Cable TV Transformation

A business model that is in the midst of a changing cycle is how cable television is being delivered to the consumer. If we look back approximately 15 years, cable was a very basic service where we would channel surf to find programming often with a help of a paper TV Guide from a magazine or the daily newspaper. As we moved through the late 1990s to the 2000s we saw the development of the TV Guide that was embedded in the TV so that no paper version was needed. Followed by the ability to record TV on a DVR box paired with a plethora of on demand options that made managing your TV watching easier by adjusting the programs you wanted to see to your schedule, without necessarily planning your day around a specific show or event that you want to see. The only television I can think of that we still have to adjust our schedules for nowadays are live sporting events.

The on demand model has also made corpses out of formerly successful businesses such as Blockbuster Video or Hollywood Video. In addition to on-demand, businesses like Netflix also filled the void in traditional video rental by using the mail system and less restrictive late return policies to rent movies, and most recently a mail-less version where Netflix movies can be accessed via an on-demand style internet connection via an X-box or a like device.

As the next highly anticipated invention that we will see is the Apple TV. It is widely looked at something that will change the cable TV industry all together much like the Iphone changed the hand-held personal device sector and the Ipad changed the personal computer space. The Apple TV is being hyped up to be the future of media and entertainment technology. Although officially Apple is being its usual self when it comes to the secrecy of its new product, but rumors are that the Apple TV is above all trying to be as easy to use for the consumer as possible by eliminating wires, connections, and having everything be in a centralized singular platform, much like the I-Macs that come with no additional computer towers or wires that connect to third party equipment like printers, scanners, etc. that have to be connected to the monitor. Even the remote functions are said to be performed by apps within the Iphone/Ipad so that there are no separate remote pieces that come with current TVs and Cable systems.

The issue I see that will provide headwinds for the development of the new entertainment model, is that Comcast, Fios, and other cable providers will not stand idly by and have their revenues be destroyed by the Itunes store and similar setups where content can be provided by the manufacturer. The cable companies are already having issues with charging advertisers high level of fees, especially when an increasing amount of people are recording shows and fast-forwarding through the commercials at an increasing rate.

There was a CBS money watch article today that described a few of the roadblocks to modernizing the cable industry, primarily the fact that the majority of cable users are well embedded with the current model and due to the anticipated high switching costs to an apple TV and having a variable cost bill due to on-demand charges rather than a fixed bill that most consumers are currently subject to. Should be an interesting next few years in the television industry with regards to the transformation of the cable sector and the roles that the different companies play in bringing the end product to the consumer.

 
Chris Acker:
High-speed Internet access and online content will continue to grow in ways few can imagine. However, contrary to popular belief, that growth will not necessarily devalue cable TV. For the foreseeable future, we will likely see both services flourish and evolve. Eventually, they will converge – and when they do, we doubt you will be able to tell the difference between the two.

This comes from a 5 part article on the future of cable written two years ago. I still agree with him.

I don't think Apple TV will win the race for over the top video, but who knows.

As long as networks produce the content networks will be around. We've seen Netflix try out an original series. It will be interesting to see if Netflix and Hulu can start creating quality programs in the future.

 

In my opinion the Apple TV only has a few more years at most. Haven't you guys seen:

http://www.samsung.com/us/2012-smart-tv/#hub

Of course you'll be paying a premium for one of these "smart" TVs, but then again you can surf the web, use hundreds of apps (Netflix/ESPN/etc), and Skype w/ the built-in video camera.

Robert Clayton Dean: What is happening? Brill: I blew up the building. Robert Clayton Dean: Why? Brill: Because you made a phone call.
 
Best Response

I have no sympathy for the cable companies at all. Hopefully their businesses will be destroyed by more modern and, most importantly, more flexible options. Cable companies have spent decades lobbying for their own little monopolies and then forced subscribers to pay for a huge amount of content that they will not use.

The iTunes store, Netflix, and things like that allow for users to pick their entertainment "a la carte" and only pay for what they want to use. The only things I watch on TV are Mad Men, Treme, CNBC, the NFL, and Major League Baseball. Instead of shelling out $100 a month for a bunch of channels I do not need (and then having to pay over the top for Sunday Ticket or Extra Innings), I get my TV episodes from iTunes, watch CNBC and MLB.tv on my iPad, and save a shitload of money. I also have the Netflix streaming service that I watch via Apple TV or my iPad when I am in the mood for a random movie or something.

I think this is the future. A future where people pick ONLY what they want and ONLY pay for what they pick is the best for the consumer. However, it is not so good for cable companies who have huge infrastructure outlays and I am sure they will lobby and lobby until their last dying breath.

It will be interesting to see what happens.........

 

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