How YouTube TV will kill cable

March 4, 2017

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YouTube’s new live TV service will make TV mobile, flexible, easy, competitive and super profitable for Google.

Don’t look now, but cable TV’s days are numbered. Google announced this week a new live TV service called YouTube TV.

Critics are panning YouTube TV as lackluster and overpriced. But I think it’s going to change everything.

Google says YouTube TV will be rolled out “soon” and gradually, starting in major markets and later expanding to other cities. (Sorry, world. YouTube TV is U.S. only.)

Google did not specify which cities or when rollouts would occur, but it hardly matters. U.S. residents can sign up immediately even if they live outside one of the designated cities. Simply choose one of the markets where YouTube TV is available. Local programming will be from that market, not yours.

A superficial glance at YouTube TV could make you shrug with indifference. It costs $35 per month for a family plan of six accounts and is set to begin broadcasting 40 channels starting in a few months. These channels include ABC, CBS, NBC, Fox, the CW, ESPN, USA, Bravo, E, MSNBC, Fox News, Disney Channel, FX and local stations. (Members can also add Showtime or Fox Soccer Plus for an additional, yet-unannounced extra fee.)

Conspicuously absent are: CNN, HBO, AMC, MTV, VH1, ET, Comedy Central, Discovery, Cartoon Network, Nickelodeon, TNT, PBS, TBS or The Food Network.

YouTube TV will play on dedicated iOS and Android smartphone and tablet apps and on the tv.youtube.com web site. It can also be streamed to full-fledged TVs with Google’s $35 Chromecast dongle, or TVs with Chromecast support built-in. Later this year, YouTube TV will be supported by unspecified TVs, “TV-streaming devices” and gaming consoles, according to Google.

As a bonus, YouTube TV comes with content from YouTube Red, the ad-free subscription service, and Google Play Music.

YouTube TV will not require a contract or commitment and can be canceled without a fee. It can also be paused and will even pause automatically if nobody logs into it for three months from their home zip code. So you’re paying $35 per month, but you can pause it for, say, six months and not pay for those months, then resume it later. If you or your family members don’t log in from your home zip code for three months, YouTube TV will stop charging your credit card until you re-activate it.

Why YouTube TV is better than cable

YouTube TV seems like it’s half as good as a cable subscription. It’s roughly half the cost, and you get roughly half the stations and half the commercials as with the most basic cable subscription.

But that comparison obscures cable’s flaws and YouTube TV’s strengths.

In the old days, cord cutting meant giving up on legal, high-quality access to some of your favorite cable TV shows. Lately, however — thanks to internet-based TV services like DirecTV Now, PlayStation Vue, Sling TV and now YouTube TV — you can get most of the shows online that used to require a cable subscription.

Streaming services like Netflix, Roku, Hulu, HBO Go and Amazon Fire TV have become a little cheaper and a lot better. These companies are making improvements the old-fashioned way — through better technology. One example is Netflix, which announced this week its intention to use artificial intelligence (A.I.) to encode video on a scene-by-scene basis in a way that improves video quality on a smartphone — or, more to the point, enables Neftlix to selectively reduce video quality (and bandwidth usage) in ways that aren’t noticeable to viewers. (The new technology will roll out within five months, according to Netflix.)

The bottom line is that cable has lost its monopoly on high-quality TV shows.

As a result, the majority of the value of cable is live “event television.”

For certain major shows, most of the enjoyment is derived from watching the show live. Even now, it’s hard or impossible for most cord cutters to watch live, high-quality, user-friendly event TV like the Oscars, TV series or season finales (such as last year’s season finale of Game of Thrones), political debates, breaking news and just about any major sports event.

Event TV has become a social media phenomenon. It’s fun to tweet and post about event TV while it’s happening. If you show up for work the next day, everybody’s going to be talking about the show you missed; you’ll end up with an earful of spoilers and a bad case of feeling left out.

Sports are a special problem, because games and matches happen so often. Every game your team plays is “event television” if you’re a fan. Depending on the sport, it’s possible nowadays for cord cutters to watch some games live. The streaming services offer ESPN and Fox Sports channels, and some offer American football channels. You can also pay to get streaming games for baseball, basketball, hockey and soccer.

But the options for cord cutters are often inadequate for sports fans, especially for college sports and less mainstream sports.

Sure, you can always buy rabbit ears and connect to terrestrial TV for local channels. Some cord cutters selectively “borrow” broadcast programming from a friend or relative with a cable subscription. But these aren’t appealing solutions for most viewers.

YouTube TV offers nearly all event television, including sports. The mainstream network stations offered by YouTube will give you the Oscars, major political and breaking news events, the Olympics and others. It also offers generous sports programming, and even good coverage of college sports. YouTube TV includes not only ESPN, but also ESPN2, ESPNU, the Big Ten Network, SEC Network, CBS Sports Network, NBCSN, FS1, Fox Sports Networks and Comcast SportsNet.

So while YouTube TV offers only half the “channels” of basic cable, they offer most of the “value” for most of the viewers.

YouTube TV has other big advantages over cable, including Google Home support and better recommendations about what to watch, according to the Google announcement. Google is great at algorithmic recommendations and search.

Each family membership allows the playing of up to three shows at once on different devices — and recording to six cloud DVR accounts, each with unlimited capacity (Recordings will be available for nine months).

Unlimited storage plays into a strength Google has used to clobber the competition in other spheres, including photo storage on Google Photos. “Cloud DVR” is “transformational for our business,” Sling TV CEO Roger Lynch said recently. That company offers cloud DVR, but with a cap of 100 hours of recording, and users cannot record shows from ABC, Disney and ESPN networks.

Why YouTube TV means the end of cable

Google is in a far better position than any TV or streaming video provider to monetize live TV.

Google can command higher ad prices because it has far better data on users than cable TV companies do.

Advertising companies have been looking forward to YouTube live TV for years because YouTube is expected to have both the industry’s best targeting and measurement for ads, and also the largest market of young viewers. With limited ad budgets and with YouTube demanding premium fees, Google is likely to pull budgets away from other providers, especially cable providers.

Trends in TV viewership favor Google. People over the age of 30 think of TV as involving living rooms, giant TVs and cable subscriptions. But younger viewers favor YouTube and smartphones. (A recent Piper Jaffray survey found that 26% of American teenagers watch YouTube every day.)

So what happens when young viewers get older?

As young people age, they’ll gradually prefer more conventional TV programming over the zany, hyperactive antics of YouTube stars. With YouTube TV they’ll be able to find that programming on their favorite medium — YouTube on smartphones.

You can imagine a freshman going off to college. YouTube TV would be a slam dunk. A family plan would enable parents to pay for the student’s TV content, as well as one account for each parent and each younger sibling, all for the same $35 per month.

Even before YouTube TV hits, YouTube itself is by all accounts a runaway success. YouTube said last month that its users watch more than a billion hours of video each day. Viewership is 10 times higher than it was just five years ago. Advertising on YouTube earned Google $3 billion in revenue last year.

But YouTube TV should make YouTube even better.

YouTube Red Originals are shows developed by YouTube stars and also by more traditional TV content creators. The introduction of YouTube TV and the inclusion of YouTube Red in the package is likely to increase audience and incentive for more and better original exclusive YouTube content. It may be only a matter of time before YouTube introduces runaway hits with the quality and scale of House of Cards or Game of Thrones.

YouTube TV is a nightmare for cable TV companies, which are already bleeding customers. Cable providers lost 1.7 million paid U.S. subscribers last year, according to MoffettNathanson analyst Craig Moffett.

YouTube TV offers flexible options, event TV, mobility and the familiarity of YouTube. For advertisers, YouTube TV provides a big incentive to move ad spending from cable providers to YouTube.

Cable TV is doomed.

Source: How YouTube TV will kill cable | Computerworld

How YouTube TV will kill cable

YouTube’s new live TV service will make TV mobile, flexible, easy, competitive and super profitable for Google.

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