Thursday, June 9, 2016

Cutting The Cord Through Disruptive Technologies

Lawson, Andrew


            I have been a DirecTV customer for far longer than I care to admit.  My experience with that company has been largely positive.  I have enjoyed above average to great customer service, I have access to every NFL game through the Sunday Ticket and I have access to far more channels than I ever watch or will ever need.  With all that being said, I feel a little foolish and wasteful every month when my monthly bill is pulled from my bank account.  What’s more, I watch maybe 10-15 channels of the 195 channels I have and each time I upgrade my equipment, my contract gets renewed for another 2 years.  If you have come to this crossroads, this post is about a disruptive technology that can be your way to cut the cord, Sling TV.
            Cable TV and similar TV delivery methods are clear examples of sustaining technology.  As defined by Christensen in “Why Good Companies Fail to Thrive in Fast-Moving Industries,” what all sustaining technologies have in common is that they improve the performance of established products, along the dimensions of performance that mainstream customers in major markets have historically valued.”  According to the National Cable & Telecommunications Association, Cable TV has existed since 1948 and the first cable networks emerged in the 1970’s1.  During that period, only a few networks were available, but today, 900+ networks exist.  Today, with the emergence of other disruptive technologies such as Netflix, HuLu, and others, many are asking, why do I even need cable TV?   According to Consumer Reports, pay-TV companies lost more than 658,000 customers in the 2nd Q of 20152. 
            So where are these subscribers going?  As mentioned above, the advent of streaming services has eroded, albeit slowly, pay-TV subscribers.  These streaming services and other alternatives are classic disruptive technologies.  According to by Christensen, disruptive technologies are technologies that “underperform established products in mainstream markets, but have other features that a few fringe customers value.  Products based on disruptive technologies are typically cheaper, simpler, smaller, and frequently more convenient to use.”  While Netflix and other popular streaming services have been discussed in this blog, I will place my focus on Sling TV.
            Sling TV’s uses the cloud (another disruptive technology) to provide a cable like TV service at a fraction of the cost with no contracts required.  According to their website, for $20 per month, users can watch many of the major cable networks 3.  There are many add-ons one can subscribe to for an extra monthly charge.   As it relates to equipment, a whole range of options exist including Roku, Chromecast, and others, can be used to access Sling TV.  If you are watching Netflix and other streaming services, chances are, you own such a device.  However, this disruptive technology, as with all others by definition, can show worse near-term product performance.  Issues such as loading times, issues with account sharing, and latency associated with the use of broadband internet are cited.  Further, a broad band internet connection is required to use this service.
            In conclusion, Sling TV is an example of a disruptive technology and meets the definitions as stated above.  While pay-TV is here to stay (for now), their subscribers continued to erode as similar technologies emerge.  As stated in the excerpt from Christensen, it would be wise for companies and networks to recognize this trend, and develop strategies to address these new and emerging markets. 

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