Many people have written about the death of the cable biz and what will be in store for its future, so I’m certainly not the first to muse. But I find the lack of focus on obvious parallels in related businesses interesting, many of which would be highly instructive historical references to those in power, particularly at the MSOs who are fighting to consider their future.
Once upon a time there was the big bad AT&T, which was later broken up into the RBOCs, otherwise known as the regional Bell operating companies. Each of these RBOCs had the luxury of a near monopoly in the various regions they represented for many years, and during that time delighted in pillaging the coffers of their customers with ever increasing prices, poor service, and the like. Doesn’t this sound familiar so far? Replace RBOC with your local Cable Operator – for me that’s Time Warner Cable.
Over the last ten years there has been a monumental shift, however. As wireless technology improved and moved into the mainstream, customers found wireless to be an excellent alternative to the good ‘ole landline. Then things became even more interesting as VOIP changed the landscape for voice services even further. Suddenly, the RBOCs were faced with competition on three fronts – wireless carriers, cable MSOs who could offer VOIP over their traditionally video networks, and upstart companies like Vonage that had no limitations of competing in markets dominated by the RBOCs.
How does this compare to that traditional cable video industry? Well, it wasn’t long ago that you had only one choice in receiving service, your local MSO. Then the satellite business came along and offered a viable alternative to most customers in the form of DirectTV and Dish Network. Not to mention a couple of upstart MSOs that began trying to compete, with middling success, against the established players, like RCN. So, just like the RBOCs sat comfortably and didn’t evolve their business only to be “caught off-guard” by the massive landscape change (even though it took a decade to play out), the same thing will happen to the cable biz.
Already there are alternatives that are satisfying the early adopters, and as the worlds of Hulu and Sezmi begin to evolve, and as new wireless technologies like WiMax allow the wireless carriers to compete with video delivery services effectively (not to mention MediaFlo and the like), consumers will soon have many more choices and options with how they receive video content.
So what does this mean? Think about it in terms of the wireless biz… Since the service itself has been turned into commodity, they now can only compete mainly on price, features, and hardware. You can jump from one wireless carrier to another simply because you like the phone they carry better than the one offered by your current carrier. So imagine a cable biz that looks similar, where cable companies are forced to innovate on their technology as a core driver to customer acquisition. Where it’s not enough to have that same old cable box you always had, but you want the fancy new “smartbox” – making the parallel between so-called feature phones and smartphones… If the cable companies were smart, they would already be developing these new smartboxes, but to date they are still focused on the wrong things. Perhaps some get it, like EchoStar bringing Sling functionality into their suite of offers, but others are instead still focused on how to keep their captive audience even more captive by leveraging their negotiating powers with the content providers to lock out upstart companies.
On the surface TV Everywhere sounds like a good idea, but in the long run it just opens the floodgates to the cable biz morphing into an industry that will look exactly like the wireless biz of today.
I, for one, look forward to that day.
