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The Traditional Tube Is Getting Squeezed Out of the Picture

By Paul Farhi
Washington Post Staff Writer
Sunday, May 17, 2009

Sit down, kids, and let Grandpa tell you about something we used to call "watching television."

Why, back when, we had to tune to something called a "channel" to see our favorite programs. And we couldn't take the television set with us; we had to go see it!

Ah, those were simpler times.

Oh, sure, we had some technology we thought was pretty fancy then, too, like your TiVo and your cable and your satellite, which gave us a few hundred "channels" of TV at a time. Imagine that -- just a few hundred! And we had to pay for it every month! Isn't the past quaint, children?

Well, it all started to change around aught-eight, or maybe '09, for sure. That's when you no longer needed a television to watch all the television you could ever want.

Yes, I still remember it like it was yesterday . . .

* * *

Danny Ledonne rarely misses "The Daily Show." He's a frequent viewer of its cable TV cousin, "The Colbert Report," too. And for additional political satire and commentary, he often checks out HBO's "Real Time With Bill Maher."

The thing is, Ledonne doesn't own a television. He hasn't had one since he was in college more than eight years ago. When he walks into a friend's house nowadays and the TV set is on, he says, "It's like a quaint visit to an alien world."

These days, Ledonne, 27, can watch all the TV he wants merely by opening his laptop, or going to his cellphone or iPod. With full-length TV programs available all over the Internet (in both legal and pirated form), he finds he does just fine without paying a monthly cable bill -- or even having a TV. In industry parlance, he's among those who have "cut the cord," no longer tethered to the sources that have delivered programming into the home since television's inception.

As alternative means of watching "television" rapidly mature, the Danny Ledonnes of the world are at the vanguard of a potentially potent economic and social force. People like him could be poised to do to the broadcasting, cable and satellite TV industries what free music downloads did to the recording industry and free online news has done to newspapers -- that is, alter everything about the creation, production and delivery of TV.

Ledonne, for example, can construct an entire TV schedule without ever flicking on a remote control. Thanks to dozens of videocasting Web sites, such as Hulu, TV.com, Joost and Fancast, full-length episodes of more than 90 percent of the shows carried by the major broadcast networks are legally accessible within a day of being broadcast, according to Forrester Research (only about 20 percent of what's on cable is similarly available). And because online TV programs are always "on," and cost little more than the price of an Internet connection, Ledonne has gotten used to watching on his own terms.

"I don't want an arbitrary television schedule telling me when and where I'm supposed to meet it every night or every week," says Ledonne, a graduate student at American University and a video producer. "I want to watch when I want to, I want to be able to download it and listen on the bike or watch on a plane, and I want to do it for free with minimal advertising. Otherwise, I have better things to do."

The Sony in the living room isn't about to vanish, not with almost 99 percent of all American households still owning at least one TV. Nor are the cable or satellite industries in any immediate danger, given that 85 percent of the country still pays for TV service.

But watching video on computers and mobile devices -- the two other "screens" in American life -- is growing at a rate far faster than for conventional TV watching. According to comScore, a Reston-based research firm, online video viewing increased 42 percent last year, about 10 times the growth rate of TV viewing. The biggest winner in this trend may be Hulu.com, which shows programs from its parent companies, Fox, NBC and ABC, and other providers. Started just 13 months ago, Hulu ranks second (after YouTube) among video-watching sites, says comScore.

People in the TV and online businesses say coexistence between computers and TVs is still possible, and, in fact, even likely. Watching videos online simply whets a viewer's appetite to see more on a bigger screen and on a comfortable couch, says Anthony Soohoo, senior vice president of CBS Interactive, which owns TV.com and is in turn owned by the parent of the CBS TV network. "It's very complementary," he says. "People come to our sites because they missed their favorite show when it was on the air. For most of them, it's a way to catch up."

That could be wishful thinking; the trends plainly worry some in the TV business, particularly cable companies. Alarmed at the rapid online migration, cable operators have been pressuring program suppliers to limit the number of episodes they supply to Hulu and its ilk. Meanwhile, Comcast, Time Warner and Cox have been discussing a venture that would make more cable programs available online, but only to those who can prove that they already subscribe to cable.

"The reality is we are starting to see the beginnings of cord-cutting, where people, typically young people, are saying, 'All I need is broadband' "; they say they don't need cable for TV service, Glenn Britt, the chief executive of Time Warner's cable division, told stock analysts earlier this year. "So the impact of that potentially over time is to reduce the number of [cable] customers."

Sabrina Jaszi, 23, might be typical of the younger generation of online viewers. Jaszi owns a TV but no longer watches regularly scheduled programs on it. When she's not on her laptop, she uses her set strictly for playing back the DVDs she rents from Netflix. The rest of the time, it's "30 Rock," "The Office" and old episodes of "Seinfeld" via the Internet. The only time she's watched a "live" TV program this year was by happenstance -- at a Super Bowl party at a friend's house.

"The fact of the matter is I don't have time to stand in front of a TV and wait to watch a program," says Jaszi, an editorial assistant at a digital media company in New York. She gets her TV shows at a pretty good price, too: nothing. Jaszi doesn't even pay for an Internet connection; she uses WiFi in her apartment building in Brooklyn. Media, she believes, should be free: "I wouldn't say that watching TV online is about saving money because it was never something that I expected to pay for in the first place."

If Jaszi and Ledonne are the kinds of viewers who keep TV executives up at night, Dan Jones is what they see in their nightmares. Jones owns a TV set all right, but it's connected to his Mac mini computer. Which means that Jones doesn't have to watch his favorite shows hunched over a laptop or on a desktop computer screen, one of the drawbacks of mobile and online video. The connection enables him to stream Web videos directly to his TV set.

A new generation of devices such as those made by Apple, Sony and Sling Media make such video handoffs possible, foretelling a day when consumers will routinely pull videos from the vast library of the Internet and play them back on whatever device they choose. Microsoft and Sony both sell TV episodes via their Xbox 360 and PlayStation 3 videogame players, suggesting that iTunes-style downloads could be a viable model, too. Starting in December, Netflix and TiVo say they will begin a service that will enable TiVo customers with fast Internet connections to choose from among 12,000 movies and TV shows that can be streamed directly to their TVs.

An avid fan of the TV series "24," Jones has never bothered watching the show on what he calls "actual television." Instead, he's downloaded episodes from iTunes, caught earlier seasons on DVDs, and kept up with this season's plot developments via Hulu. It's the same way for Jones's other TV favorites, such as the sitcom "It's Always Sunny in Philadelphia."

"Once you can get them on demand, you really can't go back to watching TV the old way," says Jones, 27, a video producer at Harvard University. He and his girlfriend used to pay about $50 per month for cable, but he now thinks that paying a monthly bill is "just absurd."

Such attitudes are an ominous sign for the TV industry, and not just because consumers are watching every penny in a recession. The most vulnerable players may be the venerable broadcast networks, says Jeffrey Cole, director of the Center for the Digital Future, a think tank at the University of Southern California. "Teenagers today barely understand the idea of watching TV on someone else's schedule," he says. "When you tell them we didn't leave home because our show was coming on at 9 p.m., to them it sounds like our great-grandparents talking to us about horses and buggies."

Cole says the networks have been smarter than the music and newspaper industries about chasing viewers to new media "platforms" -- witness Hulu's ownership by the networks, for example. But this is mostly because the pace of technology gave the networks time to catch up, he said: Until 2007, most U.S. homes had dial-up Internet connections, which were adequate for downloading song files and text but too slow to handle movies and TV shows.

Now that more than 55 percent of U.S. households have speedier broadband connections, Cole predicts an accelerating pace of decline for the broadcast TV networks and the hundreds of independently owned TV stations, known as affiliates, that transmit the networks' programs. NBC's decision to drop original dramas at 10 p.m. on weekdays this fall in favor of an inexpensive talk show hosted by Jay Leno is a clear sign of the growing enfeeblement, he says.

"The broadcast networks as we know them are in true peril," Cole says. "They will barely have audiences under the age of 40 in the next three to five years."

Not so fast, counters Gary Arlen, who runs a media technology consulting firm in Bethesda. Millions of households still don't have fast Internet connections, he points out, making it difficult for them to view videos online. Millions of others can't or won't adapt to new technologies. While networks and local TV stations may have the most to lose, "I don't see total destruction," he says. "Some audiences are just not going to want to watch [programs] on a laptop, a desktop or a hand-held device."

In fact, there are significant financial questions about whether "free" online video can ever become a viable business. One problem: TV shows that migrate online carry fewer commercials -- often no more than two minutes of ads per half-hour program, compared with eight minutes on conventional TV. While the research company eMarketer.com predicts that online video sponsorship will grow 44 percent to $850 million this year, that's still a tiny fraction of the $70 billion spent on cable and broadcast TV ads in 2008.

CBS Interactive's Soohoo acknowledges that it's difficult to cram more ads into, say, the online presentation of "CSI" or "Survivor"; online viewers simply won't sit still for long ad breaks. "People watching online have shorter attention spans," he says. "Too many commercials get in the way of the experience." But that evokes a still-unanswered question: How will the producers of TV shows that now cost $2 million or even $3 million per episode ever support such productions online?

What's more, few people have considered a subtle social cost of TV's brave new world. Once, long ago, when mass audiences gathered around the TV set for the same programs, it created a shared national experience and a common frame of reference. The "water cooler effect" still exists for a handful of shows -- "American Idol," the Oscars and Super Bowl -- but those days seem numbered.

What happens when no one is watching what anyone else is watching, with or without a TV set?

Danny Ledonne answers that the "water cooler" is already reasserting itself on social networks like Twitter and Facebook, where like-minded people can discuss their passions and discover others' on a worldwide basis. Just the other day, he said, he was the first in his circle of friends to see an amusing YouTube video, which he then posted on Facebook.

"That's the new water cooler, I believe," he says. "Media is and should always be a social experience we share, albeit in new ways."

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