VHF channels begat UHF, UHF begat more basic cable tv networks, basic channels grew and begat more basic tiered channels, more came along as basic channels repurposed themselves and created digital offshoots. And the number of video offerings continue to grow at an exponential rate as channels are created on the web. And while broadcast television has seen their audience drop and cable's share has flattened, they still represent the hump of viewing. So how do the rest of these networks survive? Have we become too fragmented in our offerings or do these ultra niches still have a profitable economic model?
Ultimately the real economic power lies with the big networks who can repurpose their content on the different distribution platforms and enhance their brand value with "extras" and more interactive access. The challenge for the small network is to be seen as the dominant brand in their small pond. And to hope that the size of that audience is still large enough to monetize though advertising, subscription, commerce, etc.
It seems that the ones who are making money are the individuals who come up with the great idea and then build it out to be sold to the bigger company. As businesses, they need the synergy of the larger network to become more efficient and effective as a network. So many examples exist: Classic Sports sold to ESPN, Court TV sold to Turner, Bravo sold to NBC, and rumors of Oxygen soon going to Turner as well. On the Cable Operator side, we no longer talk of Adelphia, Vision Cable, Falcon, Millenium, TCI, Telecable and others. The same will hold true with web programming.