9.5 Influence of New Technologies
Learning Objectives
- Describe the difference between satellite television and cable television.
- Identify two of the major satellite companies in today’s market.
The television viewing experience has undergone a dramatic transformation in recent years. Gone are the days of being limited to a few channels and a predetermined schedule. Technological advancements have empowered viewers with unprecedented control over what they watch and when. Streaming services like Netflix, Hulu, and Disney+ have revolutionized television consumption. These platforms offer extensive libraries of movies, TV shows, and original content, allowing viewers to binge-watch their favorite series or discover new ones at their own pace. Additionally, the widespread adoption of smartphones and tablets has made it possible to watch television on the go.
While the rise of on-demand services has challenged the traditional concept of prime-time viewing, television consumption remains high. The average American adult watches approximately 5 hours of television per day, which includes time spent watching live TV, recorded programs, and streaming content (Nielsen, 2023). While television audiences have become more fragmented, the time spent watching TV has remained relatively stable. The convenience and flexibility offered by new technologies have contributed to the enduring popularity of television as a form of entertainment. Viewers might not all sit together in the family room watching prime-time shows on network TV between 7 and 11 p.m., but they still watch.
The War Between Satellite and Cable Television
Satellite television can trace its origin to the space race of the 1950s when the United States and the Soviet Union competed to put the first satellite into space. Soviet scientists accomplished the goal first with the launch of Sputnik in 1957, galvanizing Americans (who feared falling behind in space technology during the Cold War era) into intensifying their efforts and resulting in the creation of the National Aeronautics and Space Administration (NASA) in 1958. AT&T launched Telstar, the first active communications satellite, on July 10, 1962, and the first transatlantic television signal—a black-and-white image of a U.S. flag waving in front of the Andover Earth Station in western Maine—transmitted that same day. However, the television industry did not utilize satellites for broadcasting purposes until the late 1970s when PBS introduced the Public Television Satellite Service. Satellite communication technology proliferated as a distribution method between 1978 and 1984 by pioneering cable channels such as HBO, Turner Broadcasting System (TBS), and Christian Broadcasting Network (CBN), later the Family Channel.
Early satellite television systems had a problem that once people purchased a satellite system, they had free access to every basic and premium cable service broadcast via satellite signals. The FCC had an “open skies” policy, under which users had as much right to receive signals as broadcasters had the right to transmit them. Initially, most families found the $10,000+ cost for the satellite receiver prohibitively expensive. However, as the price of a satellite dish dropped toward the $3,000 mark in the mid-1980s, consumers began to view satellite TV as a cheaper, higher-quality alternative to cable. Following the initial purchase of a dish system, the actual programming—consisting of more than 100 cable channels—became available for free. Cable broadcasters lobbied the government for legal assistance and, under the 1984 Cable Act, were granted permission to encrypt their satellite feeds so that only people who purchased a decoder from a satellite provider could receive the channel.
Following the passing of the Cable Act, the satellite industry took a dramatic hit. Sales of the popular direct-to-home (DTH) systems (precursors to the smaller, more powerful direct broadcast satellite systems introduced in the 1990s) that had offered free cable programming slumped from 735,000 units in 1985 to 225,000 units a year later, and around 60 percent of satellite retailers went out of business. The satellite industry’s sudden drop in popularity became exacerbated by large-scale anti dish advertising campaigns by cable operators, depicting satellite dishes as unsightly. Although sales picked up in the late 1980s with the introduction of integrated receiving and decoding units and the arrival of program packages, which saved consumers the time and effort of signing up for individual programming services, piracy, or the theft of satellite signals, stunted the growth of the the industry. Of the 1.9 million units manufactured between 1986 and 1990, fewer than 500,000 received signals legally (Thibedeau, 2000). The actions of the Satellite Broadcasting and Communications Association (SBCA), an association created in 1986 by the merger of two trade organizations—the Society of Private and Commercial Earth Stations (SPACE) and the Direct Broadcast Satellite Association (DBSA), ultimately solved the problem. SPACE’s membership includes manufacturers, distributors, and retailers of direct-to-home systems, and DBSA-represented companies interested in direct broadcast satellite systems. The SBCA set up an antipiracy task force, aggressively pursuing illegal hackers with the FBI’s help.
Once they had the piracy problem under control, the satellite industry could move forward. In 1994, four major cable companies launched a first-generation direct broadcast satellite (DBS) system called PrimeStar. The system, a small-dish satellite-delivered program service specifically intended for home reception, became the first successful DBS system to enter the market in the United States. Within a year, PrimeStar beamed 67 channels into 70,000 homes for a monthly fee of $25 to $35 (in addition to a hardware installation fee of $100 to $200). By 1996, competing companies DirecTV and the EchoStar Dish Network had entered the industry, and Dish Network’s cheaper prices forced its competitors to drop their fees. DirecTV acquired PrimeStar’s assets in 1999 for around $1.82 billion, absorbing its rival’s 2.3 million subscribers (Junnarker, 1999).
Satellite Television Loses Ground to Streaming Services
The satellite television industry has undergone significant changes in recent years. While DirecTV and Dish Network were once the dominant players, the landscape has become more competitive with the emergence of streaming services like Netflix, Hulu, and Amazon Prime Video. These services offer a wide range of content at affordable prices, challenging the traditional cable and satellite TV models.
The Satellite Television Home Viewers Act of 1999 played a crucial role in expanding the reach of satellite TV. By allowing satellite providers to carry local TV stations, the act put them on a more equal footing with cable companies. This helped satellite providers attract subscribers and grow their market share. Satellite companies have historically offered competitive pricing and bundled packages to attract customers. They have often provided access to premium channels like HBO and ESPN at a lower cost than cable providers. Additionally, satellite TV has typically offered a wider range of channels, including international programming.
However, the rise of streaming services has presented a significant challenge to the satellite TV industry. Many consumers have found it more cost-effective and convenient to subscribe to streaming services instead of cable or satellite TV. As a result, the market share of satellite TV has declined in recent years. In 2024, DirecTV announced it would purchase its rival Dish Network for $1 (CNN Business, 2024). To remain competitive, satellite providers have focused on providing additional features and services that include advanced DVR capabilities, voice control, and integration with other smart home devices. However, the long-term viability of the satellite TV industry remains uncertain as consumers increasingly embrace streaming platforms.
The Impact of DVRs and the Internet: Changing Content Delivery
The television landscape has changed significantly in recent years, driven by technological advancements and shifting consumer preferences. The introduction of digital video recorders (DVRs) and streaming services has fragmented audiences and altered how viewers consume content. For example, viewers can set their DVRs to record all new (or old) episodes of the show South Park and then watch the recorded episodes whenever they have free time.
DVRs have empowered viewers to take control of their viewing schedules. By recording programs to view later, audience members can avoid commercials and watch content when convenient. While DVRs initially raised concerns about user privacy, the industry has implemented standards to protect consumer data.
The internet has revolutionized content consumption. Streaming services like Netflix, Hulu, and Amazon Prime Video offer vast libraries of movies and TV shows, allowing viewers to access content on demand. While online platforms have posed challenges for traditional media industries, television has remained a dominant form of entertainment and the average American continues to spend a significant amount of time watching television. Despite the growth of streaming services, traditional TV remains a popular medium. Many viewers combine television with other forms of media, such as watching YouTube videos or catching up on missed episodes online.
New Viewing Outlets: YouTube and Hulu Of the many recent Internet phenomena, few have made as big an impact as video-sharing website YouTube. Created by three PayPal engineers in 2005, the site enables users to upload personal videos, television clips, music videos, and snippets of movies other users can watch. Although it initially drew unfavorable comparisons with the original music-sharing site Napster (see Chapter 6 “Music”), which found itself buried under an avalanche of copyright infringement lawsuits, YouTube managed to survive the controversy by forming agreements with media corporations, such as NBC Universal Television, to legally broadcast video clips from shows such as The Office. 2006, Google purchased the company, which showed more than 100 million video clips per day, for $1.65 billion (MSNBC, 2006). Correctly predicting that the site represented the “next step in the evolution of the Internet,” Google CEO Eric Schmidt has watched YouTube’s popularity explode since the takeover. As of 2010, YouTube shows more than 2 billion clips per day and allows people to upload 24 hours of video every single minute (Youtube). To secure its place as the go-to entertainment website, YouTube has expanded its boundaries by developing a movie rental service and showing live music concerts and sporting events in real-time. In January 2010, Google signed a deal with the Indian Premier League, making 60 league cricket matches available on YouTube’s IPL channel and attracting 50 million viewers worldwide (Timmons, 2010).
While YouTube remains focused on user-generated material, viewers looking for commercial videos of movies and TV shows have turned to Hulu. Established in 2007 following a deal between NBC Universal, News Corporation, and a number of leading Internet companies (including Yahoo!, AOL, MSN, and MySpace), the site gives users access to an entire library of video clips without charge and syndicates its material to partner distribution sites. The videos include full episodes of current hit shows such as House, Saturday Night Live, and The Simpsons , as well as older hits from the studios’ television libraries. Supported through advertising, the venture, which is only available to viewers in the United States , became the premier video broadcast site on the web within two years. In July 2009, the site received more than 38 million viewers and delivered more videos than any site except YouTube (Salter, 2009). Throughout the entire year, Hulu generated an estimated $120 million in revenue and increased its advertiser base to 250 sponsors (Salter, 2009). Its advertising model appeals to viewers, who need only watch two minutes of promotion in 22 minutes of programming , compared with 8 minutes on television. Limiting sponsorship to one advertiser per show has helped make recall rates twice as high as those for the same advertisements on television, benefiting the sponsors as well as the viewers.
Some critics and television executives claim that the Hulu model has been too successful for its own good, threatening the financial underpinnings of cable TV by reducing DVD sales and avoiding carriage fees—in 2009, Fox pulled most of the episodes of It’s Always Sunny in Philadelphia from Hulu’s site. Per the networks’ request, Hulu also shut off access to its programming from Boxee, a fledgling service that enabled viewers to stream online video to their TV sets. “We have to find ways to advance the business rather than cannibalize it,” stated the distribution chief at TNT, a network that refused to stream episodes of shows such as The Closer on Hulu’s site (Rose, 2009). However, many television executives realize that if they do not cannibalize their own material, others will. When a viral video of Saturday Night Live short “Lazy Sunday” hit the web in 2005, generating millions of hits on YouTube, NBC did not earn a dime. Broadcast networks—the Big Four and the CW—have also begun streaming shows for free in an effort to stop viewers from watching episodes on other websites.
Video-on-Demand
Originally introduced in the early 1990s, the concept of video on demand (VOD)—a pay-per-view system that allows viewers to order or download a film via television or the Internet and watch it at their convenience—did not immediately become successful because of the prohibitive cost of ordering a movie compared to buying or renting it from a store. Studios also often withheld movies until long after they became available on DVD, by which time most people who wanted to view the film had already seen it. Studios have remedied both of these disadvantages, releasing movies at the same time on VOD as DVD at competitive rental prices. Currently, most cable and satellite TV providers offer some form of on-demand service, either VOD, which provides movies 24 hours a day and enables viewers all the functionality of a DVD player (such as the ability to pause, rewind, or fast forward films), or near video on demand (NVOD), which broadcasts multiple copies of a film or program over short time intervals but does not allow viewers to control the video.
As an alternative to cable or satellite VOD, viewers can also readily obtain movies and television shows over the Internet, via free services such as YouTube and Hulu or through paid subscriptions to sites that stream movies to a computer. Netflix eventually abandoned its online DVD rental service because it started giving subscribers instant access to its catalog of older TV programs and films in 2007 . Internet giant Amazon set up a rival service resembling the pay-per-view model in 2008. Viewers can also stream free episodes of their favorite shows via cable and broadcast networks’ websites. The increasing popularity of smartphones increased the number of viewers using VOD as a way of watching television while out of the house. Having discovered that consumers will watch entire TV episodes or even films on their smartphones, industry executives began looking for ways to capitalize on smartphone technology. In 2010, News Corporation’s Fox Mobile Group planned to launch Bitbop, a service that will stream TV episodes to smartphones for $9.99 a month. Discussing the project, Bitbop architect Joe Bilman said that “the marriage of on-demand content and mobility has the power to light a fire in the smartphone space (Stelter, 2010).” The shift from traditional television viewing to online viewing is making a small but noticeable dent in the $84 billion cable and satellite industry. Between the beginning of 2008 and the end of 2009, an estimated 800,000 U.S. households cut the cable cord in favor of web viewing (Schonfeld, 2010).
Interactive Television
Moving a step beyond VOD, cable and satellite TV providers have combined aspects of traditional television viewing with online content to create an entirely new way of watching shows—interactive television (iTV). Using an additional set-top box and their remote control, viewers can utilize several different features that go beyond simply watching a television show. For example, interactive television enables users to take part in quiz shows, vote for a favorite contestant on a game show, view highlights or look up statistics during sports matches, create a music playlist or photo slideshow, and view local information such as weather and traffic through a ticker under a current TV program. Software such as Microsoft’s UltimateTV , released in 2001, even brought interactivity to individual television shows. For example, a viewer watching CBS crime series CSI can click on the interactive icon in the corner of the screen and obtain instant information about forensic analysis techniques, along with an episode guide, character biographies, and a map of the show’s Las Vegas setting.
Interactive television takes on the social format of the web, linking viewers with online communities who use communication tools such as X (formerly Twitter) and Skype IM to discuss what they just saw on television in real-time. When the popular musical comedy show Glee hit the screens in 2009, marketing experts at Fox pushed for a strong online presence, airing the pilot episode well in advance of the actual season debut and generating buzz on social networking sites such as Twitter and Facebook. Once the show gained widespread popularity, Fox launched an interactive hypertrailer on its website, allowing viewers to click on and “like” the show’s cast members on Facebook. The Glee cast also participated in weekly “tweet-peats,” which featured live Twitter feeds that scrolled across the bottom of the screen during reruns of the show, providing behind-the-scenes details and answering fan questions. The CW network uses a similar technique with its “TV to Talk About” campaign, a tagline that changes from ad to ad to include iterations such as “TV to text about,” “blog about,” or “tweet about.” Its website offers forums where viewers can discuss episodes and interact with video extras, photos, and background clips about various shows. Online television forum Television Without Pity provides viewers with an alternative place for discussion that does not affiliate with any one network.
In February 2009, Sony spokesman Greg Belloni said, “Sony’s stance is that consumers don’t want an Internet-like experience with their TVs, and we’re really not focused on bringing anything other than Internet video or widgets to our sets right now (Richtel, 2009).” Although some analysts predict that up to 20 percent of televisions will be Internet-enabled by 2012, consulting firm Deloitte anticipates the continued concurrent use of TV sets with laptops, MP3 players, and other browser-enabled devices (Deloitte, 2010).
