Thursday, August 2, 2012

Viacom Fight over Bundling Points to End of Cable TV Model

Hunter Communications recommended reading from:
The Atlantic

Link to Article:
The End of TV and the Death of the Cable Bundle

DirecTV's battle with Viacom and the startup of Aereo, a new service that allows local television to be streamed to a variety of devices, point to the end of the billing models that have kept cable and satellite companies in business for decades. Just as new technologies on the Internet have drastically affected the music business and print media, now it is television content that has to adapt or die.

Excerpt: "The debate between DirecTV (a provider) and Viacom (a "content" creator) is about finding the right price that providers should pay for content that most people don't watch. That's where bundles are useful. They disguise the price of things we don't use. But with pay TV growth slowing, we're at the edge of a revolution. 'DirecTV thinks video streaming is eating away at the ratings of channels like MTV and Comedy Central,' Jeff Bercovici writes at Forbes, and the company has 'demanded that Viacom give consumers the right to select channels a la carte.'

The Aereo story is different. It's not about cable. But it is about distributing broadcast networks online. Once sports fans can get the Olympics and NBA and other shows without a cable package, whenever they want it, it could serve alongside Netflix, Hulu and other services to replace the cable bundle.

The Internet is ruthlessly efficient at stripping cross-subsidies and allowing content to shine on its own. (As Jim Fallows has pointed out, newspapers once paid for international coverage with classifieds and cars. Now, if you want classifieds and cars, you go to a classifieds site or a cars site. Bye-bye, cross-subsidy.) Devices like Aereo combined with cases like Viacom's could be leading to an a la carte model for television. The question isn't really if the Internet's unbundling revolution will visit the television industry but when."

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