Bundling is a perfect way to generate customer resentment For one, I hate cable bundling about as much as AOL. I'm stuck with both --but the minute there is a viable alternative, presto !, I'd go to other services in a flash. Maybe you know the feeling. BR . . . Cable is taking the fast train to oblivion Michael Wolff, Special for USA TODAY February 18, 2013 The buoyant recent quarterly financial results at Time Warner and News Corp. and the decision last week at Comcast to buy up the rest of NBCUniversal are all based on the outsized profitability of cable networks. Time Warner is CNN, HLN, TNT, TBS, Cartoon Network, Turner Classic Movies, Adult Swim, truTV and Turner Sports and HBO. News Corp. is Fox News, Fox Business Network, FX, Star, Big Ten Network, Fox Sports, Nat Geo. And NBCUniversal is Bravo, CNBC, MSNBC, USA, Oxygen, Weather Channel, Golf Channel. And yet every sentient person in the media business not being directly paid to support this charade knows cable is on a fast train to oblivion. How fast is one question. How willfully blind are the executives of these companies to oncoming reality is another. It is not a rare business predicament. Lots of industries — cars, banks, music, newspapers — happily made money, until the day they went off a cliff, leaving behind uncomprehending managers. And now here is cable programming, yet raking it in, but facing disruption and obsolescence as great as any. The current deal is surely fabulous. Cable operators pay media companies more and more to carry their cable channels. (Actually, cable systems pay the media giants for their successful channels and, as part of that deal, pay for the less successful channels, too.) The cable operators then pass these costs on to customers in larger and larger bundled cable bills. And, then, cable channels get to sell advertising. That's sweet. Except for the future — which is emperor's-no-clothes obvious. We all know, and are altering our habits accordingly, that vast portions of television content, current and past, are available through other outlets that bypass cable. The cable industry regularly rushes to announce that "cord-cutting" is a limited issue, when virtually everybody has cut it or is flirting with the possibility of cutting it or being harangued by their children to do so. What's more, habits, behavior, expectations and a fundamental sense of rights of the American media audience are going the opposite direction from the thing that most sustains the cable business: that you want a little but have to pay for everything. That's called bundling. The future is called à la carte — you buy what you want when you want it (and if it's not available with that sort of ease and reasonableness, you steal it). Oh, and cable technology stagnates, while digital technology ever improves. Google, in a direct challenge to cable, is rolling out a new infrastructure called Google Fiber, which will increase speeds by 100 times current standards. The first test is now being built in Kansas City. And yet media execs and investors remain … happy. Secure. Delighted, even. Comcast is buying the rest of NBCUniversal that it doesn't own ahead of its anticipated timetable because it believes the business will only improve and that the outstanding shares will get more expensive. This is modern business myopia. You have an installed base that is so large, and throws off so much cash, and which has so many people dependent on it, and necessarily committed to it, that it is in no one's interest to truly question it. What's more, transformation, even though you can see it coming, takes a long time to actually be felt by a system this vast and inured to change. We all know that cords are being cut, and yet the system isn't registering it because the cash keeps coming. My large television is a fully connected but dead presence in the house where a river of video, legal and not, flows over my laptop. When will I sort bills and take steps and finally stop paying for cable? I will … tomorrow. The continued mighty cash flow, the gargantuan size of these businesses and the unhurried pace of reality creates a certain executive hubris. Detroit saw foreign cars coming and did nothing. The music business saw its products being stolen and hardly blinked. No need to mention banks and bad mortgages. Such hubris is combined with, perhaps, a human inability to truly appreciate the pace of change — it will come, everyone can acknowledge, but not yet. And that complacency contributes to the belief that change is manageable. Time Warner has a notion called "television everywhere," in which, as a concession to the changing world, if you continue to pay it — that is, continue to do what you have always done — Time Warner will give you access to its shows on your other devices. This is negotiating with the inevitable — and accommodating the de facto. (And, by the way, whose HBO Go account are you using?) Money, of course, is one of humankind's greatest natural drugs. As long as the cash is coming you feel good and believe you have time to find a solution, even though, save for an extraordinary innovation which nobody has yet to quite get to work on, the end is preordained. The cable programming business — running, practically speaking, on consumer inertia — doesn't work anymore, and shouldn't. It's too costly and inefficient. It will die. This is easy: There will not be a cable business in five years, or at least not a healthy one. This is so evident that in the media business one is not even regarded as a Cassandra to say as much — but rather a killjoy. And yet, somehow the end of cable seems no more threatening than global warming, a problem perhaps, but for some other executives and investors. -- -- Centroids: The Center of the Radical Centrist Community <[email protected]> Google Group: http://groups.google.com/group/RadicalCentrism Radical Centrism website and blog: http://RadicalCentrism.org --- You received this message because you are subscribed to the Google Groups "Centroids: The Center of the Radical Centrist Community" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. For more options, visit https://groups.google.com/groups/opt_out.
