s Wii U, and none have proven hugely successful. Microsoft’s best hope is to lure people in with the Xbox One’s other capabilities, and then to provide a good enough TV experience to keep people hooked on that single input.
Of course, some companies are simply avoiding ambitious content deals and instead relying on standalone video apps such as Netflix and Hulu. Devices like Roku haven’t transformed television overnight, but people are growing more interested in these dead-simple streaming boxes that don’t carry huge monthly fees. It’s no surprise that Amazon is rumored to be eyeing the space with a set-top box or gaming device of its own.
The Big Bundle Dilemma
So here’s the $150-per-month question: Will these newfangled web-based TV plans save you money? The answer is “probably not,” at least not if you’re expecting to get the same amount of content that you do through cable or satellite.
TV networks make most of their money on carriage fees from cable and satellite operators, an arrangement made even more lucrative by tying several channels together as mandatory bundles. That’s why Comcast can’t give you ESPN without also giving you ESPN2 and ESPN News, and then charging you for the privilege of having all three. Neither ESPN nor Viacom are planning to change their bundling ways when it comes to web-based television. They may even charge more for these bundles than the cable companies pay, as the New York Times speculates. Or, as Bloomberg says, they may require a certain number of subscribers, with tech companies paying the difference if those numbers aren’t met.
The best we can hope for is the ability to break subscriptions down into smaller bundles–for instance, all of the ESPN channels, or a big bundle from Viacom–instead paying for 200 channels you don’t want. Apple and Google, after all, have different business goals than Comcast or Time Warner Cable. Apple makes most of its money on hardware, and Google makes most of its money on advertising, and they both have a broader goal of locking you into their phone, tablet and TV ecosystems. Compared to your cable company, it doesn’t hurt Apple or Google nearly as much if you get a smaller package of TV channels. So far, Intel is the only company that has talked about this possibility of smaller bundles.
Why Web TV Matters
Assuming these web-based offerings aren’t much less expensive, if at all, than traditional cable and satellite, why should anyone care? As analyst and TIME Tech contributor Ben Bajarin explained earlier this week, there’s a good chance tech companies can offer a better TV experience than Comcast or Time Warner Cable.
Just think of DVR as an example. It gets the job done, but it’s flawed in all sorts of ways. You have to physically record the show in question, which means you can only record a certain number of shows at once, and only store a certain number in total. Internet-based TV could allow every non-live program to be on-demand all the time. We could use our phones or tablets to easily search through all that content, or use voice controls to just say what we want to watch. Tech companies could also provide better recommendations on what to watch based on social networking and our past viewing history. (Apple reportedly acquired Matcha.tv for that very purpose.)
There’s clearly lots of potential for tech companies to change the way we watch TV, as evidenced by the growing list of companies that are negotiating. Still, until any of these companies announce finalized deals and give us details on actual products, it’s all just hopes and dreams.