Are Cable Companies in Trouble?
Posted by Andrew | Filed under New Media
I’ve already talked about how Newspapers are quickly dying out. Well, apparently they aren’t the only big media providers that are having financial difficulties, and this one hits closer to home. You may have heard about Charter Communications, the country’s third largest Cable provider, declaring bankruptcy. To quote the immortal John C. Dvorak, “How do you lose money with a cable company?”
It is pretty hard to believe, Cable companies have a monopoly in the areas that they serve, so they can basically charge whatever they want. But, there are always limits, and apparently they can’t get people to spend enough on their cable bills. I was listening to the latest MacBreak Weekly, and Alex Lindsay and Andy Ihnatko were commenting on how how much Cable now costs, and it came up that the Cable company needs each individual customer to spend $150 a month to make a profit. And when you think about it, it makes sense. Maintaining a network as complex as a Cable system probably costs a lot, with trucks, maintenance people, accountants, installation people, etc.
However, do to the rise of services like Hulu and TV.com, people are starting to dump their television subscriptions in exchange for cheaper Internet connections. Most major networks now offer free streaming video right on their own web sites. Cable companies don’t want to be a utility like the phone company, they want people to buy their premium services, it’s their bread and butter.
Could companies like Charter and Comcast find a completely new business model built around being an Internet service provider? I think one thing they could do is move into the TV over IP business. You know, offer On Demand content over the internet for subscribers. Comcast is already dabbling in this with their new Fancast service, which directly competes with Hulu. Would you pay money to have access to TV and movies from your Internet provider?
