While cable operators are concerned about cord cutting and subscribers dropping cable services, they still have an ace in the hole with their broadband subscription service. Add to that a telephone business for both homes and businesses, and cable operators like Comcast and Time Warner Cable are here for the long run.
And while consumers may be slowly dropping their cable service for streaming services like Netflix and Amazon and others, these same consumers may have a hard time accessing those big cable networks, like ESPN or Discovery, without a cable subscription. Cable operators have negotiated agreements woth cable networks that make it hard, if not impossible, to sell these same networks to over the top (OTT) providers like Intel Media, Apple and others. Consumers may be able to access certain shows through streaming but not the entire network. And these cable operators are also trying to stop consumers from getting broadcast channels as well through streaming, just as Aereo is hitting multiple markets with their OTT service. Operators have responded with lawsuits to try and stop.
With so much control, cable operators may be making it difficult for OTT companies to create a competitive, "virtual MSO" model. And Craig Moffett, of Moffett Research, believes that environment makes it difficult for companies like Intel Media to include top ranking cable networks on their streaming subscription service. "And he thinks cable operators and other telecom providers remain
well-insulated from virtual MSOs even under that third, most promising
option." Cable operators simply have to increase the price of their broadband service or change it to a usage-based system, making an OTT alternative a too costly alternative to traditional cable.
The only chance for survival may be when cable networks feel the loss of subscriber revenue from consumers cord cutting for these other sources of online entertainment. Consumers have become more show loyal then network loyal and as that trend continues, networks may be less relevant than online show aggregators like Netflix. Will cable networks all go away; absolutely not. The big networks will survive, but the smaller ones may just feel the need to chance it on these "virtual MSOs" to increase their subscription size.
