The Proposed Cable/Netflix Alliance Will Be a Miserable Failure


When I was ten years old, my grandparents bought their first VCR. It was a very big deal for them, and they asked me to come over and help them set it up and show them how it worked. Grandma had indicated that they’d like to tape the next televised game from our hometown basketball team, so my dad dropped me off at their house that Saturday night. I plugged in the coax, ran the cable from the deck to the TV, and at 8pm sharp, I hit record on that evening’s WSU game. About ten minutes into the game, I noticed that something was very wrong. Grandma, who was usually a vocal and demonstrative fan (each basket was usually followed by some combination of applause, rising to her feet, and/or a boisterous “Hot dog!”), was worrisomely quiet. I looked over at her quizzically. In the quietest audible whisper she could muster, she asked, “Does it record everything we say?”

I couldn’t help but think of my grandma’s first VCR when reading reports of a possible Netflix integration into cable boxes, because it seems like such a “if you can’t beat ‘em, join ‘em” move by the cable companies — as if they’ve given up on fighting the streaming service, and are instead content to serve as the bridge to it for technophobes like my grandma.

Over the past few years, Netflix has made itself easily available away from the desktop and tablet: on streaming devices, some TVs, Blu-ray players, and game systems. And it’s no secret that the $7.99/month Netflix Instant service has proved a major factor in the rise of “cord-cutting.” The increased promotion of cable’s “on demand” channels for movies and television seemed to indicate that they saw Netflix as a competitor, and maybe it was in terms of content — but not in price. Our bill for Internet and a cable box with HD and DVR options runs well over $125/month; during our cord-cutter period, when we just had Internet and Netflix (and a borrowed HBO GO password, natch) it was less than $50. I would not presume we’re the only ones capable of doing this math.

Cord-cutting isn’t happening quite as quickly or as widely as you might think, in terms of the overall numbers. But what such dismissive pieces and studies leave out is perhaps the most important factor in the discussion: demographics. When you hear people talking about ditching cable for Netflix and Hulu Plus, it’s not usually people like my grandma; it’s young subscribers, people just out of college, trying like hell to find a job, and patently uninterested in shelling out $150 a month to make sure they can get all 23 ESPN channels.

There’s a reason 25-to-54-year-olds are referred to in television as the “money demo”: they’re the most desirable audience in terms of willingness to spend money on the products advertisers are buying commercial time for. They’re not seeing those ads on Netflix (or BitTorrent), and they’re only seeing a few on Hulu. Older viewers aren’t fleeing cable, but younger ones are — if they’re subscribers at all.

And part of the reason older viewers stick with cable is because it’s easy. There are certainly exceptions (and I’m sure they’ll make themselves known in the comments), but for the most part, older viewers are less likely to embrace new technology, even if it’ll save them a few bucks; thus, they’re less likely to drop cable and watch Netflix or Hulu on a Roku or Apple TV.

Which is why the idea of Comcast, Time Warner, Cox, and Charter making Netflix available to those viewers seems a little bananas. It’s certainly not going to gain them any new subscribers — anyone who doesn’t have cable and wants to watch Netflix on their television has probably figured out how to do so by now. But what it will do is possibly introduce the service to new, older viewers, or to show them that it can be enjoyed on a screen bigger than that eMachine in the basement. And then they might start to wonder why they’re spending $150 a month to make sure they can get all 23 MTV channels.

As a short-term attempt to be everything to everybody, Netflix/cable integration might make good PR (and it’s certainly good for Netflix stock). But as a long-term strategy for cable’s survival, it’s laughable. It doesn’t solve the price point problem, or present more choices for subscribers. It’s basically cable companies rearranging the deck chairs on the Titanic.