Broadcast world changes amid ‘multichannel video subscriber universe’

Contributing writerJune 9, 2013 

Like many American cities, Tacoma offers a way for its citizens to keep up with the workings of government via a television channel.

On TV Tacoma, you can watch meetings of the City Council and the public utility board, as well as informational and discussion programs on local public-affairs and business issues. But it’s not entirely Tacoma-centric; the viewer can also find programs on Northwest Indian issues and news on the Department of Veterans Affairs. For lighter fare, the schedule includes programs on exercise, piano instruction and vintage cars.

TV Tacoma is available locally through cable systems Click and Comcast. Don’t live in or around Tacoma? Not a problem. You can tune in via the city’s website.

You cannot only stream what’s currently on (although some of the non-Tacoma programming isn’t available online because of licensing issues), you can find archives of meetings and programs — something that over-the-air broadcast and traditional cable delivery systems aren’t capable of.

And right there is the problem that the city of Tacoma and Click face in attempting to resolve a budget squeeze. When your own municipally operated information TV service is available to the public, with more convenience and features, through a channel other than your municipally operated cable-TV system, that suggests a major long-term competitive challenge.

It wouldn’t qualify for the adjective “major” if it was just TV Tacoma’s programming that was available to viewers in a different venue. As valuable as the programming might be, one doubts that TV Tacoma pulls in an audience anything close to what even a niche commercial entertainment channel might command.

But it’s not just TV Tacoma, it’s ... well, almost everything. TV stations, broadcast networks and cable channels themselves post clips and entire shows. So do services such as Hulu. So do streaming services such as Netflix and Amazon. So does the Internet service provider Comcast (in competition with its own cable television service). And that’s not counting the stuff that gets posted to YouTube that isn’t supposed to be there but remains available until someone raises a copyright fuss.

So it’s not just Click and Comcast, it’s the entire TV industry that is remaking its business model without a clear understanding of what the new model looks like or how it works financially.

In the meantime, someone’s got to pay for the existing model, which is why Click and the utilities board went to the Tacoma City Council last week for a rate increase. As TNT reporter Lewis Kamb detailed, the latest increase would represent the fifth increase since December 2009.

“Mirroring national cable trends, Click has struggled in recent years to deal with a declining customer base,” Kamb wrote.

The national trends are not encouraging. SNL Kagan, which compiles data on the media and communications industries, says cable companies lost nearly 1.7 million video subscribers in 2012, which was an “improvement” over the 1.8 million lost in 2011.

Where are those customers going? Telephone companies that offer video services are grabbing a lot; satellite services are grabbing some. In fact the gains in those segments are enough to make up for cable’s losses and produce a net increase in what SNL Kagan terms the “multichannel video subscriber universe.”

But that modest growth is not keeping up with household growth, the research firm adds, indicating that “alternative access is siphoning the segment’s growth potential.”

Viewers aren’t giving up video, they’re just finding other ways to watch it. In the process they’re also creating something viewers they’ve always wanted but cable companies have been unwilling to provide — true a la carte selection, in which you only pay for the channels you actually want and watch.

The situation is going to get worse, not better. More people are channeling video to their tablets, smartphones and similar portable devices. When someone finally comes up with an easy-to-install, easier-to-use system of seamlessly connecting and integrating the Internet with those millions of big flat-panel screens Americans have bought, then look out.

Those shifts have a lot of business and financial implications for a lot of folks, starting with Click customers who are likely to be facing still more rate increases to cover increased costs. Speaking of which, will cable systems finally balk at paying increasing fees to program and content providers making the same video available through other delivery channels? What happens to those providers if the revenue stream becomes a trickle?

At some point this, rather than one more debate over one more proposed rate increase, becomes the topic of conversation for the city government: What’s our long-term plan for this service? Can it be sustained if there is no growth?

You’ll probably be able to watch that conversation on TV Tacoma – whatever way you’re receiving and consuming video when that conversation takes place. Try looking on YouTube, next to the funny-pet videos.

Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at bill.virgin@yahoo.com.

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