Monday, March 28, 2016

Cord-Cutting: The Shift from TV-Cable Packages to Internet Streaming


When it comes to entertainment, I will admit I would rather watch movies or shows via Netflix or HBO Go rather than wasting more time watching parts of an edited movie and commercials on cable.  My entertainment preferences as a consumer, along with others in America, have shifted from expensive cable packages to more flexible and accessible online streaming.  For those who pay a cable bill to Comcast or Verizon, for example, there is a reason why we are stuck with 100 or even 300 channels that we don’t even watch.  “If cable subscribers were allowed to choose their stations one by one, or even in smaller groups, the telecom industry would lose $70 billion of revenue, or 50% what they make every year.” (http://www.techinvestingdaily.com/report/the-top-3-stocks-to-play-the-death-of-cable/1313)

Business structures such as Hulu and Netflix offer a-la-carte model for their customers which have many perks but their transparency addresses the customer’s needs to conserve their money or get more services for less.  In addition to the quality of customer service, these savings for the folks who haven’t cut their cable cord become more and more attractive.  Recognizing these entrants have disturbed the entertainment industry, the cable companies are now fighting back to at least catch up with their competitors.  

Cable companies like Verizon Fios (part of Verizon Communications) are rebuilding their ground-based infrastructure; according to U.S. News, a $100 billion industry, and content more into an a la carte model which is not an easy task after being known as a TV-cable package supplier for the past ten years. As the industry becomes more diversified and full of different types of products for consumers to purchase, the barriers of entry seem to be slightly lowered for other competitors within the internet service industry as well.  Wasn’t expecting that, were you?

Take note of Google.  Not only does Project Loon, Skybox imaging, and Titan Aerospace have serious potential to increase more internet accessibility, but Google has a higher possibility to dominate over the ground internet service providers via the atmosphere.    

It’s pretty obvious there is a shift going in online streaming, internet accessibility, and high-performance data centers to support these increasing demands.  But who is to say these are the cream of the crop in the internet and entertainment industry?  It is only a matter of time to see who will come on top.

More information about Netflix (I recommend watching their quarter earnings interview under "Investor Events"): http://ir.netflix.com/index.cfm
SpaceX (potential competitor of Google): http://www.spacex.com/


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