My wife and I recently ditched cable entirely in favor of a combination of Netflix (even the $8.99 bottom-level subscription gets you unlimited access to their already pretty good and constantly growing instant-streaming catalog) and online video from sites like Hulu. We bought a $20 adapter for our laptop (a 3 year old Macbook Pro) and now pay $70 less a month. The switch has been totally worth it.
We watch the ads on Hulu, as much as we did on cable or broadcast TV. I would consider paying some kind of subscription, if the deal was reasonable. There are lots of ways to make it more profitable, better for consumers, and used more. There are really only 2 things in the way, and neither of them are technological.
1. Corporate shortsightedness. Cable companies are (rightly) afraid that consumers will prefer something on-demand nature of web video rather than the firehose that is cable. They hobble burgeoning web video to protect what they perceive to be their own stable base of cable subscriptions. In this way, they are like the railroad companies who failed to perceive that they weren’t in the railroad business; they were in the transportation business. Media is headed to the internet, and companies that see sites like Hulu as their competition rather than their future will end up as feeble as the railroads.
2. Stigma against the Internet. Ads on broadcast television command far higher fees than internet ads. Some of this is understandable; many browsers have various ad-blocker extensions you can install, and of course television is a much older medium than the web. But I spend as much time online as I do watching television, if not more, and there’s no reason advertising on a TV show that “airs” over the internet has to be any different than one that’s broadcast in the traditional manner. In fact, the web can probably provide much more accurate metrics for advertisers than the highly questionable Neilsen ratings system.
Much like the anticipated demise of newspapers, the apparent threat that online video presents to established media companies is entirely a result of their misunderstanding their own business. They are entrenched in old business models where they control everything and the consumer passively watches the television they make. But they don’t make television; they make content. I want to watch that content, along with my own movies, and the stuff from YouTube or whatever, when and how I want. I’m willing to pay for it through subscriptions or by watching ads. The pipe on which that content rides to my house should be irrelevant to them. And if they can’t figure out how to make money at it, somebody else will.