October 25, 2014

ALL YOU NEED IS NESN AND NBCSP:

The Rise of the Disrupters (IRWIN M. STELZER, 10/25/14, Weekly Standard)

So what is the disrupters' next target? They need an industry with a lot of investment sunk in the ground, dominated by a few companies made lethargic by years of monopoly power, able to use bundle-pricing to protect their shoddiest and least popular products by tying them to popular ones, and a long history of abusing customers with "For English, dial 1; for billing information, dial 2; for anything else dial 3, and hold on for an hour or so of awful canned music until a person located where English is rarely spoken comes to the telephone."

The cable industry fits that description. According to David Carr, writing in the New York Times, last week  "television staged a jailbreak....Netflix pointed a way forward by not only establishing that programming could be reliably delivered over the web, but showing that customers were more than ready to make the leap." No longer does your friendly cable company provide virtually the only path by which what is called "content" can enter your home. Netflix has changed the game in two ways. First, Mark Cuban, an investor in sports (the Dallas Mavericks among others) and other entertainment ventures points out, "Very little content is created in the U.S. without first talking to Netflix," which is now producing feature films and ending the day when old-line film studios could set the dates when their content would be released ("clearances" in the jargon of the trade) to the likes of Netflix only after being exhibited in first-run theaters.

Second, Netflix and similar disrupters have so emboldened thousands of so-called cord-cutters that cable and satellite providers have decided they would rather give in than follow the path to oblivion taken by other disrupted industries. Last week HBO ($15) and CBS ($6) -- Disney's ESPN will soon follow by offering basketball games on a choose-one basis -- announced plans to sell stand-alone streaming services. No cable subscription (circa $80 per month) required. Cable companies' ability to force consumers to pay for hundreds of unwanted channels in order to get the far fewer shows that interest them is on the wane. A la carte is the new plat du jour. It is a bit early to announce the end of the cable industry as we have known it, but as Carr points out, "Change comes very slowly, but then happens all at once. This is the all-at-once-part." One thing is certain. The closer we get to full à la carte service, the closer we come to the day when sports fans will have to bear the full cost of the cable companies' frantic bidding for rights to broadcast sporting events. My guess is that many sports fans will find the price of that television ticket too high, that the consequences will be lower bids for rights, lower salaries for players, cheaper tickets for fans attending live events.

Posted by at October 25, 2014 7:13 AM
  

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