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Shredding the cord.

Byline: The Register-Guard

The TV landscape received a major jolt last week when two of the biggest TV content providers, HBO and CBS, announced that they will set up stand-alone services that will allow consumers to view their programming over the Internet - without having a cable or satellite dish subscription.

Internet streaming is already available from Netflix,, Hulu and others but they're primarily in the business of conveying other companies' content - although that, too, is changing as the larger services gradually move into producing their own programming.

HBO made its announcement on Oct. 15 but provided few details, saying only that its stand-alone service will be launched next year.

The next day CBS said it's also creating an online streaming service, CBS All Access, that will cost $5.99 per month and allow customers to stream current CBS shows the day after they air, plus give access to 5,000 episodes of past shows such as "Star Trek," "Cheers" and "MacGyver" via a companion service called CBS Classics.

CBS said its current shows will be streamed with advertisements but the ads will be shortened by 25 percent. CBS Classics shows will be streamed without ads. HBO doesn't carry advertising.

Not surprisingly, HBO's and CBS's announcements drew excited responses from people known as "cord-cutters" - mostly those 18 to 34 years old who had a cable or satellite subscription but canceled it, or who never had one.

Cord-cutters are part of a growing body of consumers who resent the high cost of cable and satellite subscriptions (roughly $50 per month for basic programming, double that or more for premium packages) and dislike being forced to accept dozens of channels they neither want nor need - what the distributors call "bundling."

The size of cable and satellite bills is based on the number of channels provided, and on which channels are included - HBO and ESPN are among the more expensive, for example - so bundling has been highly profitable for cable and satellite companies. HBO's and CBS's new services will move TV program distribution in the opposite direction - away from bundling and toward the "a la carte" or "menu" approach that cord-cutters and others have long advocated and desired.

The pressure to reduce or eliminate bundling may end up being the biggest impact of the move toward more Internet streaming, and it's a cause for concern for some in the TV industry. In a New York Times column last April, media writer David Carr cited a report by analysts at New York-based Needham & Co. who estimated that half of all TV revenue, about $70 billion, would disappear if cable and satellite companies weren't allowed to bundle the programs they carry, and only 20 channels would be left for customers to choose from.

The number of cable and satellite subscribers has flattened to about 100 million - and actually declined a half-million this year from two years ago. Meanwhile, the number of high-speed Internet customers keeps inching up, to 90 million currently, and that's important because people need high-speed Internet service to do online streaming. Nearly two-thirds of U.S. households now have an Internet- connected device.

It would be premature to predict the demise of cable and satellite service, however. Both HBO and CBS said their content will continue to be available on those services, and in many if not most instances Internet service is provided by a cable, satellite or telecommunications company.

Also, there's one key exception in CBS All Access' offerings: It won't include major sports programming such the NFL, which is many Americans' final link to what's called "appointment TV," meaning television that has to be viewed on the broadcaster's schedule if it's to be seen live.

If - or when - the NFL, college basketball's "March Madness" and other major sporting events migrate to the Internet, traditional television viewing is likely to become a thing of the past. In the meantime, as media economist Hal Singer told The Washington Post last week, "We're chipping away at the Berlin Wall."
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Title Annotation:Editorial
Publication:The Register-Guard (Eugene, OR)
Date:Oct 23, 2014
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