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Pay TV as we know it will be dead by 2025, and this is how it will happen

Mark Sullivan | Oct. 9, 2013
The pay TV industry is in transition, retooling itself to produce and distribute content that is streamed, not broadcast.

Content owners were terrified by the gutting of the music industry by Steve Jobs and the Internet during the 1990s and 2000s, and they will make sure the same thing doesn't happen to video. Content owners will continue to nervously restrict the ways TV content can be distributed and consumed—until it makes financial sense not to.

Content owners and their exclusive distributors (cable, satellite, and telco TV) have carved out a big slice of our monthly paychecks for themselves—$86 a month on average, according to NPD Group, though NPD says the number could reach $200 per month by 2020 due to the rising cost of content (and that's $200 just for video content, without broadband or phone service). Over the next decade, as TV distribution moves from traditional platforms to streaming platforms, content owners will make sure they get their usual share of that money.

If cable and satellite companies are forced out of the business of buying and distributing content, they'll naturally fall back on the business of operating broadband networks. They are, after all, the de facto postal service for delivering streaming content, charging both senders (Netflix et al.) and receivers (consumers) to carry video streams into tablets, laptops, and living-room TVs.

It's not a bad business to be in, says cable industry analyst Craig Moffett. "Being a dumb pipe would actually be a more attractive future for the cable operators than their current business," he wrote in a recent note to investors. "Their competitive advantage is in distribution infrastructure, not in packaging and marketing."

And here's the tragicomic punchline: When TV shows flow into our households through a broadband pipe instead of through a cable, the service may come with a "suggestion engine" instead of a "programming guide," and the brand names on the devices might be different. But we'll almost certainly pay every bit as much for the content itself as we do today—if not more.

 

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