At the recent CES conference, there was much discussion of 3-D TV, mobile devices and tablet PCs. But there was also a great deal of talk about the future of television and about alternatives means of delivering entertainment and information to consumers.

On this blog, I have many times written about so-called “cord cutters” – people who have canceled their cable subscription in order receive movies and television shows over the Internet. CES was filled with talk of Netflix’s deal with Warner Bros, the Boxee box, the introduction of VUDU Apps, and more. Sessions with titles like Rethinking the Future of Creative Works and Defining Internet TV focused on emerging models for the distribution of content.

What struck me at CES – as I have also been reading in the blogosphere and the mainstream press for over a year – is that we’re moving away from the current model, where 85% of U.S. households get video through a Multichannel Video Distributor, to a new disintermediated world, where you’ll get content over the Internet directly from content creators. To hear some talk about it, the current model is a dinosaur and the sooner that the cable industry can figure that out and move on, the better.

But let’s note again that 85% of U.S. households get their television from cable, DBS (DirecTV & DISH) or from the phone companies (AT&T’s U-verse & Verizon’s FiOS). In December, NewTeeVee noted that Nielsen reports that “99 percent of video is watched on a TV in the U.S.”

Americans spent 129 hours and 16 minutes per month watching TV in the latest 3-month period, seven hours and 12 minutes watching time-shifted TV, and three hours and 24 minutes watching online video.

Things will undoubtedly change. But what might account for everyone not rushing to cancel their cable today?

One possible answer can be found by looking at the example of noted blogger Ben Drawbaugh. I don’t mean to pick on him, because he’s a nice guy, but when I last wrote about cord-cutting in December, he posted this comment:

For the most part I agree with the premise of your post, the notion that more than a small percentage of people will cut the cord and use legit streaming services is just crazy.

That being said, I do cancel my cable service in January and don’t feel the need to add it back until August. So yes, I pay $50 a month to Verizon to watch ESPN and the NFL Network — because college and pro football is worth $50 a month to me — but the rest of the crap on cable can wait. What I mean is that instead I subscribe to Netflix and wait another 5 months for Netflix to mail the first Burn Notice Disc to me. So in other words, Discs and OTA HD have everything I need for much less money.

Fair enough.

This week, though, Drawbuagh wrote a post entitled, “Canceling cable: the failed experiment.” He says that he needs to a subscription for work purposes, since he writes about cable technologies. Then, he says this:

The bottom line is that I love me some football in HD, so I can’t ever see myself going without cable year round, and with the hassle involved in canceling and signing back up, the $327 a year ($62 for 7 months minus $110 savings for signing a contract) I’d save just isn’t worth it… I suspect for many it just isn’t worth it either. Sure there is lots of content out there available via other legal means, but the bottom line is that when it comes down to it, cable really isn’t that bad of a deal considering all the HD viewing options you get for the price.

As I’ve said before, cord-cutting proponents love to suggest or outright claim that you can substitute online video for cable service, but there is much you can’t get online. One of those big categories is sports.

The Return of the Subscription Model

But all this discussion may be for naught, because some new developments suggest that online video may be moving to a subscription model anyway, which puts us right back where we are today. Hulu may soon be charging a subscription fee for some of its content, as may Boxee. Brian Barrett at Gizmodo added up the numbers for your access to even get online, plus the subscription for services like Netflix, and concluded that you might end up paying “hundreds of dollars a month,” perhaps “nearly $1,000 a month.” Nicholas Carr, in a colorfully-titled post, also looks at the numbers and asks, “Now somebody remind me how we all came to think that information wants to be free.”

And yet, on that previously mentioned Rethinking the Future of Creative Works panel, the speakers couldn’t think of what the role of service providers (such as cable operators) might be in our connected future. The panel didn’t really answer an audience question on how all the content will be paid for. They didn’t really answer a question on why service providers would invest in infrastructure.

On another panel, Mitch Berman of ZillionTV said that claims that production values for movies and TV won’t be there without subscription model are overblown. On an FCC panel, Commissioner Robert M. McDowell reminded us that quality content costs money and that right now, the ways to cover those costs are through advertising or subscriptions. Even the NY Times has now announced a new plan to require some sort of subscription.

So, we may be moving to a Bright New Future a little more slowly than some are claiming. And it may be that subscriptions serve a purpose after all.

Time will tell.

Free Press’s description of TV Everywhere is a reminder of the admonition that people are entitled to their own opinions, but not their own set of facts.  The call for an “investigation” of TV Everywhere has no factual or legal basis, no matter how many times Free Press and its allies repeat the words “collusion,” “cartel” and “illegal.”  In the name of protecting competition, they would actually reduce the amount of online content available to consumers.

For those unfamiliar with TV Everywhere, it is just one of several concepts, based on different technologies and business models, being developed for the online video marketplace.  TV Everywhere, specifically, would provide a new service at no extra charge to consumers who subscribe to a multichannel video programming service – whether provided by cable, satellite or telephone companies:  the ability to watch TV programs on PCs or laptops, and potentially other Internet-connected devices.  It could significantly increase the amount of high-value video content available online – something the FCC has said would help drive broadband adoption.

But Free Press’ theory seems to be that TV Everywhere poses a threat “to kill” online video competition because it would only be available to cable and other pay TV subscribers.  But they get it exactly backwards:  It is an effort to ensure more content than ever is distributed over the Internet at no extra charge to consumers.

Moreover, the TV Everywhere concept involves a multitude of competing program networks, most of which distribute their content on competing cable, satellite, telephone and online platforms.   As publicly announced, TV Everywhere envisions separate, bilateral agreements between one content company and one or more individual distributors.  It is purely vertical in nature – like any arrangement between a content company and a distributor.  As online video evolves, various distributors and content companies may – and likely will – come to widely varying bilateral arrangements.

It is no wonder that developing and implementing this concept isn’t easy, given the vast numbers of possible participants; however, calling any of this “collusion” is, to be kind, strange.  The fact that distribution of content requires a number of differing and competing parties to enter into a multitude of bilateral agreements is normal.  Contrary to Free Press’ suggestions, the antitrust laws do not prohibit, but encourage collaboration, even among competitors, that lead to innovation and new products and services for consumers.

Distributors do not have the ability to unilaterally decide how content is distributed.  Content owners, through individual business arrangements with a growing array of distributors, ultimately make those decisions – in much the same way every other sector of the economy works.  No single content owner or distributor is controlling this process or could do so.

What is remarkable about the online video industry, even at this early stage of development, is just how dynamic it is.  Content providers can elect to distribute their content through advertising models such as Hulu or subscription models such as iTunes.  MLB.TV will give you live programming, an online DVR, picture-in-picture, and much more for an annual fee.   Indeed, there are a growing number of “paid content” models emerging on the Internet—and a large and growing number of competitors using different models – from Netflix to Blockbuster to Vuze to Veoh to iReel to Sezmi to Apple TV to ESPN360 to VUDU to Miro, and on and on.

So, Free Press is really complaining about the decisions content owners make as to how their content should be distributed.  As it happens, many programmers rely on the subscriber-based license fees they receive from cable operators and other distributors to remain economically viable.  In order to sustain that model and continue investing and creating, many content owners may want to ensure that they are compensated for the viewing or use of their programs online.  There is nothing nefarious or mysterious about this:  Programmers invest tens of billions of dollars a year to produce high quality content; they have the right to experiment with different business models and determine how to recoup that investment in terms of distributing their content on different platforms.

As much as Free Press would like to suggest that something is radically different in this case, the TV Everywhere model would be nothing more than content owners extending their copyright licenses to allow multichannel video providers to make their programming available online.

 The fact that market participants are experimenting with models in addition to fee or advertiser-supported models is not a sign of anti-competitive conduct.  It is a sign of a dynamic and rapidly-changing market in which no one knows the ultimate outcome.  Free Press may prefer one video distribution model over another.  But that is for the marketplace – and content owners exercising their rights to distribute their content in the manner they choose – to sort out.  A model that would give consumers the option to get more value – by access to online content – as part of the TV subscription they already pay for is something that consumers should have the right to embrace or reject.