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CES 2010: Going Over The Top

The biggest battle - $120 billion big - in consumer electronics is the fight between cable and the Internet. At stake: your favorite TV shows

3 min read

Taking off my journalist hat for a moment, and considering myself as a consumer of electronics, the best thing I've brought into my living room in the past few years is a small black $99 box made by a small company named Roku. The Roku box delivers Netflix's instant Internet movie service — more than 10 000 of them — to the television instead of the computer.

I've probably watched 200 movies in the past two years that I would have watched on cable channels — or wouldn't have watched at all. In the battle between cable and the Internet for my movie-watching soul, the Internet is winning. I've scaled back my cable subscription to a minimal package, in large part because I don't need the premium movie channels. There's an entertainment industry name for what I'm doing, it's called going “Over The Top.”

If I tried to go Over The Top for all my video needs, it would take a lot more than Netflix. In fact, movies are the easiest part of it; offered, as they are, on Amazon, iTunes, and any number of other services. Television programming is much harder to find. According to one speaker at a panel session here at CES on Thursday, “I Want My IPTV,” only 53 percent of broadcast and 8 percent of cable programming can be found (not counting piracy).

Netflix isn't the only way video coming to my living room via the Internet, and while I was the one to solve the movie problem, for everything else, my wife is the queen of Over The Top. She buys TV shows on iTunes — Glee, Damages, and Castle have been the recent favorites — and we watch them via Apple TV. Some other shows are free; she podcasts The Rachel Maddow Show, for example, which we can then also watch on Apple TV. (Remarkably, MSNBC makes just the audio stream as well as the video available, and both are free of commercials.) Or, for her at least, on her iPod or iPhone (yes, she has one of each).

We haven't figured out a good way to watch The Daily Show on the television but it's easily watched on the computer at the show's website. (And while it's not commercial-free, there are only a handful of shorter-than-a-minute commercial breaks in the show.) Likewise for all the shows available on Hulu.

At the “I Want My IPTV” panel, the moderator, Brian Cooleyof CNET, described a way of doing that with an Apple Mini, a Panasonic digital projector, and a wireless keyboard and mouse. While not cheap, the whole solution costs less than a 50-inch television. More to the point, if doing so would let us cut the cable tie completely, instead of just scaling it back, I'd save more than $50 each month. (That's a new $2000 LCD projector in little more than three years.)

Needless to say, the cable companies are not thrilled about Over The Top viewing, and the television studios aren't happy about it either, even as they grudgingly make more and more of their content available. Take for example the ongoing war between Hulu and Boxee. (Hulu is an effort by the parent company of NBC to make its shows available directly on the Internet; Boxee is a software program that lets you play videos and music to your television.) NBC is willing, for now, to let you watch its shows on the small screen, presumably to maintain viewer loyalty in the long run, but it's not, as yet, ready to come to grips with alternative ways for you to watch them on the living room's big screen.

There's $120 billion dollars in advertising revenue at stake, and a handful of 30-second videos delivered to the web audience, a la the Daily Show, aren't going to make a dent in it. Likewise, even if my wife and I paid, say, $20 each for the dozen shows we like to watch, that's less than half of what we pay the cable company today. For a cable company, this would be the very worst form of unbundling and it would do to the cable business what CDOs did for the banking industry.

When I wrote about Microsoft's IPTV software, back in 2005 ("The Battle For Broadband"), it was a way of using the Internet to go around the cable industry's pipeline of movies and television programming into the living room. Today, phone companies like AT&T (with its U-verse DSL service), and Verizon (FiOS optical fiber service), are trying to do just that. For consumers like my wife and me, though, that's just a different pea trapped in the same pod. We're looking to break free entirely. “Free” not in the sense of a free lunch; "free" as in "freedom": We want to watch what we want to watch, when we want, on whatever device we want, from LCD television to laptop to smartphone.

That day is coming. But if the history of digital music (a much, much smaller and if not exactly obscure object of desire) is any guide, hold on, it's going to be a bumpy ride. It'll take a messy decade of format wars, copy-protection wars, and device wars before the dust settles.

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