Tuesday, May 08, 2007

Cox Leads the Way

According to a story in MarketWatch Cox is the first cable company to agree to disable the fast forward button on its video on demand product. Video On Demand (VOD) has been attractive for the cable companies largely because it emulated a DVR without the expense of providing a DVR box in the home. DVR's are popular for three reasons: 1) they allow the viewer to "time shift" — to view a show whenever they want; 2) to skip boring and repetitious ads, and 3) to spend less time on a show because you've skipped ads. (If you don't have a DVR, trust me, you want one.)

From the story:
Walt Disney Co.'s two big TV networks, ABC and ESPN, have struck a deal with cable operator Cox Communications Inc. to offer hit shows and football games on demand, but with the unusual condition that Cox disables the fast-forward feature that allows viewers to skip ads, according to a media report Thursday.
Obviously this is not good for users. A little less obviously it is grand news for TiVo who sells the most successful independent DVR. It is easy to to evade the new "requirement" that you watch ads.

Here's the trick:
  1. DON'T rent a DVR from the cable company (they can make their DVRs reinforce this new policy if they choose)
  2. Do buy a TiVo (or use an PC-based alternative like MythTV)
  3. Tune into your Video On Demand channel
  4. Navigate to your movie or show (cable navigation is a pain you can't avoid)
  5. Record it on YOUR OWN device
  6. Watch normally: whenever you want, and power through the ads in the way you power through the ads found in normal broadcasts.
  7. (Yes, it really is that easy. This attempt to control consumers watching habits will fail and lead to a resurgence of independent DVRs and a dramatically reduced take rate for Cox's DVR products. Buy TiVo stock now.)
I already follow the above procedure with Cox's current VOD, even without the incentive of Cox trying to force ads on me. Recording shows is part of my default behavior, it allows me to pause for the phone, set up supper, catch up on some little chore, rewind to catch critical dialog and the like--recording on my own equipment allows me to pause and rewind using TiVo's silky-smooth interface and fast local storage. It makes a world of difference in the user experience. Cox's interface, mediated by a clogged-up network is slow, so painfully slow that my son refuses to use it and called me up to give me the what-for for suggesting that he do so. (I still think it is basically a good thing. Cox is providing you with a very nice library of recorded material. Just use it in conjunction with your own DVR.) (And, yes, Cox's network is clogged up--I still, months after local launch, regularly get a "network busy" signal which abruptly throws me out the system I try and access the VOD channel. Consequently, I haven't developed any habit of use. Cox really needs to fix this if anyone is to treat the service seriously.)

I'd like to say that LUS won't succumb to this ploy by the content providers but, frankly, I don't believe they'll be in a position to resist if Cox's collapse leads to new standards for cable companies and their emerging telecom competition. This is one of those rare places where competition does not work for you. As long as cable companies had an effective local monopoly on wireline video they were able to resist the content providers demands that they not let users skip ads--and up to now they have refused to cripple their DVRs or VOD content despite unrelenting pressure. In truth, content providers had little leverage. If they wanted cable viewers in Lafayette (or Atlanta or Miami) to see their VOD content they had to deal with Cox or simply not sell in that market at all. Enter prospective competition from the likes of AT&T. Now the possibility exists that content providers can give an "advantage" to one provider by refusing to sell content to their competitor unless they restrict their customers. Usually the way to exert this pressure is to refuse to sell to the new entrant--AT&T in our case. It is unusual for an established market leader like Cox to lead in giving in to supplier's demands. Once one provider in a market gives in the others will have to as well--or decide to operate at a competitive disadvantage in order to preserve their customer's rights. How likely is that? Easy answer: Not very. And since regional markets differ (Cox and AT&T serve different, if overlapping, regions) each competitor that gives in spreads the new practice to new areas of the country.

Expect a general collapse, courtesy of Cox's leadership.

I repeat: Buy TiVo.

2 comments:

Anonymous said...

Hi sir
Have you ever had a job? do you still live with your parents? Are you a college professor? Do you like persident Bush? who do you feel about the war? Are you from this country? what religion do you belong to? what is your problem with the American Dream? Are you unhappy? Have you ever felt like hurting people?

John said...

Do you think you have made a point?

Here's something to look up: "ad hominem." I've seldom seen a purer case.

I'm left to wonder what you think about the actual substance of the post. Do you actually support Cox in this?