Friday, November 21, 2008

Will Web Video Kill Cable TV?

If your under 30, you probably don't own a wired phone; all your calls come to your cellular phone. And today, there are some people who don't have cable TV; rather, they rely on their broadband connection to watch their shows. "Call it Cable 2.0: You get many of the same TV shows and movies, often with fewer commercials. Better yet, you get to watch what you want on your schedule, not the cable network's, and you don't have to pay for anything more than a simple broadband Internet connection."

But will the web replace cable TV? As a distribution platform, I believe yes. But the company that serves you your connection will still charge you for that subscription, with price points to encourage you to take more of their services. Today it is called the Triple Play, tomorrow it will have a different name but essentially will be marketed to do the same thing, keep you from switching to another provider.

The big content companies don't want to give you access without subscription and advertising. That is their bread and butter. NBC and Fox own Hulu; the last thing they want to do is watch their subscriber revenue decline as a result of people downgrading their cable service to rely on web access. Unfortunately, they are on a slippery slope. "Such services offer few live broadcasts, an obvious drawback to sports fans or news hounds. And while cable and satellite services are rapidly expanding their high-definition offerings to satisfy the demand of the growing number of HDTV owners, you'll find very few high-definition video streams today." For those reasons, the numbers that do drop cable completely may be negligible. As deals start moving to the web, the change may occur more quickly.

Cable has its own toolbox to make the set top box a more valuable asset to the home. How the STB differentiates the TV experience from a web based experience will be key to success. And cable should have the backing of the branded content providers who aren't ready to lose the subscription revenue piece of the pie.

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