Monday, May 3, 2010

Consumers Cutting Cable's Cord

Hey cable company, see that tree a mile in front of you, but in your path. If you don't start to act, you will run into it. Hey cable company see that tree, a half a mile in front of you. If you don't react, you'll plow into it. So how come the cable companies are driving smack down into that tree. As their revenues rise, their digital customer base appears to grow, and their average revenue per subscriber increases (ARPU), the cable companies watch as their stock prices rise. It seems all is well.

But trouble is indeed looming on the horizon. "One in eight Americans will cancel or cutback their pay TV service -- either cable or satellite -- in the next year, because it's getting so expensive, according to a major new study." In fact, basic subscriber numbers have consistently been dropping every quarter for cable. Some argue that this group is not spending much to begin with; dropping them makes their ARPU rise. Some are going to the competitors, others are dropping cable altogether.

The rise of mobile devices, iPad announced they sold their millionth unit already, along with wireless, signifies a change in direction for consumers. And while cable companies may need to up the price of broadband to offset the loss of cable, wireless opportunities should bring new competition to the market. I foresee utility companies looking at opportunities to easily expand their reach. Electric and gas companies could tap into this space and provide wireless coverage to entire towns.

As that tree finally gets right in front of cable's path, it may just prove too late. Customers will seek cheaper alternatives from new broadband sources. Today it may be 1 in 8, tomorrow 1 in 3. Cable companies must better adapt to TV Anywhere. It is not authenticating a different signal; it is allowing the home's set top box (or server)act as the gateway to multiple devices, wired and wireless. let the cable box talk to the mobile device, the iPad, the laptop, etc. Use technology like Slingbox and Tivo and others to your advantage. The time to act is now; else, you will be reacting too late to the tree and regardless of what you do, there will be a collision.

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