This Cnet article highlights the very clear parallels between the collapse of Blockbuster (over the last 10+ years) during the rise of Netflix and the Cable industry’s response to the rise of what is called ‘Over the Top’ – people who watch video content over the Internet without a cable subscription for video.
Changes in the technology world are pretty amazing to watch. They are truly like a tidal wave. They start small and seem very distant and minute – but they gather strength and power quickly and suddenly what seemed like an innocuous tiny wave on the far horizon to a person standing on the shore looking out – turns out to be a humongous monster wave that overruns the beaches of the status quo and leaves the landscape redrawn, redefined in its wake.
It happened when the Internet to swallow up traditional businesses like travel agencies, brokerages, books and music sellers (Dean Witter, Barnes and Noble, Tower Records, Virgin and HMV… where are they?). It happened to Microsoft and Yahoo! when out of nowhere Google emerged and took over the leadership in technology and it’s happening now.
Yes, we are witnessing a tidal wave like that now – with the emergence of Apple and Google’s IOS and Android and the revolution of the mobile internet and its devices – and the water has not receded yet, so we don’t know what they landscape will look like after it does… but clearly… nothing in the world of human communications technology and computing devices, and actually nothing in basic human interaction will be quite the same as it was pre- January 9, 2007.
The rise of ‘Over the Top’ – which uses a broadband connection rather than the existing cable systems to view video content – has been long feared in the cable business. But now it’s a reality and gathering steam – a veritable tidal wave on the horizon that still looks small – but as it gets closer it does have the potential to permanently change the media delivery landscape.
I believe that it’s not too late for the cable companies to avoid the Blockbuster Collapse Syndrome described in the Cnet article – but cable companies will need to focus their energy on rapidly pursuing change by doing three things to keep their business relevant for the long long term (cause no one thinks they will be disappearing tomorrow… but what about the day after tomorrow???):
Abandoning the addiction to the bundle
This has always been a sore point with consumers – especially those who know that they can get a lot of what they need elsewhere and on-demand. The model from time immemorial has indeed been bundled content. But a lot of consumers truly dislike this model and will abandon it to pay less for ‘less’ content (the ‘less’ being facetious because most of the ‘more’ that people have they don’t actually consume – most people watch only a few channels regularly).
The younger generations of video consumers (those under 30…I mean) will be the hardest to acquire to the ‘old way’ and unbundling content could go a long way to helping them get over the hump of skepticism about that model. Unbundling content, offering it a la carte and doing so FAST – will convince consumers that the cable cos. actually understand what is going on and are not burying their head in the sand of current fees.
Drastically reducing fees
There ARE ways to get content for less… and if Net Neutrality holds – then there will be more ways to get content for free or, at least, for less. What this means to a whole generation of people growing up on the Net (those under 30-somethings mentioned above) – and those that are avid and proficient Net users (who didn’t fully grow up on the Net but use it like they did – meaning above 30 and below 60) what this means to them is that they don’t see any reason to pay more for less content.
And this group is not small (it’s a prime demographic) and the phenomenon is not a trickle – it’s a major and growing trend and like cord-cutters to the wireline world – these people will discover they can live without paying exorbitant fees and will never come back. Reduction of fees, along with unbundled content a la carte, will alleviate a lot of the pressure that most consumers have to find alternatives.
Dramatically improving customer service and enhancing the customer experience
For too long, consumers have had the short end of the stick because the companies providing them cable content were basically monopolies. That is no longer the case – we all know – consumers have choice. One of the most annoying aspects of the relationship with the CCs is the in-home appointment – still one of the most reviled consumer events in America.
Until all the cable and broadband companies wake up to the fact that they have to make the installation, repair and upgrading of service dramatically less painful to customers – people will look for, and find, a way to cut their cord. The alternative being Satellite (which needs less maintenance) + Wireless 4G Data (which needs none).
It’s amazing how fast technology (and the companies who deliver it) becomes obsolete. It’s scary to watch a tidal of change just wash over the current familiar ways. But change is accelerating. And sometimes the writing, clearly on the wall and well in time to do something about it, is a blessing – it’s probably a good idea not wait too long to read it and take action.