1 Cable, Satellite, and Internet Television Chapter 11 © 2009, The McGraw-Hill Companies, Inc. All rights reserved.

2 CHAPTER OUTLINE History of Cable, Satellite and Internet TV Cable, Satellite and Internet TV in the Digital Age Defining Features of Cable, Satellite and Internet TV Organization Ownership Internet Television

3 HISTORY OF CABLE, SATELLITE AND INTERNET TV (1 of 2) Cable: 1950s; brought TV to remote areas. –Satellite TV transmissions gave people more reasons to subscribe to cable –MSOs: Multiple Systems Operators; large cable systems dominate industry DBS: Direct Broadcast Satellites 1992 Cable Television Consumer Protection Act –Must carry vs. retransmission consent

4 HISTORY OF CABLE, SATELLITE AND INTERNET TV (2 of 2) Telecommunications Act of 1996 –Telephone companies could provide cable TV –Cable could provide telephone service VOIP: Voice over Internet protocol New cable networks find it hard to gain access Cable TV audiences are fragmenting Internet TV (webcasting); late 1990s –Buffering & broadband have helped –Podcasts

5 CABLE, SATELLITE AND INTERNET TV IN THE DIGITAL AGE Satellite and cable systems use digital technologies to support –Video on demand, interactive program guides, high- definition TV, digital video recorders –Compression of signals, increasing channel capacity Cable systems can also provide telephone and Internet service –Bundling multiple services Easier for telephone or cable systems than satellite systems

6 Mobile Media Cable and satellite content can be sent to –Cell phones, PDAs, laptop computers User-generated content on cell phones Mobile video-sharing web sites

7 User-Generated Content Cable and satellite networks increasingly turning to user-generated video –CNN I-Report The Internet is biggest place for user- generated content –YouTube Used by politicians, advertisers, aspiring entertainers

8 DEFINING FEATURES OF CABLE, SATELLITE AND INTERNET TV Requires extra equipment Extra fees for service Specialized channels, appealing to highly differentiated audiences –Even when mass appeal content (TV shows, movies) is available on the Internet, the audience is not mass

9 ORGANIZATION We will first consider the organization of the cable and satellite TV industries, then turn to Internet video

10 Structure: Cable TV Head end Distribution system –Trunk House drop –One-way or two-way

11 Programming and Financing: Cable TV (1 of 2) Local operators –Program sources Local origination, local broadcast TV stations, superstations, special cable networks, pay services, pay-per-view channels. –Income sources Subscription fees, local advertising –Expenses Hardware (installing/maintaining system), content

12 Programming and Financing: Cable TV (2 of 2) National operators –Program sources Original productions, movies, syndicated programs –Income sources Subscription fees, carriage fees, advertising

13 Pay-Per-View (PPV) Sporting events, movies, concerts, adult content Though the potential for big money remains, PPV has fallen on hard times due to –Video on Demand (VOD) –Digital channels

14 Video-on-Demand (VOD) Users search for content stored on cable/satellite company’s server –Select desired content, and it becomes available, usually for a fee VOD has been slow to catch on –Relative lack of content; complicated user interfaces VOD use is up, but VOD is lower priority for cable/satellite companies –YouTube content creates more “buzz”; more competitors are appearing

15 Structure: Satellite TV Content providers Broadcast centers Geosynchronous satellites –Signals are encrypted Small satellite receiving dish Satellite receiver

16 Programming and Financing: Satellite TV Programming sources carried by major cable companies are also distributed by satellite –Difference: satellite networks are national, with no local generation of programs Revenue sources –Subscription fees, extra charges for DVRs, HDTV, etc. Local advertising not significant revenue. Expenses –Hardware, content Challenges –Competing with cable’s ability to bundle voice, video, high-speed Internet access

17 OWNERSHIP Ownership trend is toward consolidation Cable –Comcast & Time-Warner Satellite –DirecTV and Dish Network

18 INTERNET TELEVISION Starting an Internet channel requires only –Camera, computer, software, website Convergence between TV set and computer is well under way

19 Structure: Sources and Content Sources of web video –Amateurs –Professionals Content –Original –Repurposed

20 Microcasting How broad of an audience is being sought? –Broadcasting –Narrowcasting –Microcasting As it evolves, will the Internet be used more for broadcast or microcast applications?

21 Feedback Cable/satellite networks –Nielsen Media Research Same techniques as with broadcast TV Internet video –ComScore Media Matrix –Nielsen/NetRatings VideoCensus

22 Audience 85% of US households subscribe to cable or satellite providers –Subscribers tend to be younger, more affluent, and have more children. Demographic makeup of cable/satellite networks varies, due to the specialized content 25% of Internet users watch online videos at least once a week –People who share videos tend to be male, and young