The future of television getting close
This New York Times story (registration required) details how the future of television has finally arrived but that there's still a lot to be worked out between the cable companies that distribute the content and the networks that produce most of the content with the "negotiations with the highest stakes are taking place inside AOL Time Warner."
AOL Time Warner is moving faster than any other cable company. As one of the largest companies on all sides of the business — in cable systems, television production and operating networks — it is situated to reconcile the competing interests. How it fares at selling the digital services could influence the shape of the industry. The company has already shown it can use its power to change Hollywood, when Warner single-handedly brought down prices to jump start sales of DVD's.
...Some analysts say AOL Time Warner and other cable companies have already stumbled by overestimating the nation's couch potatoes. Since 1996, cable companies have spent more than $55 billion on reworking their systems to be able to offer various two-way digital services. Time Warner, the second-largest cable company, has invested aggressively, upgrading more than 98 percent of its systems. But of the more than 70 million people with access to digital cable, only about 15 million subscribe, and only about 3.5 million Time Warner customers do.
Industry analysts and executives say that the main reason for the slow demand is that, until the last several months, digital cable simply meant 150 channels, with no qualitative difference but more difficult to navigate. Time Warner and the other cable companies are betting that on-demand and video-recorder features will make digital cable irresistible even to viewers who turn up their nose at the smorgasbord of channels.
The cable companies are also fighting with fast-growing satellite services, which are courting subscribers with set-top boxes including built-in digital recorders like TiVo and ReplayTV devices, made by SONICblue. The recorders also make it push-button easy for viewers to store programs or movies to watch later as well as to fast-forward over the commercials. (AOL Time Warner and other media companies are suing ReplayTV for copyright infringement, in part because the device can skip all commercials automatically, without a viewer even pressing fast forward.)