Thursday, January 10, 2008

Cable-TV Industry Girds for New Threats

While I understand the average consumer's frustration with the high perceived cost of cable television, its growth is due as well to the high demand of the viewer. The audience found an appetite for more programming and kept asking for more to come; every niche was offered from multiple childrens channels to animals, from re-runs of classic tv shows to skewed programming for every demographic and psychographic - women, men, gay, teen, baby - every niche has at least one channel or more devoted to it. We stopped being satisified with general programming from the three "broad"casting networks (which also grew from ABC, NBC and CBS to include Fox, UPN, and WB - luckily UPN and WB have combined).

And as channels needed money to grow, they looked at two revenue streams, advertising and license fees. And both the number of ads per hour and the size of the license fees grew. Revenues increased. The viewers bought the products being pitched and they paid the cable companies who payed the cable networks to provide more programs.

So this article talks about one type viewer, and perhaps other viewers like him, who may have finally hit the wall. Viewers want more content, but don't want to watch all the ads and don't want to pay for cable tv. Tivo came to the rescue to save us from ads interrupting shows and the internet to save us from cable bills.

Maybe the industry is somewhat to blame for going to the well too often, sometimes there seems to be more ads than program, but it is unlikely that the broadband/cable provider is likely to let the viewer get out of paying their cable bill without upping the cost of broadband to cover itself. And networks are unlikely to provide a complete stream of programming exclusively to the web without getting their license fee paid to them as well. There is too much revenue out there today being generated by cable television to expect its downfall from broadband. The viewer will continue to pay more and new ways will be discovered to get the ad message noticed.