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Sony's Clever Cable Killer For Cord Cutters: Can It Change The Game?

This article is more than 9 years old.

Sony's long-planned cable television competitor, in the works for more than a year, is finally in beta testing with a planned rollout early next year. And while many details have yet to be revealed one thing is clear: Nearly anyone with a Playstation 3 or 4 and a good broadband connection will at least have another option when it comes to pay TV. With some innovative software, the Sony offering might be the kind of thing some customers are looking for. But the 75 channel offering will be missing some favorites, has restrictive rules around recording shows and by requiring game consoles could miss the very people that might find it attractive.

It's about time this is happening

Much has been made over the past several years over "cord cutting," the much talked about phenomenon under which people are allegedly canceling their cable subscriptions left and right in favor of Netflix and other streaming video services. The reality, however, is that mostly that isn't happening. While we all know someone who doesn't have cable, Comcast, DirecTV, et al. continue to have 90 million subscribers -- a number that's barely changed in the past several years.

But so far, competition for those 90 million has been between companies that own the transport mechanisms: cable networks or satellites. What Sony wants to do is sell a cable-TV service "over the top" of another network, whichever one you happen to get broadband from. In that sense, Sony's cable is more like an AppleTV that has CBS, Fox, NBC, Food Network, Comedy Central, MTV and a whole host of other channels. (I hope to get a chance to test the service soon but suspect that Sony will limit what can be said about it for awhile.)

Notably missing from the list are ABC, ESPN, HBO and AMC if you're keeping score. That makes an impressive offering a bit less so. Still, Andrew House, president of Sony Computer Entertainment, told Bloomberg he thinks the company will win converts from cable.

It's not entirely clear how popular this will be

Will it though? The pricing is not going to be especially low, House says, though without the pricey ESPN, it should be at least attractive. Pricing around $30 a month is likely. That's expensive compared to Netflix at $9, but a bargain compared to buying channels for $6 each. And Sony has put together some unique features that point to the beginning of a reinvention of the TV watching process.

For starters, you can watch anything that "aired" in the past three days on demand, without having to set up a recording in advance. If you do "record" something there's no limit on storage space and everything gets saved on a DVR in the cloud. But there's a huge catch: Anything older than 28 days just disappears. For a lot of folks, this might make no difference but my DVR habits would make that kind of adjustment impossible without also having a Hulu Plus subscription (and lots of micromanagement).

Sony also is creating a new way of presenting programs to you, starting with a customized feed of things it learns you like. (The Verge has some additional screenshots from the user interface.) Beyond that, it will group the channels you view most often at the top of the guide rather than requiring you to hunt down fixed numbers among hundreds of them as other services do. These kinds of interface changes are challenging for viewers to adjust to at first but a critical part of reinventing a TV experience that really is still stuck with an archaic method of selecting what to watch. Sony is also planning an iPad offering but content rights may limit what you can watch outside the home.

If Sony had a more comprehensive channel lineup at a truly breakthrough price, it would sure have a hit on its hands. As it stands, without undercutting cable pricing meaningfully, the gaps in the lineup mean its unlikely to convert too many switchers -- even with 35 million Playstations out there. And while the company believes people will buy the PS4 to get this TV offering, it's hard to understand why that would happen unless the monthly fee were meaningfully lower than traditional cable. Still, this is an important first step in creating competition for viewers.

It's not the only new offering we'll see, either

Dish Network has been working on an over-the-top offering for as long as Sony, and the success of the latter in obtaining rights to many key channels could open the floodgates for Dish and others to finally complete their offerings. But the cable companies aren't standing still. Verizon just created a new bundle for Fios customers that includes broadband internet, local channels, HBO, Showtime and Netflix for $60 per month. Comcast has had a similar offering that includes HBO and local channels with internet service in its service areas for some time, too.

These bundles are sometimes described as "cord shaving," a truly hideous term but one that explains how the incumbents plan on keeping you as a customer whether you buy a television package from them or not. Nevertheless, they point to a challenge that Sony, Dish and even Netflix faces as cable customers "skinny down" their video selections and move to taking only broadband. The cable companies will find ways to collect their share, perhaps capping bandwidth if needed.

Comcast, for its part, suspended bandwidth limits two years ago but has been testing the best way to bill for the amount of bandwidth customers actually use. The company said in May it expected to have everyone under usage-based billing within 5 years. While that's far enough in the future most people can't be bothered to worry, the very people who might have a concern are the ones who are streaming hours of video each day. It's hard to blow through the 250GB most plans were offering before the cap was suspended without watching lots of Netflix but it's easy if the TV is on for 5-6 hours each day.

Of course, you'll have options for additional bandwidth, especially with higher speed plans. The question is whether those kinds of tradeoffs are ultimately appealing. If you're opting in to faster, more bandwidth-rich internet to "save" money on TV service from a third-party provider like Sony, are you really winning in the end? The answer may come down to just how appealing that service ultimately is.

For now, at least, Sony and others are going to pull together things that look a lot like cable, even if they come through different hardware than the cable box. Dreams of a la carte offerings where you can buy 5-6 channels for significantly lower prices are just that: fantasies. The economics of the bundle remain too appealing to the owners of content to make it appealing for them to sell channels individually at prices likely to be attractive to customers.

For the time being then, what you are left with is more choice from new players. Sony, then perhaps Dish, Verizon, maybe even Apple down the road. Ideally, someone like the iPhone maker enters the mix because the TV bundle itself becomes less of a profit center if the company is motivated to sell you a fancy device to hook up to your screen or a new OLED television itself. But that also has to wait. With Sony's offering just around the corner, at least that wait won't be much longer.

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