The cable-TV business has been a profitable citadel for the networks and their cable distributors for more than 30 years. But now the dominoes are starting to fall; the latest is CBS Corp., which on Thursday launched a subscription service over the Web called CBS All Access for $5.99 per month. That follows Time Warner Inc.'s announcement that HBO will go direct-to-consumer in 2015.
What's more, CBS CEO and President Leslie Moonves told Recode that Showtime is also moving toward a direct-to-consumer offering. Both Showtime and HBO have always been sold exclusively through cable operators.
The decoupling of programming from the traditional monopolies on distribution has been part of a long process, and its happening now as entertainment options and audiences are splintering across a vast array of videos, apps and devices. With its two nearly equal revenue streams -- subscriptions and advertising -- the system has been very profitable for Hollywood and cable companies for many years, but no one wants to be the last adherent to yesterday's business model.
As CBS is an over-the-air broadcaster, this content is technically available free to anyone with a digital antenna. It's also telling that the URL for CBS's new service -- http://www.cbs.com/all-access/upsell/ -- contains the word, "upsell." However, subscribers will also have access to a formidable back library of CBS shows ("Star Trek," "MacGyver"), and they'll be able to watch a live CBS feed on their Android and iOS devices.
This all comes on the heels of CBS successfully defeating Aereo, which offered a similar service for watching live over-the-air TV online, in a case that went all the way to the Supreme Court. And it comes six years after CBS made the strategic decision not to join NBC, Fox and ABC in Hulu, which offers broadcast content over the Web for free.
CBS All Access won't include all of the network's content. Sports fans will likely take umbrage with a big missing feature here -- since the broadcaster doesn't have streaming rights to NFL games, Sunday afternoon and Thursday night games will be blacked out. The service is available only in the 14 markets where CBS owns the local station, which includes Los Angeles, Chicago and New York. And because CBS doesn't necessarily own the rights to everything it airs, certain shows will be missing.
But it does mean that consumers are going to have more options outside a traditional bundle of cable channels when it comes to subscription TV. As Netflix CEO Reed Hastings said in his company's earnings interview Wednesday: "It's clear that Internet TV will be everything in the next few years."