News Corp.’s Fox television network has announced it will erect a pay wall that will delay access to popular Fox shows for eight days after airing… unless you are an authenticated cable-TV or other pay television subscriber.

The announcement is the first among the major broadcast networks to keep cord-cutters and those who don’t pay for their television entertainment from conveniently watching shows online.  With most Fox shows formerly available for free on Hulu one day after airing, many viewers simply watch programs online, enjoying a reduced number of commercials along the way.

Now, viewers will have to wait a week before those shows become accessible.  Or, they can pay Hulu $7.99 a month for a Hulu+ subscription and watch right away.  Or sign up for cable television.

The pay wall will be introduced Aug. 15 and was constructed at the behest of the nation’s largest cable, phone, and satellite companies to stop consumers from watching shows online for free.  Local Fox stations don’t mind the change either, if it means you will watch your favorite shows on local stations instead of a national website.

Michael Hopkins, Fox’s president of affiliate sales released a statement explaining the change was designed to “enhance the value” of cable, satellite, and telco-TV subscriptions.  Cable companies have been upset about paying retransmission rights fees for Fox’s local affiliate stations, only to see the network give away programming, for free, online.

Hopkins

“We’re concerned that cord-cutting is going to be a problem,” Mike Hopkins, Fox’s president of affiliate sales, said in an interview with the Wall Street Journal. “The more you enable it by putting content out there for free without any tether to a pay-TV subscription, the bigger that danger becomes.”

If Fox is the first broadcast network to erect a pay wall, it likely won’t be the last.  Disney’s ABC is exploring adopting a similar strategy, and CBS had withheld much of its programming from online ventures precisely because it believes it dilutes the value of its shows.  It will likely favor a similar pay television approach.

For consumers, the details of how the pay wall will work could become problematic depending on their pay television provider.  DirecTV is quickly working to keep free access to Fox shows for its subscribers after the pay wall takes effect.  But some cable companies like Time Warner Cable have dragged their feet on TV Everywhere online projects, and subscribers, even with cable TV packages, could still find themselves locked out behind the wall, unless they also have a Hulu+ subscription.

The risk of annoying viewers by keeping them away from their favorite shows could easily spark a renewed interest in piracy.  With a commercial newsgroup account, access to peer-to-peer software or file storage sites like Rapidshare or Megavideo, bypassing the industry’s pay-walls is as easy as finding the shows viewers want to watch, legally or otherwise.

More than 35,000 Netflix subscribers flooded the company’s blog and Facebook page with negative comments less than 24 hours after the company announced major pricing changes for its DVD-by-mail and streaming services.

News that Netflix would unbundle discounts for customers who enjoy online streaming and still need to rent an occasional DVD-by-mail went over like a lead balloon for the overwhelming majority, who hit the 5,000 comment limit on Netflix’s own blog by 5:30pm Tuesday, and continue to pound the company’s Facebook page by the tens of thousands this morning.

One of the most “liked” comments came from longtime Netflix customer Scotty Fagaly:

“The only way that this is terrific for the customer is if you plan to offer your entire collection available for streaming,” Fagaly lamented. “Otherwise, this is just yet another way to choke more change out of your customers.”

Only about 20 percent of Netflix’s library is available for streaming at any time, with some titles and studios coming and going.  Several television series are available online, but certain episodes are often missing from the streaming library, requiring customers to rent the DVD to see everything.

Are these discs made of gold now?

The biggest negative response came from the loss of the popular $9.99 plan, which allowed unlimited streaming and an unlimited number of DVD’s — sent one at a time — to customers.  With the unbundling of discounts, that same plan now costs $15.99 — a 60% increase.

Netflix officials have yet to respond to the firestorm of criticism, in part laid at the feet of Jessie Becker, who tried to make lemonade out of the price increase most customers describe as a lemon.

“It’s insulting that Netflix think we’re stupid enough to believe this change is either ‘exciting’ or ‘good news,'” one hostile commenter noted.  “Stop couching this as anything other than what it is — a price hike.”

“So far you have 32,446 people on your Facebook page planning to or already have canceled, and 6,857 on this blog [over an] announcement yesterday. If nothing else there might be an award in it for you guys for most Internet hits for pissing off customers in the shortest amount of time,” said Christine Perry.  “I can go to Redbox and rent a new release for a dollar, watch it and return it the same day and get a new one. Why would I pay $7.99 to wait 3 days to get a DVD, and the another 3 days after I watch it for you to get it back, and then another 3 days to get another one?”

Daniel Indiviglio, a former investment banker who works today as an associate editor at The Atlantic, called Netflix’s price changes “boneheaded,” particularly for investors if it backfires:

“How much could Netflix lose? Let’s do a quick analysis. According to one estimate, about 80% of Netflix subscribers currently have by-mail service that includes free streaming. Of that portion, let’s say half cancel streaming but keep by-mail service. Remember, many people don’t use streaming at all. In particular, if you don’t have an Internet-ready device connected to your television with a Netflix widget, then streaming is far less attractive. Through Netflix’s new pricing, by-mail only service will be about 20% cheaper than the current rate that includes free streaming.

[…] “Netflix has been a darling of investors for some time now. In just the past year, its stock price has increased by an amazing 144%. But Wall Street might begin to question its strategy. The company has said that streaming is the future. It’s right. But the future isn’t here yet. If its streaming subscriber base suddenly plummets by 50% or even by a smaller margin like 30%, then investors might worry about whether consumers are really ready to embrace the service on which Netflix has been investing a huge portion of its revenue. And if its profits dive as a result of the rate hike, then investors will be even more concerned with Netflix’s vision.

“So what should Netflix have done? It should have increased its rates slightly, maybe by a dollar or two, and broke out streaming and by-mail service. For example, the company could have increased the cost of its basic plan from $9.99 to $11.98 for streaming plus by-mail service. If you wanted the two a la carte, it could have charged $4.99 for streaming and $6.99 for one DVD-by-mail. Although customers wouldn’t love the rate increase, they’d be better able to stomach it. It would also give Netflix the ability to up its fees in future years gradually, to hit the target that it believes is appropriate. But putting the hike in place immediately may do the company more harm than good.”

Your Alternatives

Bankrupt Blockbuster wasted no time taking advantage, pelting many of their former rental members with e-mail reminding them they can rent Blockbuster DVD’s by mail without a monthly subscription.  Unfortunately, it’s not cheap.  A seven day rental of a single disc will cost $4.99.  Subscription plans offer a better value for frequent renters.  Blockbuster also benefits from not being perceived these days as a “bad boy” by Hollywood studios, who have been penalizing Netflix with longer rental embargo windows.  Many new releases reach Blockbuster a month before showing up in Redbox or on Netflix’s roster.  Customers can also swap out up for five DVD’s a month at BlockBuster retail outlets, and video game rentals are also available.

Prices:

• One DVD out at a time: $12 per month
• Two DVDs out at a time: $17 per month
• Three DVDs out at a time: $20 per month

Hulu Plus has not been a runaway success for its owners, charging $8 a month to paying customers who win the right to watch additional content, but with the same commercial load the free alternative service provides.  People don’t think of Hulu for movies because the service is heavily focused on television series, but Hulu Plus does deliver a small selection.  Amazon Instant Video is another alternative, for those paying Amazon.com $79 a year for the privilege of getting their orders shipped to arrive in 48 hours for no additional shipping charges.  Amazon added unlimited access to their Instant Video streaming library at no additional charge for Amazon Prime members.  Just about anyone signing up with a new account at Amazon can get a 30-day free trial of Amazon Prime, with the movie service.  But you will make due with watching around 6,000 titles, many of which are obscure or a distant memory.

Many of Netflix’s upset customers report they are headed for the Movie Tardis — the 27,000+ giant red boxes erected in front of grocery and drug stores.  Redbox pitches $1 movie rentals, but you need to return them by 9pm the following day.  Blu-ray movies cost 50 cents more.  Redbox carries a healthy selection of current titles, and you only interact with a machine, so you won’t deal with the eye-rolling you might get renting at area video stores.  This option works best if you are within a very short distance from the nearest kiosk.  Otherwise, you may find returning discs a hassle.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WNAC Providence Netflix raising prices 60pct 7-13-11.mp4[/flv]

Netflix is raising prices and subscribers are not happy, shares WNAC-TV in Providence.  Their advice? “Stick to Redbox.”  (1 minute)

Netflix has dramatically raised prices for their customers who subscribe to both unlimited streaming and renting DVDs-by-mail, several months after their last rate increase.

The company today announced it was unbundling discounts for its plans that include both online video streaming and DVD rentals-by-mail.  Under the old pricing, customers could watch an unlimited amount on online content and still get one DVD at a time mailed to them for $9.99 per month.  Effective today, that same plan will cost $15.98 — a $6 monthly increase.

According to Netflix’s Jessie Becker, the company is effectively pushing customers through pricing to either renting all of their DVD’s by mail or going with unlimited streaming.  Doing both will carry a significantly higher price.

“We are separating unlimited DVDs by mail and unlimited streaming into separate plans to better reflect the costs of each and to give our members a choice: a streaming only plan, a DVD only plan or the option to subscribe to both,” Becker writes on Netflix’s blog. “With this change, we will no longer offer a plan that includes both unlimited streaming and DVDs by mail.”

That’s not exactly true, however.  Netflix is still selling combined plans, just at substantially higher prices.  A three-DVD-by-mail plan that includes unlimited streaming used to cost $19.99 a month, but will now be priced at $23.98 a month, a four dollar increase.

The new pricing does not include the very steep price increases forecast by Wall Street for unlimited streaming.  Content creators, especially large Hollywood studios, expect to aggressively negotiate for dramatically higher fees to renew contracts for Netflix video streaming rights.  Most anticipate Netflix will need to raise streaming prices to cover those costs in the near future.

Customer reaction?  Overwhelmingly hostile, with many threatening to cancel service in favor of Amazo, Hulu, or even Redbox.

Among the comments:

◊ This is a 60% price increase. Netflix sure has some audacity to think they can get away with a 60% price increase in this economy. I currently have the $9.99 one-DVD plus streaming plan. Sept 1st I will have to pay $15.99 ? Not gonna happen. I’ll cancel one or both services. There are other options (I have Tivo, Apple TV, Amazon Prime, etc.) Netflix has peaked. They are going to blow it.

◊ You can spin this any way you want, Netflix, but it comes down to simple greed. With limited new content on your streaming service, I will be definitely be canceling that and will probably cancel DVD service as well just on principle. Time to sign up for Hulu Plus! Go ahead and change your name to Blockbuster, because with more stupid decisions like this, it’s only a matter of time before you go by the wayside like they did.

◊ 60% increase, practically overnight, to get the same service I get now? That sucks. If I rented more than one or two DVDs a month, it might be worth it, but I only use the DVDs as a fallback when the movie I want isn’t on streaming, and they often take several days to arrive. If you had your entire catalogue on demand, then I could pick between two options, but you’re forcing me (and a lot of other customers) to pay full price for both in the hope of getting one complete service. You already increased prices at the beginning of the year, and this kind of hike six months later is unacceptable. Hulu is starting to look very good.

◊ Congratulations. You’ll probably be losing our household subscription. We’re long-time members (since 2002) on the Unlimited 3-disc plan. We just started streaming more because we finally have a game system set up in the living room. However, with these “changes” we’ll no longer be able to afford both. So why bother to keep either? Thanks, a lot, Netflix. I really bloody hate you. And that’s sad because until this year, I didn’t have many complaints about your company. Why the hell can’t you just leave things as they are? If things aren’t broken, don’t fix them. 🙁

◊ The only way I will be sticking with Netflix then is if they offer newer titles and ALL titles in just streaming. Because I’m not paying 15.98 for what I get now at 9.99. This doesn’t make sense. THe only reason I signed up is because I thought “9.99 a month. I can do that.” but 15.98 a month with my minimum wage job, having to pay for college, gas, insurance, cell phone. I’m not adding an un-needed 15.98 a MONTH netflix bill. Count me out.

◊ So, my 2-at-a-time with streaming and Blu-ray plan currently costs $17.99 (up from $16.99 last year and $13.99 when I first joined in 2008). Under this new scheme, I get no new features or services, but I have to pay $22.98? Um, no thanks… I think I’ve had enough.

◊ The whole point is that we use the streaming primarily and only order a DVD when you don’t have it available for streaming… thus the $2 per month for DVDs makes perfect sense.  You guys have really messed up here.

Dish Networks' ViP722: Leaving on a 60-watt bulb 24 hours a day uses just a tad more than the ludicrous power consumption of this set top box: 55W while active and 52W while in standby.

The average pay television subscriber is spending at least $4 a month in hidden electricity costs thanks to the small set top boxes found on top of many television sets across North America.  That’s more than you are paying to run a modern refrigerator.

That stunning revelation comes from a study by the Natural Resources Defense Council, financed by the Environmental Protection Agency.

Costs for residents in the northeastern United States, where electricity rates are often higher, can reach $10 per month for customers with a DVR in the living room and a traditional set top box in the bedroom.  That’s up to $120 a year in hidden charges.

The pay television industry, which has driven the set top box into millions of homes, has never paid much attention to energy consumption of their equipment, if only because they don’t pay the power bills of their customers.  The NRDC found that many boxes even attempt to fool consumers into believing they are running in a reduced-power mode, by programming them to slightly dim the front clock when the box’s “power button” is switched off.

In reality, most set top boxes use nearly as much power “shut off” as they use left on.

The cost of these little power demons to North America’s power grid exceeds 18 billion kilowatt hours. More than seven power plants could not sustain that level of power, even if running 24/7 every day of the year.  The combined electric use of Alberta and British Columbia in a year would still not match the power consumption of every set top box in North America.

These revelations have led the U.S. Department of Energy to lay the groundwork to regulate the power consumption of set top equipment.  Once again, the United States would be a follower.  Europe cracked down on excessive power consumption of electronic equipment years earlier.  In the United Kingdom, for example, satellite providers include a box that can achieve a standby status that only consumes a handful of watts.  The trade-off is that consumers have to wait up to 90 seconds for the box to re-boot every morning when the television is first switched on.  Consumers have the ability to choose different power states as a menu option on the devices.

Some cable operators program their DVR boxes to spin down internal hard drives overnight, assuming no recording is scheduled at those times.  But many of these initiatives were designed to spare the longevity of the hard drive, not reduce power consumption overall.

Popular Science dug through the data and uncovered the best reasonable options subscribers have for boxes that at least snort their way onto your monthly utility bill, as opposed to pigging out at the trough (your wallet):

If You Have Comcast

In terms of energy efficiency, Comcast comes out as the lesser of several evils, but not by much. Comcast’s most energy-efficient boxes tend to be slightly more efficient than their equivalents at Verizon, Time Warner, and the satellite companies, and they also offer more choices in terms of hardware. The NRDC’s data picks the Motorola DCH70 as the best standard-def box (sucking down 10W while active, and 10W while on standby), the Pace RNG110 as the best high-def box (13W active, 12W standby), and the Motorola DCX3400 as the best HD/DVR (29W active, 28W standby).

I spoke to a Comcast representative who told me that typically, the company installs whichever box they want, but that if you request a specific box that they have in stock, they’ll happily install that one for you. They won’t order you a box from elsewhere, and this kind of hardware rotates in and out of availability fairly quickly, but at least you might have the option to choose.

If You Have Verizon FiOS

Verizon’s most efficient boxes are just okay, while its least efficient are some of the worst of any surveyed. Even worse, Verizon gives the customer absolutely no option about which box they get–you can’t request a specific box at any point. That doesn’t matter too much for the non-DVR boxes, as the NRDC’s findings only turned up one standard-def and one high-def box, but there’s a big gap in efficiency between the company’s best and worst DVRs. The most efficient is Motorola’s QIP7216, at an unremarkably 29W active and 28W standby, but the older Motorola QIP6416 clocks in at a lousy 36W active and 35W standby.

If You Have Time Warner Cable

Time Warner has a smaller selection of set-top boxes than either Verizon or Comcast, with only one averagely (in)efficient DVR and one startlingly inefficient standard-def box. For a high-def, non-DVR box, the Cisco Explorer 4250HDC is the most efficient, at 19W active and 18W standby, but Time Warner told me that that’s an older box that might be tough to find. The Time Warner rep was (surprisingly, given the company’s lousy reputation here in New York) quite helpful, and offered to try to track down one of the 4250HDCs if that was what I wanted.

If You Have DirecTV

Here we get to the satellite folks. DirecTV’s offerings are only slightly less efficient than Comcast’s or Verizon’s, with the (currently only) standard-def box coming in at 12W active, 9W standby, the best HD box (the DirecTV H24) at 16W active, 15W standby, and the best HD/DVR (the DirecTV HR24) at 31W active, 31W standby. The DVR is pretty lousy, efficiency-wise, but that’s nothing compared to the Dish Network’s craziness.

If You Have Dish Network

I don’t know what is happening inside the Dish Network’s DVRs. Given the energy usage, they might well be powering nuclear reactors. The “best” DVR Dish offers, the ViP922, uses 43W while active, and 40W while in standby–but the worst one, the ViP722, uses a ridiculous 55W while active and 52W while in standby.

If You Use Internet Video Streaming

Many are ditching traditional cable services for online services like Netflix and Hulu, and luckily, there are a whole bunch of gadgets that can play that content (and more) on a TV. They are also invariably more efficient than a cable box, to a startling degree. The Apple TV (reviewed here), which streams Netflix and plays music, movies, and TV from Apple’s iTunes store, uses a mere 3W while active and 0.5W while in standby. Roku‘s XR-HD, which streams Netflix, Hulu, Amazon Instant Video, and a whole bunch more, uses only 7W while active and another 7W while in standby. The Boxee Box, a curiously shaped media streamer that uses the open-source, ultra-powerful Boxee software, can play Netflix, stream video from other computers on its network, play media from a hard drive or thumb drive plugged into one of its USB ports, and stream from lots of apps (with Hulu hopefully to come soon). It was tested by an Ars Technica commenter whose measurements probably differ from the NRDC’s, but roughly estimates that it uses 13W while active and 13W while in standby.

[flv width=”640″ height=”388″]http://www.phillipdampier.com/video/CBC TV boxes guzzle power 6-27-11.flv[/flv]

CBC TV took a closer look at the pay television set top box: a real power guzzler.  (2 minutes)

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/KRIV Houston Know Your Homes Internet Limit 6-29-11.mp4[/flv]

So you’re ready to switch from cable or satellite TV to Internet-only video? Beware: many Internet providers limit how much you can download from websites like Netflix or Hulu.  Isn’t that exactly the point?  KRIV-TV in Houston investigates.  (2 minutes)