• 07.21.10

Race to Net TV in China Spotlights Doom of Cable TV in U.S.?

Net TV may be the biggest new media tech event on the horizon in the U.S., but it’s also big news in China. Though it’s for different reasons, the rapid developments in online TV there may well impact how you watch TV in the future, too.

cable TV

Net TV may be the biggest new media tech event on the horizon in the U.S., but it’s also big news in China. Though it’s for different reasons, the rapid developments in online TV there may well impact how you watch TV in the future, too.


The New York Times just produced an interesting thought piece about the state of television and Internet entertainment in China. It’s a timely discussion, given the recent moves by Google to align itself with Chinese censorship regulations in order to preserve its right to operate as a business inside China, and with all of Hulu’s developments to innovate its business, indicating how TV may develop in the homeland of much of the world’s visual entertainment.

The thrust of the NYT article is that drab state-sponsored TV is actually failing as a business model inside China. The viewer stats are declining and increasing numbers of young Chinese turning to the Net to find their TV entertainment. The content they seek is hosted on sites like Youku and Toudo, and much of its provenance is questionable at the moment: It’s often pirated, and it’s not unusual to find, say, an episode of CSI being retransmitted here (with Chinese subtitles) within hours of its first transmission in the U.S. The companies running these sites are well aware of the business opportunities their growing viewer stats offer, and in an attempt to legitimize their enterprise they’re now legally licensing content from big names like Warner. The authorities are not blind to these goings-on, and even they are beginning to perk up, since TV on the Net falls outside of their traditional censorship purview.

But do these developments actually tell us much more than the mere evolution of TV habits inside a country on the other side of the world? Yes, and not in the usual “China affects Western businesses more than you may think” kinda way. Because what’s going on may actually lead to the speedier end of the cable TV system inside the U.S.

It’s partly a question of video format. Net-based TV is on-demand, and can be paused and even retained for re-watching later (be this in the form of a favorites list which merely keeps track of videos you like, or actually as a file on your computer). Cable TV, like most terrestrial or even satellite TV systems, isn’t on-demand or pausible, on the whole–and that’s why TiVo was so popular. Now systems like Hulu and set-top boxes like the Apple TV are taking over TiVo’s role, delivering content viewers want when they want it–exactly as the Chinese model demonstrates. But they’re in the minority in the U.S., as cable companies still operate huge monopolies. And consumers are nicely conditioned into accepting their TV content delivered in the traditional way and often with long-term subscription packages as part of the “deal.”

But basically everyone’s got a computer now, and broadband is becoming ubiquitous and speedy (even though the U.S. has a long way to go to catch up with other parts of the world). Net TV is an emerging phenomenon, and there are millions of people who illegally download TV programs and movies to watch at their convenience–both systems using broadband Net as a vehicle for delivering their content. The advertising business is a fickle lover and will always chase where the money is–evidenced by the cutbacks in newspaper ad spend and magazine ad spends during the recent recession. So at some point soon, as more people look elsewhere than their traditional TV provider for entertainment, for convenience, or because traditional TV just isn’t delivering what they want, then the ad money will surely follow. This change seems to be happening extremely swiftly inside China, albeit for slightly different reasons, but the speed is noticeable.

And when Net-based TV starts making serious money, the old-fashioned cable networks will be in serious trouble. Still, they’ve got one positive to look forward to: When their TV business falls flat, they can always repurpose their hard-lines into your home as super-fast broadband Internet pipes …


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