Verizon FiOS Xbox Live TV Deal Is Another Disappointing Half-Measure

By  |  Thursday, December 1, 2011 at 3:55 am

Giving people more options is generally a good thing, and the announcement on Tuesday that Verizon would offer a couple dozen FiOS cable TV channels through a new Xbox Live app certainly isn’t a bad thing. But it’s also a reminder of all that we still lack when it comes to consuming what we want to consume, and not subsidizing piles of stuff we don’t.

The FiOS deal sounds sweet enough—watch live TV through your Xbox 360!—until you realize it’ll require you already have a Verizon FiOS subscription. In that sense, Verizon’s deal is like all the others from cable providers who offer their services through devices likes computers or laptops. What sounds wonderful in theory—the ability to watch live TV without a cable box—turns out to require the cable box after all, and a regular subscription to boot. Instead of supplanting cable boxes, your computing devices become adjuncts to an aging, increasingly old-school method for consuming digital content, not the independent pipelines for discrete digital content they’re capable of being…and that so many consumers seem to be looking for.

Underlying all of this: The balkanization of cable content, which seems as inevitable now as its print analogue did years ago. In the late 1990s, if my wife wanted to read the daily comic strips, she had to buy a newspaper and pluck that particular broadsheet from the “entertainment” section, either discarding the rest, recycling it, or marking it for campfire (or fireplace) kindling. Today, by contrast, she just visits a website like and shuffles through whatever’s on offer. She hasn’t leafed through (much less bought) a print newspaper in years.

That’s had an understandably disastrous impact on print and related media, which spent decades subsidizing “hard news” reporting and content with lighter (and more broadly appealing) fare. People bought newspapers for stuff in the entertainment or “living” sections or the tucked-inside coupons, but wound up paying for all the parts bypassed and of interest to much smaller numbers of readers. For better or worse, that’s the way it goes–you can’t force people to pay for content they don’t want when that content’s available unbundled elsewhere.

It’s been a question in my household and among friends for years: Why, in this era of Netflix and Hulu and YouTube and I-pay-for-what-I-want-and-nothing-else, don’t we have the option to purchase a subscription to just a handful of channels? What if all I care to watch is CNBC? AMC? The CW? The Learning Channel? The Food Network? Some combination of those, or any of the hundreds of others?

The practice of bundling is under fire, and has been for years. True, à la carte pricing would cost more on a per-channel basis (and relatively speaking), but I’d gladly pay more per channel per month for one or two channels I’ll genuinely watch, instead of $60 or $80 or $100 a month for hundreds of channels I never will. And don’t forget the political “feedback” component: How many times have you wished to keep or cancel a channel because you wanted to send a message of one sort or another? Backed away from canceling because it meant canceling everything? This all or nothing business only works, in terms of justification, when there’s one way to access content. These days, serious Internet-driven alternatives pop up annually.

But okay, let’s leave the cable-bundling debate aside: There’s another reason to frown (granted, small frown) at the Xbox Live-Verizon FiOS deal. You have to be both a FiOS TV and Internet subscriber to access it, for starters–that much you’d expect. But you also have to be an Xbox Live Gold member. Gold tier membership costs $60 a year, or $5 a month. You’re essentially paying extra, if you’re not already a Gold subscriber, for the “privilege” of not having to tap the “input” button on your TV remote when you want to switch from game-playing to TV-watching (assuming your Xbox 360 connects to a TV that’s already cable-wired, that is—for those planning to use the 360 with a TV that’s not connected, it’s probably a more justifiable perk).

Microsoft’s been sticking stuff like this behind the pay-wall for years now, and customers seem happy enough to pay the bill, but when you look at the revenue model, it starts to feel less like a “value” thing and more like gratuity. Microsoft rival Sony offers comparable features through its PlayStation Network at no cost, taking care to place original content (and not third-party front-ends) behind its PlayStation Plus pay-wall. Industry pundits have nothing but plaudits for Microsoft’s monetization skills, and I’ll tip my hat to Microsoft’s clear success here, but as long as less expensive alternatives exist from serious contenders, you’ll never convince astute consumers that paying more for “the same” equals more.
In a more ideal world, Verizon would allow customers to subscribe to content on a channel-by-channel basis (or at least in smaller, demographically informed bundles) directly over the Internet–no need for cable boxes or secondary subscriptions. And in that world, Microsoft would either enhance its tie-in service in a way that actually justified the Gold membership markup, or offer it outside Xbox Live’s pay-wall.


[This post republished from Techland.

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11 Comments For This Post

  1. Ruatine Says:

    From MSFT's side, I think it's more about adding value to their already excellent Xbox Live Gold service, and if they attract more customers to subscribe to Gold because of the features they're adding, great.

    On the other hand, I've been a cord cutter for years. Why pay for a ton of content I don't care about when I can get most of the content I want for free? The rest of the content I want can either be watched via my quite cheap streaming-only Netflix account or by purchasing DVDs.

    This Verizon FiOS deal doesn't do much for me. It's much the same as the Hulu deal with MSFT where you can only access the Hulu content on XBL Gold if you subscribe to Hulu Plus (which I have no reason or desire to do). Because the cable companies refuse to change, they're becoming irrelevant.

  2. JohnFen Says:

    "if they attract more customers to subscribe to Gold because of the features they're adding, great. "

    Yeah, well, it might not do a lot of that. I picked up an xbox at a garage sale with the intention of using it solely for streaming netflix. I didn't know that you had to subscribe to MS's service to be able to do that. It angered me, as Netflix doesn't (or shouldn't) actually use the xbox live service, doesn't add any value to the netflix service, almost doubles the cost of the service, and I'd get to give yet more money to Microsoft in exchange for exactly nothing.

    The xbox went to the goodwill, and I've warned a few other people who were thinking of doing the same thing to avoid using the xbox for it. If Microsoft was a little less greedy, they may have actually sold me some games and made some money from me, instead of leaving a bad taste in my mouth.

  3. Stephanie Says:

    It's $40 a year if you buy through amazon. PS3 and Wii offer a free service but, it's not nearly as good. I gladly pay it. Would I like it if it was free? Absolutely. It is something that I never complain about purchasing though, because it gets used. Netflix, Hulu, playing games…. it really is worth it.

  4. Fred Says:

    I think you vastly underestimate how much you'd pay on an a la carte basis for the niche channels you list. AMC Networks has operating expenses of about $750 million. They obviously get revenue from ad sales, but the bulk of their revenue comes from cable operators. If instead of receiving payments from the 96 million US households that get AMC programming, they had to be paid by the households that actually want AMC programming (their highest-rated program, The Walking Dead, drew 6.6 million viewers Sunday night), the costs would be very high.

    Maybe killing off niche programming is the right thing to do economically – why should someone who only wants to watch network programming subsidize people who want to watch AMC, after all – but it's not at all clear that subscribing to five channels streamed over the internet would be cheaper than subscribing to 50 sent through a cable box.

  5. bkd69 Says:

    You’re looking at them wrong. Cable companies aren’t in the job of delivering TV (obviously). They’re rights collections agencies. As long as you pay the cable company, the networks are getting paid, so you may download the Daily Show, and Jersey Shore, and Deadly Women with a clean conscience.

  6. jltnol Says:

    Ok so AMC costs 750 Million to operate… yet, I'd have to pay a monthly fee to cable to see it, AND watch a ton of commercials?

    Hmmmm so I put up a digital antenna in my attic, and now I get NBC, ABC, CBS and Fox for FREE… no monthly subscriptions to pay, although I still have to sit thru the commercials.

    Cable providers just don't git it. All there off brand channels are only financially successful because of bundling channels. If you AMC's viewership is 96 Million, just think how few other really off brand cable channels reach.

    I cut the cord about 2-3 years ago. Subscribed to NetFlix. Haven't looked back, doubt I will. Wake me up with HBO and Showtime(the only two cable offerings I really miss) are available w/o a monthly subscription to the crap that currently goes with them, and I'm in.

  7. Lisa Says:

    Would like to make a post about xbox .During the summer I paid for internet for the house so my boys had a gold membership that stopped in august .I find out today that my credit card has been charged the last 2 months for live which we do not use nor new we had .I run my laptop off my phone .If you think you have to have live I would wipe out your credit card info from your unit as I was told by Microsoft ANYONE can get into it and you to will be paying someone's funtime .Microsoft being the greedy people they are would of course not refund my money .

  8. mal Says:

    your article would have been much better if you didn't feel the need to show off your vocabulary. put down the thesaurus and get your point across.

  9. Spider Says:

    The article was well written and can be read by any high schooler.

    Excellent article that reflects what I’ve thought.

    The Playstation 3 gives free Netflix and Hulu access. You still pay for those services but Sony doesn’t take a bite. The PS3 browser serves well for other content and YouTube.

    BTW “mal,” you could learn to read at a ninth- grade level and learn how to capitalize. Your post contributes nothing but bad grammar. You are an insipid troglodyte.

  10. Blaster Man Says:

    I'm a bit confused by the article. I think the author is ranting a little too much against cable companies and just not appreciating what is happening here. Picture this: Your house doesn't have every single room wired with a coaxial cable. You don't want to spend a ton of money wiring your house. You've got a room you would like your kids to watch Nick, Nick Jr, or Cartoon Network but this room has no coaxial. Now here's where it gets interesting. Your Xbox 360 is streaming live TV through the Internet. This isn't pre-recorded data files sitting on a Netflix or Hulu server. This is LIVE TV being streamed straight to your Xbox 360 through Wfi. In other words, this is (as far as I know) the first time you've been able to watch cable TV wirelessly. Sure there's the added expense of Xbox Live Gold but you can get those cards cheap if you look for discounts/sales AND you're not renting a cable box for $5-$10 a month.

    So: You get to let your kids watch their shows and give you some piece and quiet. You don't have to spend a ton of money wiring coaxial into your house. You don't have to rent a cable box.

    Down the road they will probably add additional channels. Imagine if other devices eventually start doing this. In my dream world, I unbox a new HDTV, turn it on, set up the wifi and VOILA the Fios app on it is already showing me TV….no cable box needed. How long till this happy future happens? I can't wait. I'm ready for wireless TV.

  11. biru Says:

    Blaster Man has it right. If I'm already getting FiOS and my kids already have XBox (and XBox Live), why not add some real-time cable TV channels using the Xbox as a set-top box in place of leasing another STB for that room? They can already get Netflix, YouTube and other Internet-delivered TV through the XBox. The only thing it's possibly cannibalizing is the monthly fee FiOS would get for another full-fledged STB, but this is also a retention tool. Anything my family members get hooked on makes it that much harder for me to terminate my overall service. It's not a big deal for most people but it doesn't need to be–really costs nothing for FiOS to implement and I'd bet Microsoft is chipping in big time for the marketing.