Saturday, August 27, 2011

Time Warner Cable is Right About Cord Cutting, For Now

Time Warner Cable executives are right to point out that people really do want to watch professionally-produced video. TWC executives also are almost certainly right that abandonment of video subscriptions specifically for the purpose of consuming professional content online is not happening, much.

The real issue is what happens down the road as the subscription video business clearly demonstrates it has passed the peak of its product life cycle. At that point, content producers are going to start looking a lot harder at alternatives. And that's when cord cutting is going to be a bigger problem.

It isn't a big problem today. And there is a reasonable chance it might not be for quite some time, if video subscription services are able to strike the right deals with content owners and allow video subscribers to watch the content they've subscribed for on their other devices, at other locations. The issue is value and price. If users have to pay just a little for that feature, one set of behaviors can be predicted.

If the cost of the "TV everywhere" feature is deemed to be "too much" for the incremental value, consumer resistance is certain. Given the steadily increasing prices for subscription TV, one would have to guess that there already is latent demand for a more flexible, possibly a la carte alternative. There just isn't any obvious way for consumers to vote with their wallets, yet.

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