The Forbes article, Cable TV Model Not Just Unpopular But Unsustainable starts with a putative outline of a cable business: essentially “keep hiking the rates, have terrible service”! Finishing with this “goal”:
If all goes as described, we should be able to consistently deliver customer satisfaction levels that rank among the lowest of any industry.
Now that’s not a business model I’d want to emulate!
The Forbes article goes into a lot of detail as to why the cable business model is unsustainable. Starting from the current position:
Yet despite widespread customer complaints over price hikes and channel bundling, the cable industry still manages to hold on to a nationwide customer base of about 56 million video subscribers, more than their satellite (34 million subscribers) and telco (10 million subscribers) rivals combined, according to a recent report from SNL Kagan.
The article goes through pricing – and how the cable companies justify increases roughly 4X that of inflation – and the problems with channel bundling (and unbundling by inference) before looking to the future. The primary factor favoring the cable system as it exists is because the program distribution companies like the way it is. The article concludes:
“Media companies want the MSO (multi-system operator) system to stay intact,” says SNL Kagan Senior Analyst, Robin Flynn. Streaming video services like Netflix and Hulu Plus, when combined with hardware like a Roku box or Apple TV can offer an increasingly attractive range of viewing options. Yet while these are growing in popularity, a majority of users are employing them in addition to a pay TV service. The number of cord cutters – those dropping cable in favor of streaming video – is still a very tiny fraction of pay TV subscribers. If you’re thinking about becoming one of them, read my detailed look at the current options to a pay TV subscription.
While it’s far from certain how this will play out in the years ahead, it’s very clear that something has to change fundamentally with the current TV model.
I think we all know the model is broken in some way or the other. I don’t think anyone really thinks the cable model is unsustainable or will change dramatically in the short term. These types of changes happen much more slowly than I would like, and then much more suddenly than I want to deal with, once the tipping point arrives.
Such is change.