Cutting The Cord – Thoughts from the other side

This month my family are joining the rivulet of Americans who are “cutting the cord” – canceling their premium cable service in favor of consuming content primarily from the internet.  In our case we canceled DirecTV service.  Here are our reasons and initial reactions. I’m planning some future blog posts about the nuts and bolts of cord cutting.

16 year old TV EOL

Full disclosure:  I worked for Comcast/NBC in their Interactive Media Group for two years.   I didn’t work on the cable side of the business, I started and ran a product and sales/marketing group for their larger websites.  One of the reasons working at Comcast on the digital side appealed to me was that I felt I’d have a ringside seat for the disintermediation that is taking place in Hollywood.  My time there didn’t provide me with a lightning bolt of clarity on this subject, but it did inform my opinions.  (Comcast isn’t available in LA so I kept DirecTV when I joined)

Our reasons for cutting the cord:

  1. Expense: We were spending about $115/month for our DirecTV, plus $210/year for the MLB Extra Innings package.  (One of my favorite guilty pleasures is watching or listening to Red Sox games during the dog days).  In the scheme of things this isn’t an overwhelming part of our discretionary income, but its not insignificant.
  2. Too much TV: I use TV as a crutch for downtime, and for the most part its wasted time.  Less TV is a good thing.
  3. A lot of what we watch is online: between premium direct-to-fan sports packages, Hulu Plus and Netflix, there is a lot out there.
  4. Curiosity: The internet TV space feels a lot like the PC market in the early 80s.  Like when I saved money from mowing lawns all rummer so I could drop $800 on an external floppy drive for my Atari 800 so I could play pirated games.  Its experimental, its hobbyist, its a new frontier.  It appeals to the geek in me.  Even more so now that I have taken the plunge.
  5. The cloud: Amazon gave me 20 GB of cloud storage for free, I wanted to see if that was a realistic solution for owned media playing in the living room.  I worked on a similar idea at Yahoo! in 2007, but we didn’t have as good a business case as Amazon, and we had less leverage with the labels.

What we did:

  1. Canceled DirecTV (yeah!!).  Actually we got everything up and running for a week and then canceled DirecTV.  My wife actually did this and said they gave her an extremely hard sell to get us to stay.  Even if you aren’t planning to cut the cord, call them up and tell them you are going to and see what they offer.
  2. Bought a Boxee box from D-link, which we connected via HDMI to our existing home stereo and living room big screen. ($200)  I’ll try to do a blog post in the near future on why I chose this solution – I’m still not sure I made the right choice.  On the positive side, because the hardware is largely unbundled from the content, you don’t have a high switching costs if you choose the wrong platform.
  3. Upgraded our internet connection from a really poor Verizon DSL line (about 1.5MBS although it was marketed as much faster) to a Time Warner cable line (>20mps most days). Optical is not available on our street.  (this was a wash cost wise, installation was free)
  4. Replaced my 16 year old massive 36″ console TV in our guest bedroom with a Vizio internet ready flat screen.  ($350 but this was overdue as the old one took up a ton of space.)  The Vizio internet software stack is based on an old Yahoo! software stack that i very tangentially worked on about 6 years ago.  I’m positive this software stack will become obsolete, but this TV was such a screaming deal I wasn’t too worried about it.  There is no futureproofing in an emerging technology market.  Does it matter what cell phone you bought 10 years ago?  5 years ago?  As an aside, how is Yahoo so early to all these markets (they had 20 good people working on it in 2006) and so poorly positioned to capitalize?  sigh.
  5. Subscribed to Hulu Plus ($8/month)  This works on our laptops and phones, and the Vizio TV, but not on the Boxee yet – supposedly its coming.
  6. Subscribed to ($15/month)  Not sure if I’ll keep this, but its a nice package.
  7. Subscribed to the MLB.TV premium ($119/season compared to over $200/season for the DirecTV MLB package, so this is a net $90 savings)
  8. Bought a digital antenna at Best Buy to be able to tune in over-the-air channels on the Vizio.  ($30)  I will probably get one for the big TV as well, although I’m not sure it has a digital tuner (they became mandatory in 2008).
  9. Bought a new MacBook Air – I needed a new laptop anyway, but partially rationalized buying this sleek machine because it is so great for media consumption.  Its basically an Ipad with a keyboard. (it was $1700, but I was going to buy it either way….)
  10. Kept the Netflix streaming subscription we were already paying for. (another wash)

So in total I shelled out $580 for hardware (not including the Macbook), mostly for a TV I needed anyway and saved $90 on the MLB Season Ticket package.  I shed $115 in DirecTV monthly costs and picked up $23 in direct to fan content subscriptions.  The Fox soccer channel was NOT part of my content package before, so most of this soccer content I did not have access to from DirecTV.

Initial feedback after about 2 weeks with internet ready TVs and a week without DirecTV

  1. Its not easy yet. On top of the inertia of not wanting to go through the 10 steps above, with Internet TVs you generally need to burn a few more calories, not just in initial setup but in finding something to watch. And then stuff crashes, you have buffering issues and content holes.  If you love watching TV and get frustrated easily, put down your cord cutters and walk away.
  2. The cable/satellite companies do add value right now.  I undervalued how EASY cable/satellite TV is.  Hit a button, it instantly turns on, its well integrated with DVRs, integrated program guides, search functionality, access to ON DEMAND content.   BUT, there is a gap between what we are paying and the value being delivered (its waaaaay less than $90/month).  I’ll write a future post about what this means for the upcoming “cable wars”, but suffice it to say Google smells blood.
  3. There is plenty of content. It may not be the same content you were watching before, but its good stuff.  And in some cases (like with MLB) you are getting a better product for less money (ie my package works on my Macbook and iPhone as well, the DirecTV one did not).  Not only that, but I am picking up 90 or so stations OVER THE AIR in HD (albeit many of these are foreign language channels in polyglot LA).  The main reason we all got cable in the early ’80s was all the channels – you could only get a half dozen or so with rabbit ears.  Over the last 30 years this has quietly changed, although I don’t think there is a lot of value in that content for me specifically.
  4. There is different content.  Smart people are already figuring out how to take advantage of the distribution opportunity.  For example, the Cartoon Network has an app that plays 2 min clips from their various shows one after another with no commercials.  Its strangely entertaining.  Also, there is a TED app which aggregates the TED talks (they aren’t as good as you think they arein general, although some are amazing).
  5. For now, a good 10′ browser is the killer app.  Any video you can watch in a browser you can get to on the Boxee (unless they have specifically coded the video player to not play off a PC).  This weekend I watched the Masters coverage off their website, and it what I use to watch content.
  6. Delicious saves the day.  In order for the browser experience to be somewhat usable, you need an rss feed of bookmarked pages that house video content.  I’m so glad Yahoo didn’t kill delicious.
  7. Just like everything else on the internet, its all about UX.  Just using what in 10 years will seem like dark ages UI really clarifies how much innovation needs to happen.  Right now it means good apps on the important platforms, and websites that work well on a 10′ browser.  Netflix is the clear leader here – their UX is light years ahead of anyone else’s and its integrated across form factors.
  8. The cloud is the DVR. Right now I don’t have a local hard drive for recording live TV – most everything is on demand from the cloud.  I’ll be interested to see if that changes.
  9. I’m reading more books, hopefully will blog more, etc.

At this point I don’t see us going back to DirecTV or cable, but I wouldn’t bet my life against it.  I think I’ll probably end up paying slightly more for content subscriptions than I am right now as new offerings come on the market, and I’ll probably rent more movies from iTunes or Vudu than before.  The fallout from Net Neutrality looms – but I don’t think its as much of an issue for people who aren’t pirating video.

Feel free to reach out on Twitter or in the comments if you have any questions.

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