Cable TV Won't Lose To The Internet Because It's Making Too Much Money?
from the logic-drop dept
I'm pretty sure that one of my very first Techdirt blogposts over a dozen years ago was to a column written by Bill Gurley. Since then I've linked to him plenty of other times as well -- and I find that I almost always agree with him. It's rare that I find any point on which I totally disagree with him, so I'm a bit surprised to find that I think he's very, very wrong about why the TV studios and cable guys will win in the big fight between cable and the internet that we've been talking about here for a while. Gurley insist that the legacy players (cable and the TV studios, basically) are going to win this fight, but his reasoning leaves me scratching my head. It's basically this: they're making a ton of money with the way things are set up now, and they don't want to lose it.Well, yes. That's true. But that's also true of pretty much every other massive industry that has been disrupted by new technologies over time. In fact, if you go all the way back to Adam Smith and The Wealth of Nations, he explains why such markets are ripe for competition, if not disruption. Indeed, Gurley does make a strong case for why the cable guys and the studios are so happy with the way things are today: thanks to affiliate fees, they rake in amazing amounts of cash in a very easy manner. Basically, the TV stations figure out a way to get a hot show on TV, which forces cable and satellite players to include that channel in their lineup, and then the stations demand a per subscriber fee. It doesn't matter if people actually watch or not -- they just get a fee per subscriber to the package that includes their channel. It's why we see battles every few months over just how big those fees should be.
But the massive problem that Gurley skips over in his post is that consumers hate this. Why? Because their bills keep going up. A lot. Way beyond what many subscribers see as reasonable.
And for all of Gurley's belief that the TV guys have this figured out, and that the infamous TV Everywhere program will solve the issue, this seems improbable. Perhaps they will figure some of it out, but the early reports suggest a disaster in the making, with execs focused on all sorts of limitations for consumers. And history has shown that your business model is focused on taking away value that consumers know can be provided, you will fail. Especially in a competitive market.
And while the entertainment industry works hard (with a big helping from the US government) to keep competition out of the market, they can't do so forever. Gurley notes that unauthorized file sharing is a challenge -- but he thinks that Hollywood will be able to contain it. That seems optimistic to me. When has anyone been able to contain unauthorized file sharing? Second, despite attempts by Hollywood to stop alternative browsers like Boxee from accessing their content, so far they've mostly failed in this endeavor, and with Google and other companies soon to enter the market as well... Well, it's going to be tougher than the TV guys expect.
Gurley is right that this won't happen overnight. There are billions in cash cow revenue that will keep this machine going for quite some time. And they will fight like crazy to protect their gatekeeper position. But you can't ignore consumers, and you can't ignore the fact that all that money that Gurley thinks helps the incumbents win also attract incredible interest from disruptive innovators. It may take some time, but the idea that the TV guys will stop the disruption seems unlikely.
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Filed Under: cable tv, economics, predictions
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I Don't Have Cable
Now I would pay for an online, on-demand, high-def (1080p) video service that charged subscription per channel or show I want to see. I would pay quite a bit for that actually. Plus I'd be willing to sit through commercials that could be much better targeted because the internet knows who I am when I log in.
So on topic, cable is already dead to me, they won't get my money, I just need someone to offer the online service we all want and I'll be all over it.
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The most valuable cable channels are the "adult" kind
You gotta see this: (Safe for work)
http://www.youtube.com/watch?v=4xNzsTHA1nI
So cable makes most of it's money from adult entertainment, and now the adult entertainers are trying to look like a upstanding contributors to society. Is this coincidence or just plain sexy?
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Re: The most valuable cable channels are the "adult" kind
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Re: titleist
disruption always wins. i agree that mr gurley, of all people, should understand this.
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Re:
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no slavery?
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"And history has shown that your business model is focused on TAKING AWAY VALUE THAT CONSUMERS KNOW CAN BE PROVIDED, you will fail. Especially in a competitive market."
Sadly until the providers realize and fully ACCEPT that fact, no matter what their product, market or gimmick they will continue to lose to the, um, "unrestricting suppliers" of their products.
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Google TV
I only mention Google here is because they often see the huge potential revenue to be gain from directed data mining and collection for the purpose of directed advertising. Plus they seem to have the capital to get such a massive indevour up and running.
After all you tune into your favorite program just to watch the ads. For it it was not for the ads you would not have your favorite program. It is not only the commerical break ads but the paid product placement within your program that all help pay for it all.
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GoogoleTV
The only thing required is a fast internet connection
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WTF is cable?
i watch all my favorite network and TV shows for free without commercials and i have been doing it for years.
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Re: WTF is cable?
Congrats on being a freeloading piece of shit.
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Re: Re: WTF is cable?
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Re: Re: WTF is cable?
i prefer the term "digital delivery pioneer".
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Sorry Cable Guy
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Who wants to pay monthly fees anymore?
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Quem tiver uma luz por favor me ajude meu e-mail: riclife@ig.com.br
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Black Market Heros
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