Cable, streaming services

In the electronic age, there is one industry which seems to be stubbornly trying to hang on to its former monopoly as a widely used service provider by doing things the old way – cable television. While this may not be a true “monopoly,” it’s about a close as you get in today’s competitive global marketplace. A small number of providers in a limited geographic area with high prices and poor customer service that seemed to have few alternatives other than avoiding the service altogether. Almost everyone has had the experience of having to be available sometime between “8am and 4pm” for installation, or calling the customer service line when there’s a problem with the cable box, only to be asked, “Did you turn it on?” But because there were few other options, people just put up with this for years. Then competition started to emerge in unexpected forms. There was a pivotal point in the early part of the century where cable companies simply failed to understand their market dynamics, external environment, and their competitors – they were competing against more than just other TV service providers.  

As the economy remained down in the mid-2000’s, people became generally more conscious of their spending and saving. Activities like discount shopping, super couponing, and DIY home improvements became sources of pride rather than embarrassment. Ironically, many of these activities had television shows dedicated to showing people how to successfully do these things on their own. At the same time, the use of mobile technology and the internet continued growing. Netflix entered the picture in the late 90’s and was a competitor to video store rentals, but as the service expanded in the 2000’s to include streaming services, TV shows, and original series, it became a more direct competitor to cable television. At the same time, cable service didn’t change much. The advent of the DVR was nice, but then services like satellite TV, Hulu, Apple TV, Roku, etc. essentially offered the same thing for a much lower monthly fee or comparatively low one time purchase. And seeing all of the other options out there, people began “cord cutting” or dropping their cable service. Instead, they opted to pay a little more for fast broadband or internet service so they could stream everything to their devices. Even television companies essentially aided the competition to cable by making “Smart TVs” which can be directly connected to the internet and download apps for Netflix, Hulu, etc. and stream directly to your living room.

Through all of this, cable seems to be chasing the market. As recently as 2013, Tom Rutledge, CEO of Charter Communications, told Wall Street analysts he was "surprised" that 1.3 million of his 5.5 million customers don't want TV — just broadband internet. "Our broadband-only growth has been greater than I thought it would be." A statement like this just signals how out of touch this executive is with his market and the environment around him. It seems as though they’ve looked very narrowly at what is really a dynamic market and missed the larger picture, like the diversity of their competitors, the fact that there are few barriers to enter, and numerous products and services addressing a similar need. And now, they face even more direct competition as services like Sling TV offer direct access to cable channels on a streaming basis. In order to survive, cable companies are going to have to revamp their strategies and overhaul the way they offer their services in order to effectively compete in a nimble marketplace. They might have a chance if they can consider changing direction in their strategy, but until then, the cord cutting will continue, and cable subscription will continue to decline.

http://www.businessinsider.com/cord-cutters-and-the-death-of-tv-2013-11#ixzz3fgmFh9K6

Competitor Analysis: Understand Your Opponents (Marketer’s Toolkit: The 10 Strategies You Need to Succeed (HBS Press), 2006)