There are a lot of ways to watch TV -- free streaming online, via a traditional cable or satellite package, paying for services like Hulu Plus, etc. But the TV industry makes vastly different amounts of money depending on how you choose to watch. We invited Peter Kafka, media reporter for the website All Things Digital to play the part of a mustache-twirling cable baron and explain which of our staffers have viewing habits he can support and why.
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BROOKE GLADSTONE: In a less confusing time not so many years ago, couch potatoes basically fell into two camps, cable satellite watchers and folks who stuck to network TV. Now you can get your TV via a monthly cable package or via satellite, or through online services like Hulu, or through piracy or by peering into the window of your neighbor’s house. Of course, depending on how and where you watch, your bill will vary widely and your money will flow every which way.
Peter Kafka covers the TV industry for the website AllThingsD. We asked him to come on the show and play the part of a TV magnate or a cable king and to tell some TV viewers on the staff which among us he’d like to marry and which he’d tie to the railroad track. Peter, welcome to OTM.
PETER KAFKA: Hi, thanks for having me.
BROOKE GLADSTONE: Are you twirling your mustache?
PETER KAFKA: If you wanted me to emulate a cable baron, I could try to do that.
But I’m not nearly as wealthy as one.
BROOKE GLADSTONE: So we’ve got these three kinds of viewers. Katya Rogers, our senior producer, what do you do?
KATYA ROGERS: I’m the perfect customer. I don’t take anything for free. I have my Time-Warner cable bill, I have my Internet on there. It’s $130 a month, I think. I have a Netflix subscription, I have a Roku. I’m constantly buying on iTunes. I just throw money out the window. I just don’t even keep track.
BROOKE GLADSTONE: I, for one, not only pay for Direct satellite TV but I pay for Time-Warner Internet broadband. PJ Vogt, who is the lead producer on this hour, how do you consume television?
PJ VOGT: I don’t think I’m the industry’s best friend. Like sometimes I’ll pick up a Netflix subscription and then stop paying for it and put it back down. I’ll stream things and I’ll skip the ads, and if anything’s at all hard for me to get, I’ll just download it for free.
BROOKE GLADSTONE: Me, Kat and PJ, which do you, hypothetical TV executive, prefer?
PETER KAFKA: Katya, right?
You’re the full boat. That’s great. Please consume as much as you can. We’re a little freaked out that you're using services that don’t come directly from us but the truth is when you're watching things on iTunes and Hulu and Netflix, you're really just making more money for our partners, and we think we’ve figured out a way to sort of keep that in check. You’re only gonna watch stuff that’s already been on TV before. I mean, you can’t directly threaten our, our existing ecosystem, so that’s great.
And Brooke, if I’m an old time cable guy I don’t like the fact that you're using a newfangled satellite dish. We would have preferred to have no competition at all. But we lost that battle about 10, 15 years ago. If we add in the dish guys, if we add in the new guys from Verizon and AT&T, we’re all still working in the same system, and that’s fine too. Just keep paying your bill.
And PJ, you, you really freak us out.
Because we think you might stop paying for video altogether one day. We won’t say that publicly, at least not while we’re still running these companies. If we’re on our way out, we might say that cord cutting is real. The CEO of Verizon said that as he was leaving.
Here’s the good news for us, the cable guy, by the way. All of you, you’re still gonna pay me to get on the Internet.
BROOKE GLADSTONE: We also have a member of the staff, who will be left unnamed, who basically pirates all of the TV that he watches. We left him out because we figured you’d given up on him.
PETER KAFKA: No, he’s still paying us, by the way. He’s not getting his broadband for free. He may be getting the content for free, and that’s bad for us ‘cause it hurts our partners and our partners make a lot of money for us.
But all those movies you’re stealing, they take a lot of bandwidth and you're going to pay us for bandwidth. And we are now moving towards a system, us, being all of the cable guys collectively across the nation, towards something called usage-based billing, which is the more stuff you consume, the more we’re going to charge. The idea that you pay us 50 or 60 bucks a month and you get to eat all the Internet you want, that’s going away too.
PG VOGT: Peter, I feel like when I talk to Brooke and Kat, I feel like they’re in a world that I totally don’t understand because everyone that I know is doing what I’m doing. You know, they’re not paying for very much, they’re getting around ads. It seems crazy to me that Brooke and Kat would spend like, over $100 a month for something that you can very easily get for free.
PETER KAFKA: What do you spend a month on cable?
PG VOGT: I chip in – I’ve got three roommates – I think I’m paying like 20 bucks a month.
PETER KAFKA: So again, the cable guys assume that at some point you move out on your own and get your own place, that at some point you’ll come to your senses and you’ll say, “My time is worth more than my money, and all this going and hunting and fetching, it’s too much work. I’m just gonna bite the bullet and pay for cable and I’m going to pay that 120 bucks a month.”
PJ VOGT: They’re betting that one day I’ll be a grownup.
PETER KAFKA: Yeah.
In fact, I’m gonna guess that maybe you're 25.
PJ VOGT: Yeah.
PETER KAFKA: They would have liked for you to have already grown up because that’s – traditionally the expectation was you – you’d be signing up for cable after college. You haven’t done that, none of your friends have, that freaks them out. But they’re hoping that maybe by the time you hit 30 you’ll – you’ll shape up and join in.
KATYA ROGERS: Okay, Peter, I have a question. Does it matter that I’ve never seen an ad, never?
BROOKE GLADSTONE: Nor do I ever watch them.
PJ VOGT: Yeah, and I’ve got ad-blocking software, so even when I stream stuff on Hulu I just browse to some other tab while it sort of blacks out for two minutes.
PETER KAFKA: Yeah, Brooke and, and Katya, it, it matters that you haven’t seen an ad but the TV broadcast, cable, all the ad business, except for the Internet, is right now in this sort of mutual agreed delusionary state, where they all agree that we, we would all know no one’s watching many ads, but we all sort of seem to think it works. It works better than any other system we have for getting marketing messages to you.
By the way, we’re pretty sure that you actually are seeing some ads, you're just not aware of it. In fact, we think that when you're fast forwarding through the ads on the DVR, Katya, that we’re gonna charge a premium for the ads we run at the beginning of the commercial break and at the end of the commercial break.
KATYA ROGERS: It’s true, you always get stuck on that last one.
PETER KAFKA: You’re gonna get stuck. And, by the way –
KATYA ROGERS: Yeah.
PETER KAFKA: - we’ve started designing ads so that even as you're fast forwarding you're gonna see the message, ‘cause we’ve got a bar at the top or the bottom of the screen that says “This is the advertising message you're skipping past.” And, by the way, the advertisers are still spending more money on TV advertising, by a huge margin, than they are on the Internet where they really can target it directly to you.
BROOKE GLADSTONE: Does the vast majority of TV viewership look like me or like Kat or like PJ?
PETER KAFKA: I don’t know. I don’t think the cable guys know. I think if you live in New York, if you live on the West Coast, the technology hubs, if you're on college campuses, it might look a whole lot like PJ, as sort of the wave of the future.
You know, they’ll keep selling to you, Brooke and Katya, ‘cause you're not going anywhere; you’re not really gonna change your habits. The real worry is that five, ten, fifteen years out from now the PJ’s of the world are now the majority.
PG VOGT: The idea that when I’m 30 I’ll be like, “Ah, it’s just too much trouble to Google something and click Download” - I don’t find pirating very hard. Like, do they have a Plan B where they just charge me way more for br – I mean, that’s basically it, right, they just charge me a lot more for Internet?
PETER KAFKA: Yep, that is the plan.
That if you refuse to get with the system and refuse to pay for cable like a responsible grownup, you will pay for broadband.
KATYA ROGERS: It seems that TV’s in pretty good shape.
BROOKE GLADSTONE: Yeah, why? More than records, more than the publishers -
[TWO SPEAK AT ONCE/OVERLAP]
KATYA ROGERS: Definitely more than music.
BROOKE GLADSTONE: More than music -
KATYA ROGERS: More than publishing.
PG VOGT: [LAUGHING] More than newspapers.
KATYA ROGERS: More than newspapers. Every - all the other industries we’ve covered the death of.
PETER KAFKA: Yeah, this is one of the most interesting things about my beat, and there’s an article of faith among the digerati that the Inter – the Internet disrupts everything, it’s all inevitable and what happened to music is what will happen to the TV and, and Hollywood guys. And, like you point out, it hasn’t happened.
It might still happen, but one gut feeling I’ve got is that people – and this is very disappointing, as someone who works for newspapers and, and likes music, is that people value TV a lot more than they did those other products, and they’re willing to pay for it. They value it much more. They value it so much, they don’t even think about it, unless it goes away. If your cable goes out for a day, you’re - you’re furious, right? If your newspaper didn’t come for a day or if you couldn’t get a CD for a day, you - you’d find a way to move on. But if you can’t watch TV, you freak out.
KATYA ROGERS: That’s kind of depressing.
PETER KAFKA: Unless you're in the TV business. And, by the way, let’s, let’s admit, right?
There’s awesome TV!
KATYA ROGERS: Yeah.
PETER KAFKA: I, I cannot tell you –
[BOTH AT ONCE]
KATYA ROGERS: I pay for all of it.
PETER KAFKA: s-how excited I am to watch some shows. Yeah, there you go.
BROOKE GLADSTONE: It’s the best, ever!
Peter Kafka, thank you so much.
PETER KAFKA: Thanks for having me.
BROOKE GLADSTONE: Peter Kafka is a reporter for AllThingsD, and you can learn all about the media from going to that site, but for our purposes he played the TV industry.
KATYA ROGERS: I’m thinking of switching more to the PJ model.
[PETER AND BROOKE LAUGH]
PG VOGT: Yeah, you don’t want to go back to like four people crammed in a tiny Greenpoint apartment.
PETER KAFKA: It’s romantic but you – you want to – you want to move on.
BROOKE GLADSTONE: Thanks.
KATYA ROGERS: Thank you, bye.
BROOKE GLADSTONE: PJ, Katya, thank you very much.
KATYA ROGERS: Thank you.
PG VOGT: Thanks, Brooke.