Internet TV and The Death of Cable TV

Products have life cycles, which is about all one has to know about changing dynamics in the video business. And while there might yet remain a period of time before a firm trend can be definitively confirmed, "cable TV" might finally have reached that point in the product life cycle where its decline begins.

Telcos have a bit more experience with this sort of thing, as fixed-line voice seems to have reached a clear product life cycle peak in 2000 or 2001, depending on which set of data one looks at. Before that, telcos had to deal with a decades-long decline of stand-alone long distance, not so much in terms of usage, but a historic disruption of profit margins.

Since 2000, though, there has been a steady decline of fixed-line subscriptions. And it is starting to appear as if 2010 might mark a similar turning point for multichannel video, as we now have had two consecutive quarters of overall subscriber decline, something that never has happened before.

A rapid change to new forms of digital delivery will take some time, even though increased talk about "the death of cable TV" certainly will escalate. Content owner financial interests are the main reason. Simply put, content owners have learned quite a lot about the economics of digital distribution and are moving deliberately, to avoid cannibalizing existing business models before the new mechanisms can be perfected.

“The networks aren’t blocking Google TV because it’s Google," AdAge notes. "They are blocking Google TV because it is putting a web TV show, with web TV show economics, on a TV, which would be incredibly disruptive to their business."

Internet TV and The Death of Cable TV